Back to the complete issue
Sunday, 28 August 2016

Khaled Hanafy resigns, rumours of an impending cabinet reshuffle

Supply Minister Khaled Hanafy is out: Supply Minister Khaled Hanafy submitted his resignation from government, announcing at a press conference on Thursday (runtime 02:41). “Holding public office is not a luxury … but a burden,” Hanafy said, reading out a prepared statement. Hanafy resigned after a cabinet meeting on Thursday which, according to Al Masry Al Youm, involved a heated exchange between Hanafy and Trade and Industry Ministry Tarek Kabil. Hanafy reportedly attacked Kabil, saying the General Organization for Export and Import Control, which is under Kabil’s authority, is the entity responsible for approving wheat shipments.

The resignation came barely four days before the House of Representatives is due to begin hearings on a report it commissioned into allegations that mns in state funding was used to purchase wheat that did not exist in this year’s domestic harvest.

Hanafy’s resignation seemed inevitable on Thursday morning with an Al Masry Al Youm report from 10am CLT suggesting he was going to resign at the cabinet meeting scheduled later that day. Al Mal suggests Hanafy was “forced” to submit his resignation during the meeting, at which he reportedly submitted documents proving his innocence from any wrongdoing regarding the wheat corruption investigation and the issue of his hotel accommodation. Reuters’ team in Cairo prepared a timeline of how events surrounding the wheat corruption investigation unfolded over the past two years.

The House of Representatives report on the issue accuses Hanafy of both mismanagement and misrepresenting facts about the success of the bread subsidies system, but does not make any direct criminal accusations. The report accuses him of presiding over a ministry which allows the mixing of imported wheat and domestically harvested crops, something which Hanafy has vehemently denied in the past. The report also alleges that Hanafy’s policies increased the state’s subsidy bill to EGP 40 bn in FY 2014-15 from EGP 35 bn in FY 2013-14 despite claiming to have cut the state’s subsidies 30%. The report’s final tally on the 2016 harvest: 200K tonnes of wheat worth EGP 560 mn at nine silos and shounas inspected remains unaccounted for. Al Borsa has published a copy of the 575-page report (pdf) which will be discussed tomorrow by the House.

Hanafy could face a criminal probe, a reportedly “informed government source” told Al Masry Al Youm, without providing further details.

Meanwhile, Agriculture Minister Essam Fayed is placing the blame for the wheat corruption scandal entirely on Hanafy, according to Al Mal. Fayed says the agriculture ministry’s role is solely that of production, monitoring, and research whereas Hanafy headed the committee responsible for receipt of wheat from farmers. The supply and agriculture ministries had both released antagonistic and conflicting statements concerning this year’s harvest, as we previously reported.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.