July 6, 2009

Egypt's state-owned wheat importer plans to hold a Russian vessel of grain until it gets paid for a previous shipment that is under dispute with an Egyptian importer, an official at the General Authority for Supply Commodities, or GASC, said late Thursday (July 2).

 

"I am retaining the (Russian vessel) Seabird until Egyptian Traders provide the value of the first shipment, (Theoforos)," Nomani Nasr, undersecretary of GASC's vice-chairman told Dow Jones Newswires.

 

Seabird is currently being held in an Egyptian port while Theoforos has been released for re-export.

 

Theoforos was contracted for sale from RIAS Trading SA, the Swiss office of Rosinteragroservis, Russia's second-largest grain exporter, to Egyptian Traders Co., one of Egypt's largest wheat importers, which was supplying the wheat to GASC.

 

RIAS has been paid US$9.6 million by GASC for Theoforos, but GASC wants to recoup this money from Egyptian traders.

 

"I am retaining the first shipment (Theoforos) until (Egyptian Traders) gives the money (to GASC) and re-exports" the wheat, Nasr said.

 

Theoforos arrived in Egypt earlier this year, but was detained because of allegations of forged documents related to its import. Egyptian Traders is now under criminal investigation by Egypt's General Prosecution Office, and a source at the state prosecution office told Dow Jones Newswires the investigation is also looking at the involvement of GASC in the shipment process. RIAS has since been given the go-ahead to re-export Theoforos.

 

Egyptian Traders are also importers of the second shipment, Seabird.

 

GASC said in June that it would cut its ties with Egyptian Traders.

 

RIAS is now considering legal action against GASC, the Egyptian Trade Ministry and Egyptian Traders over Seabird, an official at the Russian importer said.

 

"We will not only sue Egyptian Traders for Seabird, we will also sue GASC and the Ministry of Trade," said Chris Vanhonacker, RIAS's commercial director.

 

Vanhonacker said RIAS is losing money on the shipment, which has already been held for six weeks, and could lose around US$10 million if the wheat is damaged due to the conditions on the boat. The company wants to send the shipment to Indonesia, Vanhonacker added.

 

Vanhonacker said RIAS owns the detained Seabird shipment, and that documents show it didn't enter into Egypt. "My buyer (Egyptian Traders) defaulted. I have nothing to do with GASC," he said. "We want the ship to leave, but we were never allowed to," he added.

 

But GASC claims the shipment belongs to Egyptian Traders, leaving it with no legal involvement. "Egyptian Traders are the importers of Seabird; they are the owners of Seabird in front of the Egyptian authorities," said GASC's Nasr.

 

Egypt's Trade ministry declined to comment before a law suit is filed. Egyptian Traders couldn't be reached for comment.

 

The Egyptian Minister of Trade, Rachid Mohamd Rachid, issued on June 24 a statement calling for Seabird to be released. The statement coincided with a visit of Russian President Dmitry Medvedev.

 

Egypt is one of the world's largest wheat importers. Its imports have been at the centre of controversy since May, when Egyptian authorities quarantined 52,501 tonnes of Russian wheat imported by Egyptian Traders.

 

As the state wheat buyer, GASC tenders for wheat on the international market and receives bids from local and international companies who buy the wheat, import it for delivery contracted to GASC, and get paid by GASC for it.