SMNE calls Investors in Confronting Official Corruption in Ethiopia

    Press Release

Washington, DC, November 4, 2013

SMNE Calls for Strong Measures from the International Community, Donors and International Investors in Confronting Official Corruption in Ethiopia

The Government of Ethiopia is broadly soliciting for development aid, foreign-based business partnerships and financial investors; yet, the unpopular ruling party has been accused of abuse of state power, misuse of donor funds, widespread party-run business monopolies, illicit financial practices and endemic corruption. It is time to demand accountability from all involved and concerned.

The Solidarity Movement for a New Ethiopia (SMNE) is a non-political and non-violent social justice movement of diverse people that advocates for freedom, justice, good governance and upholding the civil, human and economic rights of the people of Ethiopia, without regard to ethnicity, religion, political affiliation or other differences. The SMNE believes a more open, transparent and competitive market economy, supported by viable institutions and reasonable protections, which provides equal opportunity, will result in greater prosperity to the people rather than keeping it in the hands of a few political elites. 

 

We strongly contend that Ethiopia will not emerge as a dependable global economic partner until the corrupt and illegal practices of the current one-party regime’s monopoly end and existing blocks of entry to non-party members are lifted. We also believe the global business community as well as donors to Ethiopia can contribute by coming alongside Ethiopians in the push for meaningful reforms. Such reforms would include greater transparency and an opening up of economic space to the private sector, without which growth and development—beyond the benefit of the ruling party’s affiliates—will never be realized.

In light of this, the SMNE urges the international community, donor nations, charitable organizations, and the international financial and business community to make demands on the Government of Ethiopia (GOE) for compliance with national and international laws. This must include holding companies affiliated or owned by members of the ruling party, including those businesses associated with their business conglomerate, Endowment Fund for the Rehabilitation of Tigray, (EFFORT), accountable. Additionally, measures should also strongly support restoring autonomy to independent institutions, the judiciary, and the Media and upholding the human and economic rights of the people. 

Until these measures are taken, the SMNE urges these stakeholders in the international community to withhold investments, development financing and other forms of partnering with the regime and its cronies.

The ruling TPLF/EPRDF party has misused its state power and expenditures of foreign aid to corner the market through its companies and affiliates in all sectors of the economy. Illegal expropriation of land and public resources, corruption, illicit capital leakage and dubious allegiances riddle these secretive deals, putting prospective partners at high risk for future liability or other uncertain consequences. 

The Oakland Institute in its July 17, 2013 press release: “Development Aid to Ethiopia: Overlooking Violence, Marginalization, and Political Repression,” warned the international community on the dangers of unwitting complicity in creating this illegal monopoly of business and civil society that provides the Ethiopian regime development aid amounting to “an average [of] $3.5 billion a year, equivalent to 50 to 60% of Ethiopia’s national budget.”

Likewise, the international community and investors have largely ignored or, knowingly or unknowingly, become complicit with the pervasive corrupt practices of many of the 100’s of companies owned and operated by the Tigrayan Peoples’ Liberation Front (TPLF) that dominates the ruling coalition government of the Ethiopian Peoples’ Democratic Republic Front (EPDRF). “Companies under the Endowment Fund for the Rehabilitation of Tigray, known as EFFORT, alone account for roughly half of the country’s modern economy”, according to an IPS report titled “Examining the Depths of Ethiopia’s Corruption.” The wife of the late Prime Minister, Meles Zenawi, headed up the organization until only recently.

Bloomberg News, in its October 27, 2009 edition, reported Guna Trading House Plc, owned by Ethiopia’s ruling party, said it plans to become one of the nation’s biggest coffee exporters, raising concern among industry observers that private industry may get crowded out.

The report quotes the late prime minister regarding the company’s plans to expand in the industry. ‘We are intending to export to Europe, the U.S. and China,’ he said. Guna is among at least four other companies owned by the state or Prime Minister Meles Zenawi’s ruling party.”

Coffee Plantation Development Enterprise, Dinsho Trading P.L.C and Ambasel Trading House P.L.C. are among coffee exporters under the ownership of the ruling party that has been able to obtain favored treatment from public agencies and enterprises due to the regime’s control of these government agencies that should otherwise be holding them accountable. Companies that fall out of line can suddenly fall under the scrutiny of these agencies. As a result, those associated with the ruling party are able to dominate key industries, including the export of commodities. See some of the more visible companies and less visible, like Wogagen Bank, Sheba Tannery P.L.C., Ambasel Trading House P.L.C., and many more companies owned by the ruling party.

