By Asefa Belachew*

Introduction

There is unanimity on the pervasiveness and severity of corruption in Ethiopia1, but discussion on how to recover the lost/missing public assets is lacking. This is indeed the task and the responsibility of the Government, but Ethiopians both at home and abroad could play an important role. The purpose of this essay is (i) to foster a systematic discussion on the issues, (ii) based on publicly available government data, to draw lessons on the types and/or magnitude of resources diverted from the public to private hands, (iii) to identify instruments that would make it possible to recover those assets provided that the political environment warrants, (iv) to encourage Ethiopians, particularly those in Diaspora, to start a forum for a systematic discussion for them to contribute to the eventual recovery of the assets pillaged.

Magnitude and Type of Asset Transfer

Tracking the magnitude of asset transfer from the government or poor individual farmers into the hands of politicians and politically connected individuals is an extremely difficult task. Such transfers do not follow traditionally known business approaches; i.e. there is no paper trial. There are no financial records to glean some information about the size and the mechanism of transfer. Whatever we know is information assembled from disparate sources to construct some picture. In this case the work of Ermias Legesse has been very fruitful to shed light to the pillage by political corporations2. We also learn from the Global Financial Integrity report that the illicit financial outflow from Ethiopia over the ten years between 2004-2013 has been estimated at US $ 25.8 billion3.

To add to those sources of data, in this essay I will examine three potentially rich sources from which additional information could be obtained. These are the Asset Disclosure and Registration, the Addis Ababa City Council building permits and the Federal Auditor’s Report. These documents are in the hands of the government and have superiority since the assets are tied with the owner of the asset. As a result, it is easier to recover the assets provided that a legitimate justification cannot be found.

Asset Disclosure and Registry: The Federal Ethics and Anti-Corruption Commission (FEAC) is a good starting point. The Commission, in its discussion of the next Five Years Strategic Plan (2016-19), reports that it has registered the assets of close to 125,000 government appointees and public enterprise officials4. It also reports that it has issued Certificate of Asset Registration to 32,297 officials (refer to the Report in Amharic, p.19)5.

The questionnaire through which data are collected generates potentially rich information. It covers 5 issues (i) details on the respondent, (ii) immobile (fixed) assets, (iii) mobile assets, (iv) other assets, and (v) liabilities (loans and credits).

The Report in Amharic, based on data generated through this questionnaire, provides some aggregate data which is instructive. A summary of the main table is provided below:

 

Number of Potential Respondents Actual Respondents Actual as % of Potential
Respondents Male Female Total Male Female Total Male Female Total
Gov’t Appointees 2928 868 3796 2239 695 2934 76.5 80.1 77.3
Electoral Members    766 238 1004 451 177 628 58.9 74.4 62.5
Gov’t Employees 30427 11151 41578 22319 8766 31085 73.4 78.6 74.8
Defense Force 3900 344 4244 3131 338 3469 80.3 98.3 81.7
Fed Police Force 12800 1075 13875 11010 1075 12085 86.0 100.0 87.1
Total 50821 13676 64497 39150 11051 50201 77.0 80.8 77.8

In 2003-04 (EC), there were almost 64,500 senior civilian and military officials under the jurisdiction of the Federal Government required to declare and register their assets. Of this number, 50821 officials (or 77.8 percent of the potential) registered and disclosed their assets. The smallest filling rate was registered for Electoral Members (Parliamentarians) primarily as a result of non-filing by Members of the House of Federation (which is said to be equivalent to the US Senate and the Supreme Court combined), and partial filings by Addis Ababa (49 percent) and Dire Dawa City Council members (26 percent).

The largest filler group were Government Employees. These account for 62-65 percent of the actual or potential filers, respectively. This group includes officials of Federal Agencies, staff of government development agencies as well as officials of institutions of higher education. About three quarter of these officials have disclosed and registered their assets. It is interesting to note that of the potential 2377 officials of universities, only 1736 (or 65 percent) completed the form. Likewise, of the 297 members of the Judiciary (i.e. Federal First Instance Court, High Court, and Sharia Court Judges and their senior staff) 242 (or 81 percent) completed the registration. The latter number is not significant in terms of magnitude, but the fact that the data are not complete presents a challenge for administration of the law.

In as much as knowing the asset of those who have declared is important, it is also essential to know who the non-fillers are. If those with political power and allegedly considered the most corrupt in the popular view have not disclosed and registered their assets, the credibility of the exercise will be subject to serious question. According to the above table, almost 14,300 officials (22.2 percent of the potential) have not declared their assets. Of these, 82 percent are male primarily in the Government Employees category and to a lesser extent members of the Federal Police Force. The proportion of non-filling Government Appointees (President, Prime Minister and his Deputies), Ministers, Deputy Ministers) and members of the Defense Force is very low. Surprisingly, all 38 ministers and 51 Generals are said to have completed the form.

