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Mubarak ally behind illegally developed luxury Sharm el-Sheikh resort

File - Western and Arab tourists walk on Naama Bay main pedestrian area at the Red Sea resort of Sharm el-Sheik, Egypt, late Monday, July 20, 2009. (AP Photo/Amr Nabil)

SHARM EL-SHEIKH, Egypt: In the beach resort of Sharm el-Sheikh, the sun-soaked coastal strip that is one of the Middle East’s most popular holiday destinations, the glitziest hotels can shroud the grubbiest of secrets. Once a Bedouin fishing village, Sharm el-Sheikh was transformed during the rule of Hosni Mubarak into a gaudy package holiday hotspot.

Yet according to lawyers and politicians in the town, the shadow of Egypt’s former president still looms large more than two years after his demise.

Documents handed to The Daily Star suggest that a businessman with close ties to Hosni Mubarak is behind an illegal luxury resort development being marketed to buyers across Europe.

Investors who have bought homes in the resort – including British, Russians and other nationalities – could face the prospect of their property being requisitioned, according to local lawyers, while there are fears that other holiday home owners may have been caught up in similar scams.

The project, called Neama Town, has thrown a spotlight on what local opposition politicians say is the lingering influence of Mubarak-era businessmen over Sharm el-Sheikh’s lucrative tourism industry.

Set in 40 acres of desert just a short drive from the sparkling Red Sea coast, the blueprints for Neama Town look for all the world like an ideal holiday home investment.

Designed as a luxury resort complete with palm-lined boulevards and artificial lakes, the complex is a five-minute drive from Neama Bay – a sandy crescent of beachfront bars, volleyball courts and seaside sun loungers popular with holidaymakers.

Speaking to The Daily Star, one real estate agent in Britain, Starhill Realty Ltd., said they had already sold a number of apartments from the project to British buyers.

The London-based firm, which features glitzy artists impressions from the Neama Town masterplan on its website, told a reporter who was posing as a buyer that apartments and villas were “selling well” and that several British individuals had invested in the scheme.

Yet a source who has detailed knowledge of the project told The Daily Star that the entire complex – which is still in the early stages of “off plan” development – is illegal.

Speaking on condition of anonymity, he said that anyone buying property in Neama Town was investing in a large-scale property scam and would face the prospect of their homes being requisitioned by the government.

“It’s fraud,” said the lawyer. “The people who are buying are putting money into something the government doesn’t recognize. Legally they cannot own their apartments, and they don’t own them.”

He passed The Daily Star documents that reveal that the developers of Neama Town do not have the correct license for selling apartments.

An official from Starhill Realty Ltd. said he was not aware of any licensing irregularities.

Meanwhile an employee for the Egypt-based Global Investment Property – the chief real estate agent for Neama Town, which is working in partnership with Starhill Realty Ltd. – also denied there were any problems with the development.

“Our papers are legal and our project is legal,” he said.

Yet there are fears that many other property owners may be dwelling on land acquired illegitimately during the time of Hosni Mubarak.

At the height of the South Sinai property boom in the early 2000s, dozens of projects sprung up around Sharm el-Sheikh and along the nearby coastline.

One local agent, who asked not to be identified, told The Daily Star that he had been forced to turn down several offers to market apartments because developers did not have the correct licenses.

Land deals in Sharm el-Sheikh are managed by the Governate of South Sinai, with specific plots being sold for certain uses. Agents and lawyers said it was possible that developers had purchased land designated for hotel use and instead sold projects as apartments, contravening the terms of their license.

The developers behind Neama Town were issued a building license for the construction of a hotel, not apartments. A spokesman for the South Sinai Governate, which issues building licenses, said he would be unable to comment.

The criticism surrounding Neama Town highlights the nexus of Mubarak-era power and business relations that are still operating throughout the region.

PromoSharm, the real estate firm behind the project, is headed by Ashraf Hareedy, a 42-year-old businessman whose father-in-law was one of Hosni Mubarak’s chief political aides.

The Daily Star approached PromoSharm and Hareedy for a comment but received no response.

For many years there has been an umbilical link between the tourism industry in South Sinai and the corrupt regime of Hosni Mubarak.

Much of the valuable land developed throughout the 1980s and ’90s ended up in the hands of former army officers or the family and friends of Mubarak and his cronies.

The indigenous Bedouin population was often ignored, removed from the land or resettled.

“The real estate and tourism industry in the region quickly became concentrated in the hands of a small group of business families and interests,” said Tarek Osman, author of “Egypt on the Brink.”

“The development of southern Sinai has been an example, among others, of the blur between power and wealth that had taken place in Egypt in the past 35 to 40 years, and especially in the last two decades.”

The issue was thrown into sharp relief at a court hearing last month during the trial of Hosni Mubarak. One of the former president’s co-defendants, business tycoon Hussein Salem, was the first major hotel developer in Sharm el-Sheikh back in the late 1980s.

Mubarak is accused of accepting bribes from Salem in exchange for favorable land deals for his projects.

“Ninety percent of landowners in Sharm el-Sheikh are from the old regime,” said Mohammad Helal, the secretary of the liberal opposition Dostor Party in South Sinai.

“In the 1990s and after 2000, Sharm was one of the best areas around the world for making money in property. Hosni Mubarak was living here at the time and was controlling everything.”

A glance along the coastline of Sharm el-Sheikh reveals a region where the Mubarak kleptocracy is writ large in five-star luxury.

There is the Maritim Jolie Ville Resort, Hussein Salam’s maiden project; The Four Seasons, developed by Talaat Mostafa, a convict now serving time for his role in the murder of a renowned Lebanese singer; The New Tower Hotel, owned by Gamal Omar, once an associate of Tony Blair and now accused of orchestrating the 2012 Port Said stadium disaster in which 74 people were killed.

But many locals take issue with any attempt to demonize the old regime. Those businessmen who maintained ties to Mubarak have numerous sympathizers around Sharm el-Shiekh, with some praising their achievements in helping to create the town’s modern incarnation as a regional tourism hub.

“When I read about Hussein Salem’s court case I was shocked,” said Mohammad Montasir, an Egyptian who says he has sold scores of Sharm elSheikh holiday homes to British buyers through his company, Egyptian Experience.

“His was the first hotel to be built here. Who else in Egypt would have thought of going to Sharm el-Sheikh, where it was isolated and with no infrastructure, and just start building a hotel?” he added.

There are also fears, particularly among some Cairo-based British officials, that dredging up the past sins of Mubarak’s cronies risks further damage to Egypt’s shattered economy.

One diplomatic source told The Daily Star that attempts to highlight the illegal business deals that occurred under the previous regime only serves to make investors wary. Meanwhile, Egyptians continue to suffer.

 
A version of this article appeared in the print edition of The Daily Star on June 15, 2013, on page 12.

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