Another company within EFFORT’s group is Almeda Textile Factory. According to the company, it is the biggest textile factory in Ethiopia. It is one of the major exporters of textile products to the US market. The company has had help in achieving this position through assistance from US government agencies, made available through the Africa Growth and Opportunity Act (AGOA). Additionally, according to the United States Agency for International Development‘s News, they report giving technical assistance to Almeda Textile Factory through the USAID East Africa Competitiveness and Trade Expansion Program (COMPETE). They also sponsored the company in an exhibit at the MAGIC Apparel Trade Show in August 2009.

Essentially, the US government agency admittedly supported this Ethiopian ruling party-owned company in its exports into the US market, also allowing Almeda AGOA’s duty free import privilege, something that was intended for independent businesses. This is in direct violation of US anti-corruption laws.

Another ruling party-owned company, Addis Pharmaceutical Factory, which dominates the local market, claims to be the largest pharmaceutical manufacturing plant in Ethiopia. According to the company, it manufactures “analgesics, anti-acids, antibiotics, anti-malarias, anti-asthmatics, amoebicides, anthelmenics, cough syrups and vitamin preparations.” Addis Pharmaceutical allegedly benefits from the expenditure of health funding from development agencies.   

The international community, including development agencies, charitable organizations and investors, often have ignored the implication of associating with the ruling party’s owned companies. This is contrary to the public interest and is in violation of international laws and regulations against corruption.

For example, in a press release on the appointment of the Bill and Melinda Gates Foundation’s first official representative in Ethiopia, the co-chair, Melinda Gates, said, “We invest more than half of our resources in Africa, and we want to build closer and more effective relationships with valued partners on the ground.”    

According to the Foundation, “Ethiopia is an important focus country for the foundation, which currently provides more than USD $265 million in funding to partner organizations that are operating health and development programs across the nation.” 

In Ethiopia, ruling party controlled organizations and businesses are nearly the only partners possible, creating an oligarchy similar to what has happened in Russia and other countries in Africa where totalitarian governments and their cronies pillage the economy and resources to their own advantage and without regard to the people.

What appears to be negligence and a lack of doing due diligence on the part of the foreign aid community and investors, including the UN Millennium Development Goal (MDG), the Bill and Melinda Gates Foundation, USAID, among many other agencies and investors, unfortunately contributes to making it possible for the ruling party and its affiliated companies to involve themselves in all kinds of shadow businesses while eroding the prospects for viable independent businesses to emerge and survive.  

As a result, in the last decade the number of parallel shadow business enterprises associated with the ruling party and affiliates have mushroomed in every sector of the economy while at the same time the international community has poured in billions of dollars in development aid and investment without appearing to question the ruling party’s extensive involvement in business and trade. 

Global Advice Network on its Business Anti-Corruption portal concludes in the profile on Ethiopia: “The [Ethiopian] government strategy is clearly top-down, dominating anti-corruption institutions, the anti-corruption debate, and the formulation of anti-corruption policy. Despite the introduction of anti-corruption initiatives in previous years, including the Federal Ethics and Anti-corruption Commission (FEACC) in 2001, corruption remains widespread at many levels of government administration in the country.”

In the findings of the Bertelsmann Foundation 2012 Report , they assert: “Ethiopian society’s deeply ingrained clientelism does not foster a culture of accountability and transparency, has fostered cover-ups and non-enforcement of laws”. For example, they report: “Competition laws aimed at preventing monopolistic structures and conduct exist within some sectors, but are enforced inconsistently. A Competition Commission was established in 2006, and by the end of 2007 had reviewed some 23 cases. Although informally provided, the strongest complaints are against the government’s preferences for party-affiliated businesses; [however], only trade-related issues were investigated. The transportation sector, for example, is to a large extent in the hands of business people belonging to the para-party sector. There are a number of companies close to the government and the ruling party, which leads to a lack of transparency and [high levels of] corruption.”

A World Bank 2012 report on Ethiopia reinforces the same, saying that “high-level corruption is widespread within the construction sector, and that it is dominated by the ruling party affiliated companies.” 