As alluded to above the Asset Registry is a good starting point to fight corruption. If the government is genuine about fighting corruption, it would need to make completing the disclosure and registration mandatory for any senior government assignment. Secondly, it would help if the information is made public. This serves two purposes. It will build the credibility of the exercise and dispel any popular doubts and suspicions. In addition, it will provide the opportunity for the public to build the data (and Registry). If there is a property known to the public that is owned by a particular minister (or his/her cousin), this information will be brought to the attention of the Commission for the Commission to investigate and take appropriate action to update the Registry. The third suggestion relates to the integrity and safe keeping of the registry. It is not uncommon for Government officials to tamper with or destroy documents at times of political change. It would therefore help to make several copies to avoid such a mishap.

Addis Ababa Building Permits: When a prospective individual or company wants to put up a building, each builder is required to obtain permit before the construction is started. The application form requires extensive information including details of the owner(s). Of course, when it is a company the name that appears on the permit is that of the company (Finding the owners (physical persons) require going to the relevant office that issues the license.). The number of permits issued, the type of buildings, and the intended end use is provided in the Statistical Abstract. The publicly available data are outdated (8 years old) but the raw data should be available at the source. While the data below relate to permits issued by the Addis Ababa City Council, similar data must be available for each major city in the country.

In 2005-06, 373 permits had been issued for ground plus 1 and above buildings. In 2006-07, the number of permits increased more than 10 fold. The following year the number of permits declined precipitously to 534. These data supplements the asset registry in the recovery effort. This record would help to determine the properties some senior official owns. Alternatively, one could walk along the major streets of Addis, take the list of buildings and then identify the owner(s) from the permit registry.

Building Permits in Addis Ababa by Type of Multi-Storey Buildings and Services*

#Floors Purpose 2007-8 2006-7 2005-6
Residential Commercial Mixed Office Others
1 49 5 16 1 8 79 1060 86
2 30 1 3 1 8 43 901 53
3 70 2 17 1 3 93 631 52
4 33 5 13 3 6 60 324 23
5 39 11 56 4 10 120 536 87
6 5 8 25 3 11 52 184 22
More than 6 5 5 50 7 20 87 311 50
Total 231 37 180 20 66 534 3947 373

Since 2006, these data do not include permits issued by Sub-City Administrations.

Source: Central Statistical Agency, Latest National Statistics (Abstract), No Date, http://www.csa.gov.et/index.php/component/content/article/14-survey-reports/123-latest-national-statistics-abstract

Auditor General Report: The Office of the Federal Auditor General provides annual reports to Parliament on the state of financial management at Federal ministries and agencies. The data presented below are from the Reports of 2006 EC (extracted from the text) and 2007 (Annex 6)6. The Auditor’s Report is a very interesting document on fleecing Ethiopia. According to these Reports there was expenditure of Birr 2.03 Billion and Birr 2.08 for 2006 EC and 2007, respectively, for which there was no invoices, receipts or any other supporting documents showing the purposes for which the funds were used7. In addition, agencies with authority to collect revenue on account of tax collection, sale of assets (including contraband), interest on late payments and various forms of fees had not transferred Birr 1.04 Billion and Birr 1.28 Billion in 2006 EC and 2007 EC, respectively, to the Treasury.

The Auditor Report’s data are provided by Ministries and agencies, but behind each of these organization there are the Chief Executive Officers whose task is to oversee the use of the resources entrusted to them. To that extent each one of them should be held accountable to these outstanding balances.

Based on data for these two years, it appears that delinquency in accounting for public funds is becoming systematic and repetitive. About Birr 3 billion is unaccounted for each of the two years. Unless legal action is taken on the culprits, it is likely to occur again this year.

It will also be instructive to cross reference the records on Asset Disclosure and Registration, the building permits and the Auditor’s Report and draw important knowledge about the situation. A review of each and every source is an expensive and time consuming endeavor, but taking a sample would produce critical indicators. For instance, if FEAC takes a random sample (say 10 percent) of the 30,000 Certificates that would give 3000 files (individuals) to investigate. Since the salary of the individual and the spouse are given (known), one can easily estimate the potential accumulated savings of both. The declared wealth (actual) of the 3000 individual could then be compared with their potential. In addition, the declared wealth in real estate could be compared to the permit from the City Council. It will also be possible to examine these individual’s assets against the Auditor’s Report if these people are implicated directly or indirectly.

