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ETHIOPIAN NEWS


  • Police arrest top officials on suspicion of corruption

    Police have arrested top heads of Ethio Telecom and the Commercial Bank of Ethiopia (CBE) on suspicion of corruption.

    The suspects include Abraham Guade, deputy manager and head of Sourcing and Facility Division of Ethio Telecom as well as Ephrem Mekuria, head of Communications of the Commercial Bank of Ethiopia (CBE).

    Both suspects appeared before the court on Wednesday.

    Abraham was arrested on suspicion of corruption and causing a loss of government revenue after favoring a tour agency called Kereyou Tour and Travel to rent vehicles to Ethio Telecom with fake manufacturing date and out of the initial deal.

    According to police, the telecom official deliberately allowed vehicles manufactured before 2000 to pass the inspection pretending they were manufactured on and after 2000.

    In doing so, Ethio Telecom rented 67 vehicles from the agency but police did not mention the amount of loss incurred.

    The telecom official was arrested on December 27, 2016, and appeared at the second criminal bench of the federal high court yesterday. (FBC)

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  • Ethiopia accuses Allana Potash of tax evasion

     

    Prime Minister Hailemariam Dessalegn on Monday accused Allana Potash, the Canadian company which was engaged in potash mineral exploration and development project in the Afar Regional State, of tax evasion. In a press conference held in his office on Monday morning, Prime Minister Hailemariam was asked about the state of the Ethiopian mining sector and the exit of prominent mining companies such as Allana Potash and Israel Chemicals Ltd (ICL). Hailemariam said that the case of Allana was related to tax evasion. “Allana owes the Ethiopian government some two billion birr in tax. Allana should pay this and the Ethiopian government will use legal means to recover its money,” the prime minister said. Allana Potash, which was listed on the Toronto Stock Exchange through its subsidiary company Allana Potash Afar, was prospecting for potash deposit in the Danakil Depression in North East Ethiopia for more than six years and spent tens of millions of dollars on the exploration project. The company discovered 3.2 billion tons of potash which could be mined for 50 years. The company had the plan to invest 750 million dollars in developing the potash mine and export one million tons of potash yearly generating 430 million dollars. In 2013 the then Ministry of Mines granted Allana large-scale mining license that enables the company to mine the potash deposit. However, due to the commodity market crash particularly the nose-diving price of potash in the global market, Allana was unable to raise the required investment capital to finance the project. To avoid massive shareholders dilution the management and board of Allana Potash decided to sell the company. Accordingly, in March 2015 the board accepted the buyout offer from ICL, the 6th largest fertilizer producer in the world. At the moment, officials of the Ministry of Mines, Petroleum and Natural Gas were reluctant to recognize the deal citing that they were not pre-informed about the transaction, a claim which executives of Allana refute. Following the acquisition of Allana Potash, ICL applied to the Ministry of Mines, Petroleum and Natural Gas to transfer the mining license of Allana to ICL. While the ministry was evaluating the request made by Allana Potash Afar, a unit of ICL was allowed to continue the mine development work. Before the mining license transfer was made the Ethiopian Revenues and Customs Authority (ERCA) claimed Allana Potash Afar to pay some 55 million dollars in tax. The tax claim includes the withholding and VAT tax arrears, which was supposed to be paid by Allana, and capital gain tax for the acquisition of Allana. ICL rejected the tax claim and subsequently the board of ICL decided to terminate the potash project. In a statement issued in October 2016, the board stated that Allana Potash Afar was unable to carry out its work due to the obstacles posed by the Ethiopian government. “The board has taken this decision in view of the Ethiopian government’s failure to provide the necessary infrastructure and regulatory framework for the project and follows the Ethiopian tax authority’s rejection of Allana Afar’s appeal regarding the unjustified and illegal tax assessment which Allana Afar has declined to pay. In particular, as already notified to the government, Ethiopia’s acts and missions have been in breach of, inter alia, the protections to which the investment is entitled under an international investment treaty,” the company’s statement read.

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