A law approved by Interim President Adly Mansour to ban appeals from a third party against contracts between the State and investors is “unconstitutional,” said Director of The Arab Center for Integrity and Transparency Shehata Mohamed late Tuesday.
“We see this law as a legalization of corruption, waste of public funds and a gift for businessmen of the Mubarak era,” Mohamed told The Cairo Post.
The Arab center will consider appealing it within two days, he said, adding that the law has limited the right to appeal the invalidity of state contracts, to only the contracting sides.
Mansour approved the controversial law last week, which the government said is intended to spur investors and ease their concerns over legal challenges which may hinder their businesses in Egypt. Since being approved, the law aroused concerns among NGOs, rights groups and activists that it could protect investors at the expense of citizens.
Egypt has experienced dramatic economic problems since the ouster of former President Hosni Mubarak in the wake of the January 25 Revolution, with a deficit of 240 billion EGP ($34.3 billion) during fiscal year 2012/2013.
Mohamed further noted that “there is no difference between this law and the constitutional decree issued by the Former Islamist President Mohamed Morsi [which granted him absolute powers and aroused public anger against his rule.]
Both laws violated the constitution, which prohibits granting immunity over any administrative act or decision of judiciary control, he added.
Mohamed said an interim president should not pass such laws, adding “permanent laws must be issued through an elected parliament.”
Minister of Trade Mounir Fakhry Abdel Nour said in an interview aired on Mehwar Channel Monday, that “appealing state administrative contracts has devastating effects on Egypt’s economy and investment environment.”
Abdel Nour reiterated that the new law regulates the procedures of appealing State contracts, stressing government’s efforts to protect public money as well as creating good environment for investment.
“Egypt will face a dramatic budget deficit if international arbitration accepted the claims of investors’ suing the state for compensation,” added Abdel Nour, who said that the new law could save hundreds of billions of Egyptian pounds and would protect Arab and international investors.
On Monday, Minister of Finance Hany Kadri told CBC channel that Egypt’s budget deficit is expected to range between 14 to 14.5 percent of the gross domestic product by the end of the current fiscal year, totaling between 340 to 350 billion EGP, which exceeds the ministry’s expectations.
Further, the minister said earlier during a cabinet meeting that the budget deficit will hit 14 percent in fiscal year 2014/15 if economic reforms are not applied, but the deficit may fall to 10 percent in case they are applied.
“It is not possible to separate the criticism of the law and the upcoming presidential election [scheduled on May 26 and 27,]” said Abdel Nour in an interview with Al-Hayat channel.
“Some political powers have rejected the law for political reasons without reading it,” said the minister, alluding to supporters of the Nasserite candidate Hamdeen Sabbahi.
Ziad al-Elamy, ex-parliamentary member and human rights lawyer, said the new law prohibits citizens’ rights “to litigate against corrupt contracts, and violates the constitution,” Youm7 reported.
Elamy said the Supreme Administrative Court previously abolished 11 governmental contracts for corruption, adding that some factories have been sold for a lower price than the base price of their lands. Elamy also claimed the new law is actually based on a suggestion presented by Abdullah Bin-Mahfouz, head of the Saudi Arabia-Egyptian Business Council, in February.
“The new law is the first step toward state corruption,” Economic expert Hamdy Abdel Azem told Vetogate, adding that the government will “protect its deals with foreign investors at the expense of citizens.”