Prominent business man, Yohannes Sisay charged
Prosecutors from the Ethiopian Revenues & Customs Authority (ERCA) have charged YESU Plc, Shebel Plc, and their respective managers, for concealing income amounting to billions of Birr and laundering the proceedings through to the accounts of Yohannes Sisay, a businessman behind the two companies.
In a charge brought to the Federal High Court, Eighth Criminal Bench, federal prosecutors accused six individuals and the two companies on 25 counts, for allegedly committing misdemeanours related to evasions of value-added, income, and withholding tax.
The defendants have also been charged with crimes of making false statements and money laundering, with the managers failing to discharge their legal responsibilities to safeguard the companies from engaging in illegal activities.
Yohannes, 40, who owns 93pc of YESU, and General Manager Issayas Teklu, 43, were arrested by the ERCA’s law enforcement agents in mid March 2012, under the suspicion that they had been dodging corporate taxes. They remained under investigation while detained at the Federal Police Investigation Unit, a.k.a. Ma’ekelawi, on Dejazmach Belay Zeleke Street.
Four other individual defendants surfaced by the time the charge was filed on Friday, April 27, 2012: Hirut Endale, 38, Yohannes’s nephew; Abera Mengistu, 35, a salesperson for Endale Molla Building Materials Store; Jember Teka, 42; and Hailu Assefa, general manager of Shebel Plc, a company formed with a registered capital of 10 million Br in 1996 by Yohannes’s father Sisay Molla and his brother, Yared Sisay.
Hailu is accused of neglecting his responsibilities in protecting Shebel from being involving in tax evasion, concealment of its actual revenues, and money laundering.
YESU Plc and Shebel Plc, owned by Yohannes Sisay and his family members, are accused of evading a total of 795.2 million Br that ought to have been paid in corporate, value-added, and withholding tax, federal prosecutors allege.
YESU Plc, owned by Yohannes and Yared, with a registered capital of 555 million Br, has a cold steel mill in Gelan Town, 35km southeast of Addis Abeba, in Oromia Regional State. Built in the late 1990s, it was a pioneer in galvanised steel sheet production in Ethiopia, with a total capacity of 400tn a day. Until recently, it had been working at 25pc capacity, due to power shortages.
However, the company has been declaring losses since 2004, federal prosecutors allege, undercutting its total turnover for seven years from 3.16 billion Br to 2.14 billion Br when filing for taxes. Shebel, a trading outlet for products of YESU, was involved in the same conduct of dodging taxes and concealing over half of its actual turnover for seven years, totalling 4.26 billion Br, prosecutors allege.
Federal prosecutors Tesfamariam Gebretinsae and Abebe Arega presented the indictment against Yohannes and co-defendants for money laundering, amounting to a total of 378.5 million Br, transferred to the accounts of Hirut, Abera, and Jember before being transferred back into the accounts of Yohannes.
Yohannes has been known to have a start in business since the early 1990s, importing and distributing kettles from Kenya. He has been a major campaign financier of the ruling EPRDF, while buying 30 million Br worth of bonds to finance the Grand Ethiopian Renaissance Dam, an amount among the most bought by an individual local businessman.
He is now accused of supplying Shebel Plc on credit and under production costs, with the intent of evading taxes in a business that produces semi processed metals used as an input in the manufacturing of iron and corrugated sheet metal from raw materials (cold rolled coils) that it has been importing. Thus, federal prosecutors claim 81.5 million Br in unpaid corporate incoming tax from YESU for the period between 2007 and 2010 and 123.8 million Br from value-added tax, for the period from 2004 to 2010.
YESU has been co-managed by Yohannes, prosecutors claim, and Issayas was found cooking its accounts to declare a total loss of 539 million Br, for the seven years beginning in 2004. The company has actually made a gross profit of 451.75 million Br during the same period, which resulted in the accusation of falsifying financial statements and misleading the ERCA.
Yohannes is now being subjected to an indictment for laundering illicitly earned money, amounting to 205.4 million Br.
Under custody for the last month, Yohannes and Issayas were brought into the courtroom on Chad Street, Lideta District, when the charge was sent to the Bench. Nonetheless, their lawyers – Desalegn Kibret, Mulualem Fetene, and Sisay Lemlem – were at the Federal First Instance Court of Arada District, near John Melly Street (in front of Adwa Square, where the equestrian statu of Emperor Menelik II is erected) awaiting investigators of the ERCA to produce a record showing the status of their investigations and to argue before Judge Tarikwa Tebeje, in their bid to win bail privileges for their clients. They were informed that the case, in the process of remand at the Lower Court, was closed for a formal charge brought to the High Court in Lideta.
Hearing testimonies in another case, however, the Judge at the Eighth Criminal Bench of the High Court, Kedir Mohammed, did not interrupt the hearing. Thus, copies of the charge framed by the ERCA’s prosecutors were delivered to defence lawyers outside the Bench.
The Judge adjourned the case for May 8, 2012, to rule on the appeal for bail privileges as well as to open the hearings on the case