Egypt Independent: Business-Main news en Egypt's wheat corruption scandal: timeline of a crisis <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>The minister responsible for food subsidies in Egypt, the world&#39;s biggest wheat importer, resigned on Thursday amid a high profile corruption probe.</div><div>&nbsp;</div><div>In July, Egypt launched an inquiry into whether millions of dollars intended to subsidise farmers were used to purchase wheat that did not exist.</div><div>&nbsp;</div><div>A corruption report, delivered late last week to the head of parliament, concluded some 200,000 tonnes of wheat was missing at ten private storage sites visited by the commission.</div><div>&nbsp;</div><div>Below is a timeline of how events have unfolded over the past two years.</div><div>&nbsp;</div><div><strong>* February 2014: </strong>Khaled Hanafi is appointed minister of supplies, putting him in charge of Egypt&#39;s extensive food subsidy programme as well as GASC, the world&#39;s largest buyer of wheat.</div><div>&nbsp;</div><div><strong>* 2014: </strong>A smart card system for subsidised bread distribution is rolled out in cities across Egypt and touted as saving flour.</div><div>&nbsp;</div><div><strong>* 2015: </strong>Hanafi hails the new system as a success, saving millions of dollars in bread subsidies, reducing imports, and ending shortages that once prompted long queues outside bakeries across Egypt. Industry officials, traders and bakers argue that, to the contrary, those reforms have failed - and even made abuse of the system worse.</div><div>&nbsp;</div><div><strong>* July 2015: </strong>Egypt collects a record 5.3 million tonnes of wheat from its local farmers, up from 3.7 million tonnes the previous year, amid mounting evidence of smuggling. Traders say as much as 1 million tonnes of the total could be foreign wheat but the supplies ministry repeatedly denies the claim of smuggling and the case is not taken any further.</div><div>&nbsp;</div><div><strong>* November 2015: </strong>Egypt&#39;s cabinet says it will start buying local wheat from farmers at the average global price starting in the 2016 season, changing the way it subsidises its wheat growers, to avoid smuggling. In previous years an annual fixed local price for Egyptian wheat that is above global prices encouraged traders to sell cheaper foreign wheat to the government, falsely labelled as Egyptian, to make a profit.</div><div>&nbsp;</div><div><strong>* February 2016: </strong>Under pressure from parliament, which said the direct subsidy to farmers was too low, Egypt&#39;s cabinet cancels the wheat subsidy reform and returns to the old system.</div><div>&nbsp;</div><div><strong>* April 2016: </strong>Egypt introduces measures to put an end to smuggling during its local wheat buying saying it will ban the trading of imported wheat inside the country during the buying season.</div><div>&nbsp;</div><div><strong>* June 2016: </strong>Egypt ends its local wheat procurement season with another 5 million tonnes of purchases fueling speculation once again that smuggling has occurred.</div><div>&nbsp;</div><div><strong>* June 2016: </strong>Amid mounting pressure, the government launches a recount of wheat in silos as a laywer, supported by a group of grain businessmen, files a case to the public prosecutor about the matter.</div><div>&nbsp;</div><div><strong>* July 2016: </strong>In his first public statement on the matter, Egypt&#39;s public prosecutor says some local wheat was only bought by the government in paper transactions and not physically delivered ordering the arrest of those involved and imposing asset freezes and travel bans on several individuals related to the case.</div><div>&nbsp;</div><div><strong>* July 2016:</strong> Egypt&#39;s parliament sets up a fact-finding commission to look into the allegations of corruption and hands its final report to parliament the next month as mounting pressure builds on the minister of supplies to resign.</div><div>&nbsp;</div><div><strong>* August 2016: </strong>In a second statement on the matter, Egypt&#39;s public prosecutor says upwards of $70 million worth of local wheat has been falsely claimed.</div><div>&nbsp;</div><div><strong>* August 25 2016: </strong>Khaled Hanafi resigns.</div><div>&nbsp;</div><div><strong>* August 29 2016: </strong>The final wheat corruption report is due for discussion in parliament.