Reports alone cannot fully capture the enormity of the ruling party’s affiliated companies’ extensive involvement in all sectors of the economy due to the ruling party’s control of:

  1. Public agencies such as: Ethiopian Rural Land Management Agency, Privatization Agency, Investment Commission, Commercial Bank of Ethiopia, Ethiopian Agriculture Transformation Agency, Ethiopian Grain Trade Enterprise, Development Bank of Ethiopia, The Federal Ethics and Corruption Commission, Information and Communication Technology Agency and others;
  2. Trade institutions such as: Chambers of Commerce and Sectoral Associations, The Ethiopian Commodity Exchange, Ethiopian Coffee Exporters Association and farmers and trade union and associations;
  3. Licensing and regulating of charitable organizations, which includes: The Ethiopian Charities & Civil Societies Agency (ECCA) and legislations severely limiting the kinds of activities—civic engagement important to healthy societies—that organizations are allowed to carry out if they receive more than 10% of their financing through foreign sources, rather than through government funding under the Charities and Societies Proclamation; resulting in the ruling regime’s operation of hundreds of charitable organizations, including the Tigray Development Association (TDA);
  4. Public Media infrastructures, including Ethiotelecom, (the only internet provider in the country) ‎ View shared postand Ethiopian Broadcasting Authority  (the only shortwave Radio and Television broadcasters in the country), The Ministry of Communication and Information Technology http://www.mcit.gov.et/

The UNDP commissioned Global Financial Integrity Report: ‘Illicit Financial Flows from the Least Developed Countries: 1990-2008’, revealed that approximately US$197 billion flowed out of the 48 poorest developing countries and into mainly developed countries, on a net basis over the period 1990-2008. Trade mispricing—when imports are overpriced and exports underpriced on custom documents—accounts for 65 percent of illicit financial flows.”

The report ranked Ethiopia among the top ten worst countries out of the forty-eight. As a recipient of the largest development aid in Sub-Sahara Africa, the international community has the obligation to hold the GOE and the ruling party owned business conglomerate and facilitating organization primarily responsible and accountable.

In light of these concerns, the SMNE calls on the international community, donor countries and organizations and financial institutions, investors or business partners, either prospective or established, to not ignore the overwhelming evidences of endemic corruption but to take strong measures to ameliorate the problem to the best of their ability through exposure, denial of services, investigations, criminal proceedings and remedial actions. Some of these actions should include:

 

  • Demand that the ruling party disclose and dissolve all its business holdings built on public resources and foreign aid
  • Demand that the ruling party affiliated charitable organizations’ including EFFORT Group, disclose their financial holdings to the public and cease operating charitable organizations
  • Call for an independent investigation of the regime’s business and charitable activities
  • Call for the immediate restoration of the independent Media, including allowing the international Media to operate freely in the country with full access to the public records
  • Demand public disclosure of all records on foreign investment, including land contracts for the purpose of commercial farming as well as real-estate, mining and manufacturing

 

The SMNE urges the international community, donor nations and organizations, Ethiopian political parties, civic and religious organizations and the Media, at home and abroad, to pressure the international community to:

 

  • Not provide a blank check and diplomatic cover for the Government, the ruling party and its affiliated companies
  • Require meaningful conditions be met as part of receiving development aid and diplomatic support
  • Closely monitor the misuse of military and security assistance they or others have provided that has helped the ruling party gain control of the ways and means of the economy
  • Open an investigation on crimes of corruption and money laundering on the part of the ruling party’s affiliated companies, officials, and family members residing inside or outside of the country, in their respective jurisdictions abroad
  • Close any access for the ruling party affiliated companies that do business in the international markets until compliance with international and national laws are followed.

