Ethiopia Authority Probes Alleged Tax Dodgers, Loan Sharks
The suspects under investigation include Ayalew Tessema, chairman and major
shareholder of Ayat Real Estate Development Enterprise
15 June, 2009
Addis Ababa (Fortune) - Investigators from the Revenues & Customs Authority (RCuA) made a series of arrests saying that they are in hot pursuit of a ring of businessmen allegedly involved in massive tax evasion. However, they have yet to establish how much the state might have lost from any crime these businessmen may have committed.
Eight of the suspects have appeared before a judge at the Federal First Instance Court, Arada Criminal Bench on Thursday, June 4, 2009. It filed an application to keep the suspects under custody for further investigation.
The suspects under investigation include Ayalew Tessema, chairman and major shareholder of Ayat Real Estate Development Enterprise. Ayat is a pioneer in Ethiopia's thriving real estate sector. He has built thousands of homes in Yeka District, apartments behind the UNECA and adjacent to its headquarters on Gambia Street, near La Gare train station.
Ayalew was arrested at his office during the late afternoon on Tuesday, June 2, 2009. Earlier in the afternoon, investigators from the Authority conducted searches of his office.
"They checked through our financial documents," a salesperson working at Ayat told Fortune. "They came around noon and left at about 5:00pm".
Clad with Gabi, a warm traditional blanket, Ayalew appeared before the court up in the St. Giorgis area on Thursday morning. He was joined by other well known businessmen such as Ayele Debela, general manager and shareholder of ADH International; Gebrekidan Beyene, a.k.a Morocco, general manager and shareholder of a company bearing his name; and Kebede Tesera, general manager and a shareholder of Adeka Plc (no relation with the car renting company) and Bereket Plc.
Yosef Daniel, Hendia Chebsa and Kone Meheretu are also in the list of detainees accused of dodging taxes. Kone, however, was released on Thursday afternoon after the court granted him a bail worth 1,000 Br bond.
Meseret Tutu, a saleswoman working inside a kitchen appliances store owned by Ayele in Merkato, was detained for an alleged breach of the law on value added tax (VAT). Customs intelligence officers claim that they had purchased appliances from the store but were not provided receipts, sources close to the investigation disclosed to Fortune.
It is against Ethiopia's laws for VAT registered businesses not to issue receipts upon selling goods or services.
"We are in the process of conducting further investigation to know the exact amount of loss the suspects have caused on the revenue that had to be collected by the government," Yakob Shiferaw, a senior intelligence officer with the Authority, told Fortune.
The Authority has been investigating the suspects for several weeks now, a senior official at RCuA disclosed to Fortune. They have obtained several cheques issued and contractual agreements entered between suspects and their clients, and involving millions of Birr, the senior official told Fortune. They have also compiled documents from courts where some of the suspects won series of cases against alleged defaulters, according to this official.
"You have cases where individuals have small front companies but involve in transactions a lot bigger than their disclosed turnovers," said the senior official. "They have earnings concealed, thus providing evidence on tax evasions."
The Authority is also probing to establish that some of the suspects are loan-sharks, engaged in a lending business that ought to be licensed by the central bank, according to sources. However, whether it should pursue this case all by itself or in collaboration with the Ministry of Justice is yet to be determined, a senior official told Fortune.
The judge however has granted investigators seven days to pursue their investigation against the suspects, cutting in half the appeal by investigators. The suspects were taken back to custody at the Authority's detention facility, located behind previous head office of the Disaster Prevention and Preparedness Commission (DPPC).