6 April 2014

Ethiopia: High Court Refuses to Drop Berhan Bank Fraud Charges

Although Siman's lawyer requested that the case be dropped, the judge insisted he must hear it from the plaintiffs

A company accused by Berhan International Bank (BIB) of civil charges of fraud says the Bank has agreed to drop charges after offers of compensation, but the judge in the case has refused to drop the charges.

The Federal High Court's Ninth Civil Bench rejected the request from Siman Business Plc to drop the charge filed against it by Berhan, reasoning that the request should come from the Bank.

Berhan filed a civil suit at the Federal High Court on February 12, 2014, against Siman and Soney Garment & General Trading Plc, both its clients, for a series of alleged frauds, which it claims were committed through Certified PaymentOrders(CPO) at the bank's Genet branch.

Although the court session on Thursday April 3, 2014 was meant to hear the charges, only four of the nine defendants had submitted statements of defence.

Among those missing was Tewodros Agulalie, the branch manager, who was said to have been under police custody.

This is according to Firehiwot Mekonnen, one of the four other individuals who are also included in the charge, as they had previously signed an agreement to provide guarantees on behalf of the branch manager and the finance officer for damages caused to the Bank equivalent to around 50,000 Br.

The defence lawyer of Siman presented a document to the Court, showing that the Company paid 233,205 Br, and a letter from the president of the Bank to Siman, which says that the Bank decided to relinquish all charges against them.

Although the lawyer asked the Court to drop the charge against Siman, the judge said the request should come from the plaintiff. Berhan's lawyer said he agrees with dropping all charges. The judge, however, ordered him to submit the request in written form.

Siman's lawyer also requested the court to change the charge file name, which is now Siman Business Plc et al, claiming that the bank had consented to dropping the charge on Siman.

Soney's lawyer stated that the Company had signed an agreement with the Bank to pay the 7.9 million Br on the behalf of all defendants.

"We will make the first payment of 1.3 million Br on Thursday April 10, 2014 and the payment of the remaining 6.6 million Br will be finalised within a year's time, according to an agreement we have signed with the management of the Bank," said the lawyer.

The Bank requested to the Court that defendants pay it back 7.2 million Br, with 16pc interest on the total amount. Berhan made the payments to Siman and Soney, says the charge, after the two withdrew the money through falsified CPOs, while they had insufficient balance in their respective accounts at the Genet Branch near Mexico Square.

Also included in the charge are three of the Bank's employees, namely Tewodros Agulalie, the bank's Genet branch manager; Alemayehu Abebe, the branch's finance officer, and Konjit Sebsibe, the internal auditor - all of whom are accused of being accomplices in the CPO fraud.

The branch manager and the finance officer were accused of signing falsified CPOs showing that the companies had deposited the stated amount,whereas the internal auditor is accused of certifying them.

Managers of Siman, says the charge, ordered a 3.5 million Br CPO on June 29, 2013, from the Genet branch, although the Company had insufficient funds.

The charge filed to the Court also indicated that Soney, a sister company of Siman, is also charged with taking 14.4 million Br from the same branch, although it only had 3.4 million Br in its accounts.

Berhan claimed, in the charge, that the withdrawals through falsified CPOs caused it to fall short of deposited funds and forced the management to pay an extra 10pc interest on time deposits from customers.

The remaining four defendants, who did not submit statements of defence, were ordered to submit their replies to the charge on April 8, 2014, and the judge adjourned the case to May 29, 2014, for oral proceedings.

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