&nbsp;</div> Fri, 26 Aug 2016 08:25:00 +0000 Reuters 2472101 at sites/default/files/photo/2014/05/12/484151/image.jpg Oil prices fall as Saudi Arabia dampens prospects of output freeze <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p>Oil prices fell on Friday after the Saudi energy minister tempered expectations of strong market intervention by producers during talks next month, and as analysts pointed to an ongoing supply overhang that was weighing on markets.<br /><br />International benchmark Brent crude oil prices LCOc1 were trading at $49.46 per barrel at 0658 GMT, down 21 cents from their previous close.<br /><br />U.S. West Texas Intermediate (WTI) crude CLc1 was down 10 cents at $47.23 a barrel.<br /><br />Saudi Arabian Energy Minister Khalid Al-Falih told Reuters late on Thursday that &quot;we don&#39;t believe any significant intervention in the market is necessary other than to allow the forces of supply and demand to do the work for us&quot;, adding that the &quot;market is moving in the right direction&quot; already.<br /><br />Members of the Organization of Petroleum Exporting Countries (OPEC) will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria from Sept. 26-28.<br /><br />The minister&#39;s comments put a dampener on expectations of a meaningful intervention into the market, which has been dogged by oversupply for more than two years.<br /><br />Iran said on Friday that it would cooperate with other producers to stabilize oil markets, but added that it expected others to respect its individual rights.<br /><br />Many observers, however, interpreted that as Tehran saying it would continue to try and regain market share by raising output after the lifting of sanctions against it last January allowed a full return to oil markets.<br /><br />&quot;I do not expect the OPEC meeting in September to agree any freeze or affect the oil market in any significant way. This is because it appears key OPEC members remain more concerned about market share,&quot; said Oystein Berentsen, managing director for crude at oil trading firm Strong Petroleum in Singapore.<br /><br />Regarding the current supply overhang which has been weighing on oil prices for over two years, he said that he saw oil stocks globally &quot;falling too slowly to sustain a higher price above $50 per barrel&quot;.<br /><br />U.S. investment bank Jefferies said on Friday that despite recent bearish data like record OPEC output and soaring Chinese fuel exports, it expected &quot;the oil market to come into balance in Q4 and for inventory draws to accelerate into 2017, setting the conditions for a sustainable fundamental price recovery&quot;.</p> Fri, 26 Aug 2016 07:32:00 +0000 Reuters 2472103 at sites/default/files/photo/2016/08/26/504802/oil_pump.jpg Parliament must approve 14 percent VAT rate: deputy minister <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><p>Egypt&#39;s deputy finance minister for taxation polices, Amr al-Monier, has expressed fears that parliament may reduce the rate for Value-Added Tax (VAT) proposed in a bill submitted by the government last year, thereby harming Egypt&#39;s ability to reduce the budget deficit.<br /><br />Monier told al-Masry al-Youm on Monday that the 14 percent VAT rate proposed in the bill is equal to 1.1 percent of gross domestic product, and that this income is needed to bring the budget under control.<br /><br />He said some MPs are aiming to reduce the VAT figure to 12 percent, which would reduce the revenues expected from enforcing the law by LE13 billion.<br /><br />However, Mohamed al-Bahi, head of the tax committee at the Federation of Egyptian Industries, said that reducing VAT below 14 percent might actually increase revenues, since higher taxes are more likely to provoke avoidance. He said that the sales tax, which is due to be replaced by VAT, is current set at 10 percent, and up to 60 percent of people avoid paying it.<br /><br />The Finance Ministry has estimated LE30 billion in revenues from the new VAT system as outlined in the bill. The government is currently seeking to convince MPs to approve the law as it stands.<br /><br />The draft VAT bill was announced by former Finance Minister Hany Damian last year. The proposed law was opened up to the public for debate, but large sections of Egyptian society disapproved, fearing the new taxation system would bump up taxes by 5-15 percent. Talks on the bill were restarted when a new parliament was sworn in at the end of 2015.<br /><br />Last week, Monier said that the ministry is already carrying out inspections of markets and shops to crack down on those dodging the sales tax already in place.