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Ethiopia: CBE Goes After More Mina Assets, Gets Court Order to Freeze 22 Trucks
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Addis Fortune (Addis Ababa)
3 December 2007
Posted to the web 3 December 2007
Issayas Mekuria
State-Owned Commercial Bank of Ethiopia (CBE) has had a seven-year legal battle with Mina Trading Plc over unpaid debts and interest totalling 61 million Br. CBE has seized houses, hundreds of trucks and an 11-storey building from the company and its owners.
In the saga's latest chapter, CBE is seeking to gain hold of 22 more trucks.
State-owned Commercial Bank of Ethiopia (CBE), in its quest to recover costs from an unpaid 61 million Br loan it gave to importer Mina Trading Plc, has seized several houses, 212 trucks and an 11-storey building. That is not enough, it says.
The Bank has convinced the Federal High Court's 9th Civil Bench to issue an injunction blocking Mina, a sister company of Star Business Group, from transferring ownership over an additional 22 trucks the Bank claims that Mina owns.
CBE on November 12 filed a request with the court to prevent the debtor, Mina, from transferring ownership of the trucks by sale or gift to third parties. The court ruled in favour of the CBE on November 19, issuing an order to the Federal Transport Authority (FTA) and the three branch offices of the Authority in Ayertena, Asko and Megenagna to prevent any transfer of the vehicles.
The Bank first filed an initial complaint on March 24, 2000, against Mina alleging that the company had not serviced its original 40 million Br debt.
Although commercial banks have the right to seize properties used as collateral for loans, there was not enough collateral when CBE set out to recover its loan. The Bank is now on a hunt to find other properties owned by Mina, requiring the authority of the Court to take possession of the assets.
When the CBE branch office at Anwar Mosque in Mercato signed the 40 million Br additional merchandise loan agreements with Mina, the only property put up as collateral was a residential belonging to Minwuylet Atnafu, a shareholder and general manager of the company, with an assessed value of 561,210 Br.
Mina was first established in the early 1990s by Abebaw Desta, Minwuyelet and their spouses. The company was restructured in 2003, registering a 20.5 million Br capital, shared equally between the two businessmen. It is an industry leader in stationery, timber, steel and sugar wholesale.
The company, however, came into trouble, along with its sister companies, when Abebaw and Minwuylet were arrested on charges of grand corruption. During their five-year detention while fighting the charges, their companies were placed under the management of a caretaker team, the Receivership Committee for Restrained Property, which was appointed by the Federal High Court.
According to documents filed by CBE with the Court, out of the 40 million Br initial loan, 2.9 million Br was serviced by Mina in the first year before the company's owners were detained.
By the time the businessmen were released in 2006, however, Mina and its sister company Tis Abay PLC together owed 180 million Br in unpaid debt, interest and penalties to CBE. The Bank moved to foreclose their properties and refused to accept various repayment plans forwarded by the debtors. CBE started to auction the properties last month.
CBE has so far foreclosed 212 trucks and six residential houses. Five residential houses were auctioned two weeks ago, recovering no more than 10 million Br, sources at CBE told Fortune. CBE has brought the latest charges to the Court on the grounds that these collateralised assets are insufficient to pay off the loan.
Of the 22 trucks now blocked from being transferred, 11 of them were bought with a different loan from CBE that has been paid off by Mina, according to the court documents. Though Mina has paid off the loans used to buy the 11 trucks, CBE still has the titles.
A letter undersigned by Minwuyelet and dispatched to CBE's Anwar Mosque Branch on October 18, stated that the trucks have not been used as any kind of collateral and that all of them are paid off. The letter further warns the Bank to return the trucks' titles should be handed over to Nile Insurance SC immediately.
"If CBE does not hand over the titles to Nile Insurance within the next five days it will be liable for any damage occurring to the trucks," Menwielet's letter says.
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Additionally, CBE is currently trying to sell an 11-storey structure built at a cost of 31 million Br, located off Ethio-China Friendship Avenue that was used as partial collateral for a separate 60 million Br loan taken by Tis Abay.
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