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Thailand: China cancels rice deal amid graft probe

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BANGKOK (AP) — China has canceled a deal to buy more than a million tons of rice from Thailand due to a probe into the beleaguered Thai government's subsidies for rice growers.

Thai Commerce Minister Niwattumrong Boonsongpaisan told a news conference Tuesday that a Chinese state company, Pei Ta Huang, terminated a contract to buy 1.2 million tons of rice out of concern it would run into problems due to an investigation by Thailand's National Anti-Corruption Commission.

The commission last month pressed charges against ex-Cabinet ministers and some government officials involved in negotiations to sell rice to two Chinese state enterprises as part of government-to-government deals. The agency is also investigating Prime Minister Yingluck Shinawatra for negligence as chairwoman of the National Rice Policy Committee.

The rice scheme is a flagship policy of Yingluck's embattled caretaker government, aiming to woo votes from millions of farmers across the country.

Critics say the policy of buying rice from growers at above market prices has accumulated losses of at least $4.46 billion and has been dogged by corruption.

The scheme's losses and alleged lack of transparency are one of the complaints of anti-government protesters whose weeks of street demonstrations against Yingluck's government led to her dissolving the parliament and calling elections that were held Sunday. Ten people have been killed and nearly 600 injured in the protests.

Rice is Thailand's staple grain and one of the country's main exports. India and Vietnam surpassed Thailand as the world's top rice exporters in 2012 as the Thai government stockpiled rice to avoid even bigger losses.

The government has been unable to keep up with payments to farmers and in recent weeks thousands of people have blocked main roads in the provinces in protest.

Niwattumrong said the government will try to sell more of its rice stockpile to resolve the problem of delayed payments to farmers.

"Please don't worry. The Commerce Ministry is trying its best," Niwattumrong said.

Money from current rice sales will be paid to farmers and the Finance Ministry is seeking additional loans so payments can be made, he said.

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