allAfrica.com: Ethiopia: Commission Arrests Senior Officials in Alleged Real Estate Fraud (Page 1 of 1)

Two weeks after it embarked on its investigations of alleged fraud in Addis Abeba's real estate business, the Federal Ethics and Anticorruption Commission (FEACC) last week suspended the Geographical Information System (GIS) bureaus in the 10 districts and the municipality from rendering services.

The Commission also apprehened senior city officials; Kassa Hailu, general manager of the Land Development and Administration Authority (LDAA), as well as Fekade Woldu, lease implementation department acting head.

GIS, a computerised plot indicator, is used to authenticate title deeds, verify ownership and identify illegal constructions. However, district land administration bureaus have stopped functioning after the suspension, sources told Fortune.

"The bureaus were closed due to a legitimate concern we have that the suspects in custody may dismiss information," Ali Suleman, commissioner of FEACC, told Fortune. A committee of four experts established under the Commission has been exploring the alleged shady deals that existed between the developers and city bureaucrats. The Commission turned its face to the real estate business following fraud tips brought to its attention, a source told Fortune.

There are 408 real estate companies which have requested 95.7 million square metres of land with a registered capital of 42.9 billion Br. However, only 100 have received land and half of them have started construction.

The real estate business boomed following a proclamation containing incentives for developers issued by the former provisional administration of the city in November 2002. Prior to the issuance of this proclamation, the number of real estate companies in the city were not more than five, dominated by Ayat and Habitat Real Estate, sister company of Berta Construction.

FEACC arrested the two officials on Thursday, November 1, at their respective offices at the municipality at 9:30am. The following day the commission captured Samuel Lema, department head at the Yeka District Land Development and Administration, and Getnet Belay, a team leader in the same department. However, the arrest has angered Mayor Brehane Deressa. He feels that he should have been given at least an earlier notice when such senior management staff were about to be apprehended.

In a regular Lease Board meeting held on Friday, November 2, the mayor expressed his dissatisfaction with the measures taken without his consent, sources disclosed.

The commission's request for a 14-day investigation at the Federal High Court, First Criminal Bench, on Friday was accepted by the court.

A charge read before the court by Desalegn Yehualazewde, the Commission's investigation team leader, stipulated that Kassa, et. al. were suspected for an allegedly irregular transfer of plots to Ayat Plc 10 years ago and Gift Real Estate. Having taken 130,048sqm of land for industrial purposes in 1998 by signing a contractual agreement with the then city lease department as decided by the LDAA Board, the indictment read, Ayat did not use the plot in compliance with its promise for so long.

"Fully knowing that Ayat did not undertake any activities, the suspects signed a new lease agreement in 2004 with Ayat terminating the first agreement without the consent of the board, instead of taking legal measures," said the commission. "The defendants granted the construction of apartments on plots designated for industrial construction having the regulation in their grasp."

Kassa, who has over 10 years experience in different capacities in the city, and Fekade former customs employee, were charged for passing orders to grant title deeds for Ayat without settling the lease price agreed upon on the lease agreement while Samuel and Getnet were held accountable for issuing title deeds for Ayat.

"All have been put under custody as they have abused their powers," contends the charge. According to the commission, Ayat has 13.9 million Br in unsettled debts. Established in 1997 by 18 shareholders with a capital of 25.4 million Br, Ayat is the second real estate developer after Jackros Ethiopia. Its capital was upgraded to 330.8 million Br in 2002, while the number of shareholders has been reduced to three; Ayalew Tessema, major shareholder (60pc), his son, Tewodros Ayalew, and Abreham Zeleke.

In the plot it took in CMC, the company installed 1,700 houses, but it still could not give the title deeds to owners.

Fortune's repeated attempts to contact Ayalew failed.

The defendants were also accused of granting Gift Real Estate title deeds for 169,999sqm of land while the board agreed only on 98,504sqm of the 130,000sqm plot granted for Gift signing an agreement with the company after it paid its dues.

First established in 1998 by Gebreyes Egata, Gift Trading set out on import and export, wholesale and as a commission agent. It later formed a subsidiary company, Gift Nail Manufacturing (GNM) Industries Plc, and finally Gift Real Estate Plc.

"I cannot explain the legal details of how my company acquired the plots, as it requires me to refer documents," Gebreyesus told Fortune. "But I am definitely sure that we have not violated any law. What I know is our company has a clear legal status."

The suspects had protested the 14-day investigation requests by the Commission.

"It is now a year and three months since I left my position," said Samuel. "There would not be any evidence that I would dismiss or any testimonials that I would lobby."

However the Commission's investigator was against requesting, arguing that considering the senior working status the suspects had earlier means they could dismiss evidence if bailed.

The High Court headed by the Adil Ahmed and two other judges, Mekonnen Gebrehiwot and Muluken Teshale, declined to give bail rights.

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