The SMNE and partners advise all concerned organizations to use established laws, agreements and protocols, where possible, to compel the ruling party to abide by international and regional conventions and protocols as well as to follow all applicable laws and regulations on corruption both nationally and internationally. =============================

For media enquiries contact:

SMNE Media & Public Relations

910- 17th St. NW, Suite 419

Washington, DC 20006 USA

E-mail: media@solidaritymovement.org

Website: http://www.solidaritymovement.org

 

CC

Media

A24MEDIA

All Africa

BBC AFRICA

Bloomberg News

NCNB Africa

CNN MARKET PLACE AFRICA

INDIAN OCEAN NEWSLETTER

REUTERS AFRICA

The East Africa

Business Daily

African Review

VOA Ameharic

VOA-English

ESAT

 

NON Government

TECHNO SERVE

ACCOUNT ABILITY

ACTION AID

AFRICA HERITAGE FOUNDATION

AFRICA LEGAL AID

AFRICAN DEVELOPMENT ASSOCIATION

ALLIANCE FOR A GREEN REVOLUTION IN AFRICA (AGRA)

ALLIANCE FOR FINANCIAL INCLUSION

Amnesty INTERNATIONAL

BUSINESS ACTION AGAINST CORRUPTION

CARE INTERNATIONAL

CATHOLIC AGENCY FOR OVERSEAS DEVELOPMENT

CENTER FOR INTERNATIONAL PRIVATE ENTERPRISE

CORRUPTION WATCH

COUNCIL ON FOREIGN RELATIONS

CREATE TRUST

DEMOCRACY WATCH

FORD FOUNDATION

FREEDOM NOW

Free Africa Foundation

GENOCIDE WATCH

Global Advice Network

GLOBAL HUMAN RIGHTS DEFENSE

Global Integrity

HERITAGE FOUNDATION

INTERNATIONAL COFFEE ORGANIZATION

INTERNATIONAL CRISIS GROUP

INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE

INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT

INTERNATIONAL LEGAL ALLIEANCE

Least Developed Countries Watch (LDC Watch)

MELINDA & GATES FOUNDATION

Development Research Institute NYU

OAKLAND INSTITUTE

THE AFRICAN CHAMBER OF COMMERCE IN THE US

THE AFRICAN INSTITUTE OF CORPORATE CITIZENSHIP

The Bertelsmann Foundation

THE COMMONWEALTH BUSINESS COUNCIL

THE CORPORATE COUNCIL ON AFRICA

THE FINANCIAL ACTION TASK FORCE (FATF)

THE GLOBAL CLEARINGHOUSE FOR DEVELOPMENT FINANCE

TRANSPARENCY INTERNATIONAL

TRUST Africa

U.K. Anti-Corruption Forum

Overseas Development Institute UK

OXFAM

PARTNERSHIP AFRICA CANADA, PAC

World Vision International

World Accord

HOPE International Development Agency

CARE- Cooperative for Assistance and Relief

Africa Governance Monitoring and Advocacy Project (AfriMAP)

 

Regional Organization

AFRICAN DEVELOPMENT BANK

AFRICAN UNION

The African Economic Community (AEC)-AU

Common Market for Eastern and Southern Africa (COMESA)

East African Community (EAC)

East African Court of Justice (EAC)

 

Multilateral Agencies

BANK FOR INTERNATIONAL SETTLEMENTS

ECONOMIC COMMISSION FOR AFRICA (ECA)

Food and Agriculture Organization

INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT (IFAD)

INSTITUTE FOR INTERNATIONAL COOPERATION AND DEVELOPMENT (IICD)

Multilateral Investment Guarantee Agency-World Bank

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT -WORLD BANK

International Monitory Fund (IMF)

INTERNATIONAL LABOUR ORGANIZATION

Investment Climate Facilities for Africa Trust (ICF)

ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Development Assistance Group (DAG)

United Nations (UN)-Sectary

United Nations Development Programme (UNDP)

United Nations Conference on Trade and Development (UNCTAD)

Multilateral Investment Guarantee Agency

United Nations Industrial Development Organization UNIDO

World Food Programme (WFP)

 

Government Agencies

EUROPEAN UNION

EUROPEAN COMMISSION

GOVERNMENT OF CANADA

GOVERNMENT OF UNITED KINGDOM

GOVERNMENT OF UNITED STATES

OFFICE OF THE PRESIDENT US

Government of India

Government of the Republic of China

Government Of Japan

Government of Indonesia

Government Malaysia

Canadian International development agency (CIDA)

US Agency for International Development (USAID)

UK Department for International Development (DFID)

The Japan Bank for International Cooperation

Japan International Cooperation Agency – JICA

China Council for International Cooperation

CCICED Secretariat International

India International Development Cooperation Agency

Export-Import Bank of India

The Export-Import Bank of China

Danish International Development Agency (DANIDA)

