CAIRO // The Egyptian government broke the law in 2008 when it transferred a huge piece of land in the south of the country to an Abu Dhabi-based agricultural investment company, an administrative court here has ruled.
The ruling has thrown into doubt the future of a US$500 million (Dh1.83bn) agricultural project south-west of Aswan that represents one of the UAE's largest investments in Egypt, and comes amid rising calls for Egypt's new military-led government to investigate allegations of corruption in dozens of land deals that took place in the last five years.
The general assembly of the State Council, an administrative court that provides legal expertise to government ministries and rules on disputes between the public and the government, found that a government body improperly granted the UAE's Al Dahra Agricultural Company the right to cultivate 100,000 feddans (43,000 hectares) in Toshka, according to Mohammed Attayah, the head of the general assembly of legal opinion and legislation in the State Council.
"Several legal opinions were offered on this contract, and the general assembly stood for the legal opinion that preserves the best interest of the state," Mr Attayah said in an interview yesterday. "According to [the ruling], the contract is nullified, except the company can keep just 100 feddans."
The Egyptian General Body of Agricultural Development was not permitted to award such a large parcel of land by "direct order", the State Council found, and should have instead held an open bid and welcomed competing offers from other potential investors.
The ruling was made before the February 11 resignation of Hosni Mubarak, Mr Attayah said, but was first announced on Monday in some Egyptian newspapers.
"We didn't inform the [UAE] company, we informed the government party that made the contract with the company," Mr Attayah said. "Decisions from the highest legal opinion in the state cannot be appealed."
The chief executive of Al Dahra's Egyptian division, Osama Abdul Lotif, reacted with surprise yesterday and said he had not heard about the ruling. Al Dahra did not acquire its land improperly, he said.
Mr Abdul Lotif said he was confident that the ruling would not have a direct impact on the company's operations. Al Dahra has not started farming in Toshka because water infrastructure in its portion of the area is not yet complete, he said.
Al Dahra, an Abu Dhabi company that already operates three farms in Egypt, signed the agreement in July 2008 with the Egyptian General Body of Agricultural Development to cultivate over 43,000 hectares of land in Toshka and invest more than $500 million.
Al Dahra executives in Abu Dhabi could not be reached for comment yesterday.