Egypt Minister Says To Probe Mubarak-Era Deals

Egypt will probe investment deals signed under ousted leader Hosni Mubarak to ensure the state gets a fair price for assets it sold, the country’s investment minister said on Tuesday, a move that might unsettle investors.

Osama Saleh also said the government, struggling to fund a hefty budget deficit, hoped to sell Islamic bonds by year-end.

Investors have tip-toed back into Egypt, encouraged by greater political stability ushered in by President Mohamed Morsi’s election and his appointment of a new cabinet.

But talk of corruption probes on past deals has raised the prospect that agreements reached when Hosni Mubarak was in power may come unstuck or lead to long-running legal wrangles, even if many also welcome a more transparent government.

Several cases claiming land was sold too cheaply were raised in the courts before Mubarak was ousted. Since his overthrow in February 2011, the rows have gathered momentum. Egyptian firms embroiled in such cases include Talaat Moustafa Group and Palm Hills.

The government said last year it was trying to settle disputes with about 20 foreign and local investors to rebuild confidence in Egypt. T h e minister said on Tuesday he had settled one row with Dubai-based developer DAMAC over a land contract, though the company had no immediate comment.

But the investment minister, who addressed a Cairo business conference and then spoke to Reuters, also said the government would seek to open new investigations in the sales of state land, contracting deals and other contracts.

“It is not harming the investor or adding any burden, but is getting the government’s rights and a fair price that they should have taken,” he said.

Similar remarks by Morsi on Saturday, saying he would probe contract violations and tax evasion by investors, rattled the stock market on Monday and sent shares down 2 percent.

Saleh said settlements already reached by the previous interim government would not be re-opened and that not all fresh probes would necessarily lead to contract changes.

He said cases where state land sold for agriculture was then used for property development would be among those examined.

“To support agriculture, I give it at a highly subsidised price, but if it then becomes a very profitable residential area, it definitely has to be reconsidered, rebalanced and recalculated,” he said.

SEEKING INVESTMENT

Saleh said the government was seeking private investment of 176 billion Egyptian pounds ($29 billion) in the fiscal year to June 2013, with up to 15 percent from foreign direct investment.

Foreign investment was now about 9 to 10 percent of overall investment, he said, but added that oil and gas could represent between 15 and 20 percent total investment in 2012/13.

Asked if the investment goal depended on Egypt securing a $4.8 billion IMF loan this year, Saleh said: “Partially, yes.”

Saleh sought to reassure investors by saying Egypt had in the past coped with far lower foreign reserves than the $15 billion or so it now has – even though that is less than half the level of reserves before the uprising last year.

“This country has been through much more difficult situations, with reserves less than a billion dollars,” he said.

Saleh also said a new capital markets law would allow firms to raise Islamic bonds, or sukuk, and the government was now considering issuing its own sukuk to support the budget and help the state invest in public-private partnerships.

Asked if a sukuk could be issued by the government this year, he said: “We hope so”.

He said the government was working aggressively to expand petrochemical production, was offering $8 billion worth of public private partnership (PPP) projects and would implement a five-year plan in 2013 to educate entrepreneurs and exporters.

Reuters