By Lin Noueihed and Tom Perry
CAIRO (Reuters) - Egyptian former president Hosni Mubarak, who was arrested after his overthrow in 2011, can no longer be held on a corruption charge, a court ruled on Monday, a decision his lawyer said removed one of the last obstacles to his release.
Mubarak was the first leader toppled in a wave of Arab uprisings to face trial. In scenes that captivated Arabs, the man who ruled Egypt for 30 years appeared in a courtroom cage on charges ranging from corruption to complicity in the murder of protesters.
Monday's ruling, which could bring Mubarak a step closer to freedom, coincided with another decision from the public prosecutor to press new charges of inciting violence against his successor as president, the Muslim Brotherhood's Mohamed Mursi.
The military removed Mursi on July 3 after mass protests against his rule. Mursi, who was freely elected but alienated many Egyptians during his year in power, is in detention at an undisclosed location.
He was already facing an investigation into accusations stemming from his escape from prison during the anti-Mubarak revolt. These include murder and conspiring with the Palestinian Islamist group Hamas.
Fareed Ismail, a Muslim Brotherhood politician, condemned the new rulings on Mursi and his predecessor, saying they were "not surprising as we are expecting Mubarak to be released while we see honorable people jailed.
"This is a continuation of the coup that is happening in Egypt and the massacres that are happening," he told Reuters.
THE CASE AGAINST MUBARAK
Mubarak was sentenced to life in prison last year for failing to stop the killing of protesters in the revolt that swept him from power, but Egypt's highest appeals court ordered a retrial in January.
After Monday's decision, the only legal grounds for Mubarak's continued detention is another corruption case which his lawyer, Fareed el-Deeb, said would be settled swiftly.
"All we have left is a simple administrative procedure that should take no more than 48 hours. He should be freed by the end of the week," Deeb told Reuters.
A judicial source said Mubarak would spend at least two more weeks behind bars before the criminal court made a final decision in the outstanding corruption case against him.
That case related to gifts that Mubarak is accused of accepting during his presidency. Mubarak has recently repaid money equivalent to the value of those gifts, meaning he could potentially be freed, though the court could choose to extend his sentence on other grounds or come up with new cases.
Mubarak is being held at Tora prison on the southern outskirts of Cairo, the facility where senior members of the Muslim Brotherhood have been detained since they were arrested in a crackdown on the organization that began in July.
Mubarak's trial has continued despite the army intervention against Islamist rule but, perhaps tellingly, the families of those killed in the uprising have ceased to attend the court.
One lawyer who has acted for those families said the former president was unlikely to be freed given the political divisions that have torn the largest Arab country since Mursi's removal.
Mohammed Rashwan told Reuters pending legal suits could give the judiciary enough latitude to refuse Mubarak's release.
"This is bigger than a legal problem. This is a political problem because Mubarak's exit at this moment would tip the situation in favor of the Brotherhood. This is not a desirable outcome and one the current regime would not allow," he said.
"If Mubarak comes out at this time, the Brotherhood will exploit it to the utmost extent and claim that what is happening in Egypt is a return to the former regime."
In June, a court ordered the release of Mubarak-era Prime Minister Ahmed Nazif because of a limit on pre-trial detention in a case for which he had been held since the revolt.
Convictions of Mubarak-era officials have often failed to stick, prompting frustrated Mubarak opponents to accuse the judiciary of dragging out proceedings.
(Additional reporting by Alistair Lyon, editing by Mark Heinrich)