Former Egyptian housing minister in corruption trial

Ahmed al Maghrabi accused of deal involving sale of land in Cairo at far below market rates that cost Egyptian government Dh168m, involving shell company set up by an Emirati, Waheed Metwally Youssef.

Powered by automated translation

CAIRO // Egyptian prosecutors opened their most high-profile corruption trial yet yesterday, charging the country's former housing minister with sponsoring a corrupt land deal, worth hundreds of millions of dirhams, that was allegedly brokered by an Emirati businessman.

The opening day of the trial took place amid a torrent of indictments targeting the regime of former president Hosni Mubarak - the proceeding opened one floor above a brief hearing for the country's former minister of the interior on money laundering charges — but it still stood out for the well-known officials involved.

The prosecutors' case implicates one of the country's largest media companies and its most famous property development, in addition to Ahmed al Maghrabi, the former minister.

Prosecutors say Mr al Maghrabi, working with three co-defendants, oversaw a series of transactions in which Akhbar al Youm, a government company that owns the daily newspaper Al Akhbar, sold a parcel of land it did not actually own to a shell company set up by Waheed Metwally Youssef, the Emirati.

The shell company, identified as Al Rokan, was promptly acquired by Palm Hills, a high-profile developer. Mr Maghrabi, a shareholder in Palm Hills, shared in the profits as the company acquired the 47.5-hectare parcel in a fast-growing suburb south-west of Cairo at prices far below market rates, prosecutors allege.

The scheme cost the government almost 273 million Egyptian pounds (Dh168m) and enriched Mr Maghrai and the other defendants by 159 million pounds, prosecutors said.

All four of the defendants have denied the charges through their attorneys; Mr Youssef and another defendant, Yassin Mansour, did not appear for the trial and face a warrant for their arrest, according to a court document dated February 23.

"The minister was the seller and the buyer at the same time," Amir Ibrahim Mohammed, the deputy chief editor of Al Akhbar, told the court as a witness for the prosecution yesterday.

Akhbar al Youm had acquired the land at below-market rates from a government authority in 1998 under a plan to build housing for its workers.

But it soon became clear that the company's chief executive, Mohammed Ahdi Fadly, had no intention of building the housing and instead wanted to resell the land for a profit, Mr Mohammed and two other witnesses testified yesterday.

"They sold the land without having confirmed ownership, and they violated the terms of the land grant, which was to build housing for workers," Hossam Khalid Abdul Halim, an accountant who was appointed by the Central Authority for Accounting to audit Akhbar al Youm's budget, told the court.

The 1998 deal involved no exchange of money — Akhbar al Youm instead promised the government's New Urban Communities Authority that it would give it ownership of 16 per cent of the housing stock planned for the site. But the company never built the housing, and when the government authority threatened to take back the fast-appreciating land in 2006, Akhbar said it would pay cash instead.

The company, which did not own the land according to the 1998 contract, received the authority's permission to sell the land to Al Rokan for a price of 515 pounds per square metre.

Part of the money repaid the government authority, which internally valued the land at only 275 pounds per square metre.

Mr al Maghrabi and five other government ministers sat on the property pricing committee that came up with that assessment, according to Abdel Naguib Zahir Hamed, an official in the New Urban Communities Authority.

Mr Hamed's admission proved easy fodder for the presiding judge in yesterday's trial, who joked, "What a committee; of the six, two have fled the country and another one is sitting right over there" behind bars.

After Mr al Maghrabi allowed the 2007 sale to go forward, the prosecutors said, Rokane was within two months acquired by Palm Hills, a publicly traded developer. Through a private firm, El Mansour and El Maghrabi Investment and Development Company, the former housing minister owned shares in Palm Hills.

Rokane, created by Mr Youssef in March 2007, was "specifically established to be the curtain behind which Palm Hills hides", the prosecutors wrote in their February 23 indictment.

The company "had no previous activities, it was appropriated just two months after its establishment".

No Palm Hills executive has been indicted in the investigation, and the company has insisted it did not know anything was amiss with the sale.

In a March 10 statement, it said it "never sought or got any land plots in an illegal manner".

Mr al Maghrabi, who watched the trial from a barred cell on the side of the courtroom, was barely visible through a row of guards who stood in front of the bars.

He slumped low in his chair, wearing the standard white prison uniform, and occasionally took notes as some witnesses spoke.

The court will reconvene tomorrow to hear the former minister's defence.