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Palm Hills chairman cleared of graft

Cairo, July 5, 2011

An Egyptian court on Tuesday cleared the chairman of real estate developer Palm Hills  and the former housing minister Ahmed el-Maghrabi of corruption charges in a state land sale.

Palm Hills, Egypt's second-biggest listed developer, has been hamstrung by the country's political upheaval, which froze sales and increased the number of new home cancellations.

Chairman Yasseen Mansour was among several businessmen facing corruption charges.

Although Mansour was cleared of criminal charges, the company is awaiting a verdict by another court on whether the contract for the land parcel will be scrapped. That court is due to hear the case on October 4.

Palm Hills' shares soared 10 percent in mid-day trade after Tuesday's verdict. Its shares had slumped 63 percent this year, more than those of any other firm on the main index.

Mansour has not returned to Egypt since the uprising that ousted President Hosni Mubarak in February.

"This is good news. He can come back and run the company," said one Dubai-based analyst, who asked not to be named.

Egypt's public prosecutor had accused Mansour, Maghrabi and two other executives of improperly arranging the sale of the land in Sixth of October city on the outskirts of Cairo, and its later transfer to Palm Hills.

A court investigating the charges said that while the case was being reviewed, Mansour's defence team had offered to make up any shortfall in the price paid for the state land.

Analysts said the verdict may indicate that courts were not succumbing to public pressure for convictions whatever the reality of a case.      "This is good news for the market. It indicates that businessmen will have a fair trial and not all be convicted," says Osama Mourad of Arab Finance Brokerage.

Analysts remain concerned the firm's liabilities and debts will weigh it down as it fights a separate court ruling in April that a state land sale to Palm Hills was illegal and must be scrapped.

Hamdy Fakharany, the engineer who filed that case, said last week he would not seek further litigation after the government appealed that ruling. He said there was no point in continuing while officials did little to fight corruption.

Palm Hills, which last month reported a first-quarter net loss, has said it would return some land to help it manage its cashflow. It has already proposed returning two plots.

Analysts say Palm Hills may have to struggle to rebuild its balance sheet, one of the weakest among Egyptian real estate developers.

"Palm Hills has problems in its operations that aren't related to the case against Mansour," said the analyst in Dubai.     

Palm Hills was founded by the Maghraby Investment and Development Company, a joint venture between the Maghrabi and Mansour family businesses. Maghrabi has been sentenced to five years' prison and fined over a separate, illegal land deal.  -Reuters

Tags: Cairo | Corruption | Palm Hills | Egytp | land sale |

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