Finland-Department for International Development Cooperation (FINIDA)

France Department for International Cooperation

French Development Agency (AfD)

Federal Ministry for Economic Cooperation and Development

Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

Ministry of Foreign Affairs: Italian Development Cooperation

Netherlands – Ministry of Development Cooperation

Norwegian Agency for Development Cooperation (NORAD)

Saudi Fund for Development

Swedish International Development Cooperation Agency (Sida)

Swiss Agency for Development and Cooperation (SDC)

Turkish International Cooperation and Development AgencyTİKA

 

Selective Embassy in Addis Ababa

1. Royal Netherlands Embassy

Ambassador Hans Blankenberg

 

2. The Embassy of The Republic of South Africa

Ambassador Lungile Christian Pepani

 

3. The Embassy of Sweden

Ambassador Jens Odlander

 

4. Embassy of France

Ambassador Mr. Jean- Christophe BELLIARD The

 

5. The Embassy of the State of Israel

Ambassador Oded Ben-Haim

 

6. The Embassy of Denmark

Ambassador Pernille Dahler Kardel

7. The Embassy of Finland

Ambassador Leo Oslasvirta

 

8. The Embassy of The Republic of Rwanda

Ambassador Prof. NSENGIMANA Joseph

 

9. The Embassy of Canada

Ambassador Michèle Lévesque

 

10. The Embassy of Brazil in Ethiopia

Ambassador Isabel Cristina de Azevedo Heyvaert

11. The Embassy of India

Ambassador BHAGWANT SINGH BISHNIO

 

12. The Embassy of the Republic of Kenya

Ambassador Dr. Monica Kathina Juma

 

13. The Embassy of The Federal Republic of Germany

Ambassador Lieselore Cyrus

 

14. The Embassy of the Republic of Italy

Ambassador Renzo Maria ROSSO

 

15. European Union

Ambassador Mr. Xavier MARCHAL

Head of Delegation

 

16. The Embassy of Australia

Ambassador Ms. Lisa Kim Filipetto

 

17. The Embassy of The Republic of Turkey

Ambassador Ugur Kenan Ipek

 

18. PleThe Embassy of Switzerland

Ambassador H.E. Mr. Dominika Langenbacher

 

19. The Embassy of Japan

Ambassador Mr. Hiroyuki KISHINO

 

20. The Embassy of the Democratic Peoples Republic of Korea

Ambassador Kim Hyok Chol

 

21. The Embassy of the Republic of Indonesia

Ambassador Mr. Ramli Saud

 

22. Kingdom of Saudi Arabia

Ambassador Abdulbaqi Ahmed Ajlan

 

23. The Embassy of the Russian Federation

Ambassador Mr. Valery I. UTKIN

24. The Embassy of the Royal Norwegian Embassy

Ambassador Mr. Odd-Inge Kvalheim

 

25. The Embassy of the United Republic of Tanzania

Ambassador Joram Mukama Biswaro

 

26. The Embassy of the Arab Republic of Egypt

Ambassador Mohamed Fathi Ahmed Edrees

 

27. The Embassy of Belgium

Ambassador Mr. Hugues Chantry

 

28. The Embassy of the Republic of Djibouti

Ambassador Mohamed Idriss Farah

 

29. The Embassy of the Republic of Sudan

Ambassador Abdel-Rahman Sir Alkhitim

 

30. The Embassy of the People’s Republic of China

Ambassador Xie Xiaoyan

 

31. The Embassy of the United Kingdom of Great Britain and Northern Ireland

Ambassador Mr. Grey Dorey

32. American Embassy in Addis Ababa, Ethiopia

Ambassador Patricia M. Haslach

 

Person of interest

Dessalegn Yigzaw, Trade Development Manager
British Embassy, Addis Ababa Ethiopia

Emaildessalegn.yigzaw@fco.gov.uk

 

 

 

Share Button
Disclaimer: We are not responsible for any losses or damages that may have caused by using our services. EMF declines all responsibility for the contents of the materials stored by users. Each and every user is solely responsible for the posts.
Posted by on November 8, 2013. Filed under NEWS. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

Leave a Reply

Your email address will not be published. Required fields are marked *