June 15, 2009

Egyptian authorities are double-checking documents relating to all recent imports of Russian wheat into Egypt as a result of a criminal investigation into whether paperwork for one shipment was forged, a person at the General Prosecution Office told Dow Jones Newswires Sunday (June 14).

 

The General Prosecution Office, Ministry of Trade and Industry and the regulatory body for imports and exports within that ministry are carrying out the document checks, the person at the Prosecution Office said, without specifying how many trading companies' and wheat shipments' documents they are re-examining.

 

Private company Egyptian Traders Co., one of Egypt's largest wheat importers, is under criminal investigation by Egypt's General Prosecution Office, the Ministry of Trade and Industry said Wednesday. The company imported the Russian wheat shipment with the documents at the centre of the prosecutors' investigation. The shipment was contracted for delivery to Egypt's s state wheat buyer, the General Authority for Supply Commodities, or GASC.

 

Egyptian Traders Co.'s Chief Executive Ashraf El Attal and some other company executives are banned from travel outside Egypt until the investigation is concluded, said the person at the Prosecution Office.

 

The investigation is ongoing, and relevant state authorities have been notified that Attal is banned from travel, the person at the Prosecution Office said. "Attal knows he is not allowed to travel pending the investigation results," the person said.

 

But Attal, who also serves as president of the Grain and Feed Trade Association international trade body, Friday denied any investigations are ongoing. Attal didn't return an e-mail message seeking comment Sunday on the travel restrictions and ongoing investigation, and he didn't answer a telephone call.

 

Geneva-headquartered inspecting and certification company SGS SA, said Friday it didn't inspect the wheat shipment under investigation and that the document purporting to be an SGS certificate was "grossly fabricated."

 

Egypt is one of the world's largest wheat importers and buys around 8 million tonnes of wheat from the international market each year. Russia is a key supplier to the Egyptian market due to its wheat undercutting other major suppliers' prices including the US and Europe.

 

Over recent weeks, local port authorities have subjected several ships carrying Russian wheat to further quality testing over concerns about whether the wheat is fit for human consumption. This follows a shipment of 52,501 tonnes of Russian wheat imported by Egyptian Traders Co. being quarantined at Safaga port in May after weed seeds and insects were found in it.

 

Since this incident, all shipments of Russian wheat entering the country have been subject to increased scrutiny, though Egyptian Traders Co. remains the sole wheat company under investigation by the General Prosecution Office, the person at that office said Sunday.

 

At Egypt's Damietta port, regulatory bodies are holding two ships, containing wheat contracted for delivery to Egypt's state wheat buyer GASC, for quality checks, but "preliminary results of tests done on the safety of these shipments has shown no problems," said the person at the Prosecution Office.

 

The person said Egyptian grain trading houses Horus and Union Trade had imported the wheat on the two ships being held for quality testing by regulatory bodies, but "there is no order in the Prosecution Office to investigate" those shipments.

 

Union Trade declined to comment on the issue. Horus couldn't immediately be reached Sunday.

 

The Red Sea port of Safaga also is holding a shipment of Russian wheat - imported by Egyptian Traders Co. to supply to GASC - over quality concerns, said the person at the Prosecutor's Office. Attal said Wednesday GASC is still interested in receiving that Russian wheat, which was imported on the Seabird vessel, "if quality is acceptable by authorities."

 

GASC buys more than half of the country's wheat imports for the government's subsidized bread program and has not tendered on the international wheat market since the end of April. It has bought wheat from the domestic market instead, causing wheat traders to speculate that it's not allowed to make international tenders because of quality concerns.

 

An official at Egypt's Ministry of Trade and Industry - which oversees GASC - said, however, "GASC has not been stopped from tendering for wheat internationally."

 

Russia is expected to supply Egypt with more than half of its wheat import needs for the marketing year from July, 2008 to June, 2009.