June 11, 2009

Egyptian authorities are conducting a criminal investigation into whether the firm Egyptian Traders Co., one of the country's largest wheat traders, imported Russian wheat that didn't meet Egyptian specifications, Egypt's Ministry of Trade and Industry said Wednesday (June 10).

 

The investigators are looking into whether documents - submitted by the company about the imported wheat - were forged, said Hisham Ragab, the ministry's assistant minister of trade for legal affairs.

 

Ashraf El Attal, Egyptian Traders Co.'s chief executive, denied in an e-mail message that any investigations are ongoing and said the investigations were finalized on Sunday.

 

The Ministry of Trade and Industry confirmed the criminal investigation of Egyptian Traders Co. Wednesday, on the same day that its CEO, Attal, who also serves as the current president of the Grain and Feed Trade Association, was scheduled to address the association at a black-tie dinner in London. GAFTA is a worldwide industry association that promotes international trade in wheat and feed.

 

Attal said by e-mail that he has cancelled his trip to London as he was working to get approval from Egyptian authorities to discharge other Russian wheat shipments.

 

During the past month, the controversy over whether some imported Russian wheat met Egyptian specifications caused greater scrutiny of Russian wheat imports and provoked complaints from Russia's government, as some shipments were held up by Egyptian authorities at the Red Sea port of Safaga.

 

Egypt is the world's largest wheat consumer, with annual imports of around eight million tonnes, and more than half of that from Russia.

 

The Ministry of Trade and Industry raised the issue of the imported Russian wheat to the state's General Prosecution Office about three weeks ago and is aware of the office's criminal investigation, Ragab said.

 

"They are investigating whether or not the shipment is in compliance with the specifications, and they are investigating the documents submitted by the company regarding this shipment," Ragab told Dow Jones Newswires.

 

An official at the General Prosecution Office declined to comment on the matter. "As a prosecution office, we will not say anything until we see what the situation is," said Khaled Rustom, a counselor at the office.

 

The investigation follows controversy over shipments of Russian wheat to Egypt. In May, Egyptian authorities quarantined a shipment of 52,501 tonnes of Russian wheat imported by Egyptian Traders Co. because it found weed seeds and dead insects in the grain.

 

At the time, Attal said the vessels were being held subject to the conclusion of the state prosecutor's investigations into whether the quarantined wheat was fit for human consumption.

 

Last weekend, the government seized a 55,000-ton shipment of wheat from RIAS Trading SA, the Swiss office of Russia's second-largest grain exporter Rosinteragroservis. The shipment was contracted for delivery to Egyptian Traders Co.

 

RIAS alleged Wednesday that Egyptian Traders didn't pay for the wheat in accordance with the sales contract.

 

RIAS ordered the vessel carrying the wheat to leave the port of Safaga, but local authorities seized the cargo.

 

Attal declined to comment on RIAS' allegations, saying it was a contractual matter between Egyptian Traders and RIAS.

 

The Egyptian government has offered RIAS no explanation for why it seized the wheat, said Chris Vanhonacker, RIAS Trading SA's commercial director. RIAS has appointed lawyers in London and Cairo to try to get the grain back, he said.

 

"There's no problem with Russian wheat. This is an Egyptian Traders problem," Vanhonacker said. "Russian wheat is totally acceptable in Egypt and will continue to be bought by Egypt."

 

RIAS plans to appoint an arbitrator via the Grain and Feed Trade Association within the next couple of days to address the alleged default by Egyptian Traders, Vanhonacker said.