</p><p>The ministry has also said the imposition of VAT at the proposed rate will mean increases in the prices of various governmental services, including passport processing and public notary office work.<br /><br /><em>Edited translation from Al-Masry Al-Youm</em></p> Tue, 23 Aug 2016 08:46:00 +0000 Al-Masry Al-Youm 2472038 at sites/default/files/photo/2016/08/20/505446/deputy_finance_minister_for_taxation_polices_amr_al-monier.jpg Egypt wheat commission submits corruption report amid calls for minister to resign <img src="" alt="" title="" class="imagecache imagecache-media_thumbnail" width="152" height="114" /><div>A fact-finding commission investigating corruption in Egypt&#39;s domestic wheat supplies has delivered its final report to parliament, a lawmaker said on Monday, amid mounting pressure on the minister of supplies to resign.</div><div>&nbsp;</div><div>Egypt, the world&#39;s largest importer of wheat, has been mired in controversy over whether much of the roughly 5 million tons of grain the government said it procured in this year&#39;s harvest exists only on paper, the result of local suppliers falsifying receipts to boost government payments.</div><div>&nbsp;</div><div>The wheat corruption report, delivered late last week to the head of parliament, concluded some 200,000 tons of wheat was missing at ten private storage sites visited by the commission, Yasser Omar, a lawmaker on the commission, told Reuters.</div><div>&nbsp;</div><div>&quot;Of course there is more than one million tonnes missing ... but we won&#39;t be able to know exactly how much is missing because we cant inspect every single site,&quot; he said.</div><div>&nbsp;</div><div>Minister of Supplies Khaled Hanafy told Reuters last month only 4 percent of this year&#39;s procurement was missing. Grains industry officials have said the figure likely exceeds 2 million tonnes.</div><div>&nbsp;</div><div>If Egypt&#39;s local wheat procurement numbers were misrepresented, it may have to spend more on foreign wheat purchases to meet domestic demand &mdash; even as the country faces a dollar shortage that has sapped its ability to import.</div><div>&nbsp;</div><div>Parliament will discuss the report this week before questioning Hanafy and possibly holding a vote of no-confidence that could remove him from office, Omar said.</div><div>&nbsp;</div><div><strong>Calls to resign</strong></div><div>&nbsp;</div><div>Egypt&#39;s fact-finding commission has brought an unprecedented level of scrutiny to Hanafy&#39;s management of the commodities sector which has already faced criticism from grains industry officials over issues such as hacked bread distribution smart cards to subsidized rice shortages.</div><div>&nbsp;</div><div>Nader Nour El-Din, a former adviser to the ministry of supplies, said Hanafy&#39;s policies had allowed corruption to flourish, prices on staple commodities to jump to &quot;unprecedented levels,&quot; and public sector companies to be &quot;destroyed&quot; amid favoritism for private sector businesses.</div><div>&nbsp;</div><div>Hanafy maintains that his stewardship of the supplies ministry has led to numerous successes that include savings in flour and wheat as well as the end of bread lines.</div><div>&nbsp;</div><div>While Hanafy has not been accused of directly profiting from corruption, parliamentarians, industry officials, and media commentators have in recent weeks pinned blame for the wheat crisis largely on his shoulders, with many calling for his resignation.</div><div>&nbsp;</div><div>&quot;The minister has to bear political responsibility for this,&quot; said Omar.</div><div>&nbsp;</div><div>Criticism took an unexpected turn late last week, when fiery media personality and lawmaker Mustafa Bekry accused Hanafy on television of using 7 million Egyptian pounds ($788,300) in state funds to maintain a residency at a posh downtown Cairo hotel.</div><div>&nbsp;</div><div>The minister later said in a statement he had paid for the long-term hotel residence with his own personal funds.</div><div>&nbsp;</div><div>Appearing before a parliament committee on agriculture on Monday, Hanafy chose not to respond to questions about the hotel controversy, saying only that he had no plans to step down.</div><div>&nbsp;</div><div>&quot;My resignation is not whatsoever on the table,&quot; he said.</div> Tue, 23 Aug 2016 07:58:00 +0000 Reuters 2472034 at sites/default/files/photo/2016/01/11/94/opening_session_of_egypts_house_of_representatives_in_january_10_2015.jpg