Egypt prosecutor says some local wheat bought on paper only

CAIRO: Egypt's general prosecutor said on Thursday some local wheat was bought by the government in paper transactions only and not physically delivered, the first public statement by his office on the matter since fraud allegations surfaced last month.

Egypt, the world's largest wheat importer, launched a government-led inspection of wheat silos in June after an unusually high procurement figure prompted allegations of possible fraud from top industry officials, traders and members of parliament.

Egypt's parliament then set up a fact-finding commission to look into allegations of corruption in wheat procurement.

Egypt pays its farmers a high price for their wheat in an attempt to encourage them to grow the crop.

This has for years encouraged local traders -- who act as middlemen, buying wheat from scores of small-landholding farmers before selling it on to the government -- to mix cheaper imported wheat into the subsidised local supplies.

A lawyer representing a group of businessmen in the grains industry has also filed a formal legal complaint to the country's general prosecutor.

"The investigations that the public funds prosecution has been conducting revealed that some silo owners in association with some members of the committee that supervises wheat procurement, had manipulated the amounts of local wheat registered by listing amounts of wheat more than what was actually delivered," a prosecutor's office statement said.

Egypt's supply ministry said in the latest procurement season which ended in June it bought nearly 5 million tonnes of local wheat from farmers, the second highest figure on record and well above the 3-3.5 million tonnes per year farmers had delivered in the past decade.

If the numbers were misrepresented, the world's top importer of the grain may have to spend more on foreign wheat purchases to meet local demand, even as it faces a dollar shortage that has sapped its ability to import.

The prosecutor ordered the arrest of anyone who is found to be involved in the fraud from silo owners to the members of the committee receiving the wheat.

They will also have their assets frozen and be banned from travel, the statement said.

Egypt's supply ministry has repeatedly denied allegations its wheat procurement figures were inflated, saying violations were small in number.