5 June 2007

Ethiopia: Customs Arrests Three on Suspicion of Smuggling

Authorities at the Ethiopian Customs Authority (ECA) have arrested last week in Merkato three businessmen whom the Authority accuses were involved in the transaction of items smuggled into the country.

Seven customs and eight police officers from the Addis Ketema District have conducted sudden searches in the stores owned by Ismael Hassen, Fekade Agiro and Brehanu Tegegn, on Thursday afternoon, May 31, 2007. These stores are located in Merkato, in a place popularly known as Bomb Tera, behind Me'rab Hotel. The officers claimed to have apprehended 480 pieces of Red Bull drinks, about 20 packs of NIDO powder milk as well as an unspecified number of canned tuna.

The law enforcement officers who have conducted the search secured a warrant from the Federal First Instance Court of the Arada District Bench issued on Tuesday, May 29, 2007, Fortune has confirmed.

"We had visited the stores discreetly before we went to Court to secure search warrants," Gashaw Aysheshim, head of the investigation, told Fortune. "We have concrete evidence to prove our allegations."

The suspects were taken to custody the same night at the Enforcement Division of the Authority, located on General Abebe Damtew Street, behind Ethiopia Hotel. Although police brought them to court the following day, they had to return back to their detention due to unavailability of judges at the District Court.

They appeared on Saturday, July 2, 20007, where the police officers involved asked for an additional seven days to investigate further while the suspects are held in detention. However, the Court only granted five additional days.

The suspects, however, denied any wrongdoing in their statement to the police. They said they have no information whether the goods were smuggled into the country.

"They brought me these goods right to my store," Ismael Hassen told police. "I could only remember that the guy who brought the goods to me was of darker skin; neither do I know his name nor his whereabouts."

Police, however, allege that the stores were part of a larger contraband ring that begins in Djibouti. Although Country Trading is the sole importer and distributor of Red Bull products, as an exclusive agent to the Austrian Red Bull GMBH, there are products available in the market for lower prices than supermarkets supplied by the local distributors would have.

Country Trading charges 14.50 Br for a single Red Bull, after covering costs such as 150pc on duty, 15pc value added tax (VAT) and the recently imposed 10pc surtax. It is available inside one supermarket on Africa Avenue (Bole Road) for 17.60 Br per unit.

Red Bull has become an increasingly popular energy drink among Addis Abebans. When Country Trading launched a Red Bull marketing campaign 10 years ago, it had only six containers, each carrying 250,000 units. In 2006, it imported and distributed 10 containers, according to data from the Authority.

But in the last six months of this year, its distribution drastically decreased to two containers, unable to compete with prices of those smuggled ones, which are cheaper by 60 cents.

"We began to suspect that this product was smuggled into the country after we intercepted some cases, each carrying 12 pieces, in Nazareth," Eshetu Giref, head of Customs Central Intelligence Unit, told Fortune. "We latter found that the source of these goods are stores in Djibouti; drivers coming from Djibouti bring two to three cases to Nazareth, claiming that they use them for personal consumption."

Smaller private vehicles thus bring them to Addis Abeba, Eshetu told Fortune.

Investigators at the Customs Authority believe that over two containers of Red Bull are smuggled into the country not only from Djibouti, but also from Yemen, through Somalia. But the smuggled Red Bulls have a marked difference from those that are imported by Country Trading; they have product descriptions written on them in Arabic. The legitimately imported ones have only English text.

"We will work hard to stop the smugglers and protect the legitimate importers from unfair competition," said Commander Mulualem Girmaye, deputy head of Customs Enforcement Police. "We will take similar measures against other products if we are informed of their existence."

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