However, the process would muster more credibly and demonstrate the governments seriousness about eradicating corruption if the exercise focused on senior civilian and military officials. This would focus the investigation on the 2934 Government Appointees and perhaps on 628 Electoral members (Asset Registry Table above).

Federal Office of the Auditor General

Expenditure for which No Document has been Found (Pending)

Million Birr; Ethiopian Calendar

Agency 2006 2007
Financial and Communication Agencies 444.6
          Internal Revenue and Customs 67.5
                        o/w Addis Ababa Airport Branch 67.2
          Ethiopian Broadcasting Corp. 28.3
          Government Procurement and Asset Disposal Services 666.4 342.2
           Others 34.9
Development and Social Services 205.9
           Ministry of Agriculture (Former) – MOA 64.4 52.3
           MOA – Agricultural Technical Training Project 174.4 75.9
           Ministry of Water, Irrigation and Energy (Former) 25.1
           Ethiopian Geological Survey 20.0
           Others 32.6
Capacity Building (mainly Universities) 1050.1
           Ministry of Education 433.5 315.1
           Universities\1 244.6 373.9
           Other Universities 361.1
Commerce and Administration Agencies 375.5
           Ministry of Defense 144.3 139.3
           National Election Board 172.2
           Ministry of Foreign Affairs 52.3
           Others (Federal Police – Birr 39.3) 297.6 11.7
    Grand Total 2025.2 2076.1

 

\1     Data for 2006 are extracted from the text and relates to three universities (namely Mizan/Tepi, Wolaita and Arba Minch); Data for 2007 relate to 17 Universities with each accounting for over Birr 10 million

Source: Federal Office of the Auditor General, Report Submitted to Members of Parliament on the Execution of Budget for 2007, Ginbot 2008 (May 2016), Annex 6;  http://www.ofag.gov.et/ofag/audit-report/

Potential for Wealth-Building and Historical Context: What is the maximum amount of wealth a government official could build since 1991? This is an important question to ask up-front since it is the only potentially available standard or yardstick by which a senior government official could be judged if s/he has enriched herself/himself unfairly and illegally. If the wealth of such a senior official far exceeds this threshold, there is reason to think that the person has enriched herself/himself through unexplainable means.

In 1991, when the EPRDF government took power, it came across equally dispossessed city dwellers and rural people with more or less equal land sizes. Urban dwellers owned nothing but their homes, their old vehicles and a few household gadgets. Becoming a Government official did not grant much, if at all any, privileges. Being an official was rather a burden that involved long hours of work. The EPRDF government inherited almost a clean slate upon its accession to power.

On the other side, the EPRDF soldiers, the current officials, came with practically nothing. There is also no legitimate way to become a millionaire from government salary. If we assume a couple (a husband and wife) earned about Birr 20,000/month combined since 1991,8 allowing for household consumption, taxes and any interest that their annual savings may have accrued, the total accumulated savings would reach a maximum of about Birr 1 million9. The question then is how these many government officials became millionaires and owners of big buildings in Addis Ababa and other major cities.

The New World Wealth, a research and consulting firm based in South Africa, estimated the number of US-Dollar millionaires in Ethiopia in 2013 at 2,700. It also reported that the number of US-dollar millionaires rose by 130% between 2007 and 2015 – faster than in any other country on the African continent. It predicted that the number will rise to 4,700 by 2020 allegedly due to the country’s rapid pace of economic growth10.

Existing Instruments and Opportunities for Asset Recovery:  Given that corruption is the central point of discussion among Ethiopians both at home and abroad (also the Government and the Opposition parties), it is necessary to think about ways of recovering the missing/lost assets. In the mid-1970s, the problem was tacked by expropriation of private property regardless of how it was acquired. Then, the international political and economic environment made such an approach not particularly extra-ordinary. Now that option may be difficult as Ethiopia has learnt its bitter lessons of the impact of public ownership of assets and disappointing results of many of the public productive endeavors.

There are three phases in the recovery process; tracking, freezing, and recovering the assets. Considering an ideal political and legal environment, it is necessary to identify the assets illegally transferred from the public to private hands, who (individuals) the new owners of these assets are, and to determine how the asset ended up in their hands.

Existing international (UN, AU, EU and Western donor countries) and Ethiopian laws provide opportunities to regain lost/missing assets through legal means11. The Criminal Code of Ethiopia, Proclamation No. 414/2004, for instance, says the following12.

1. Any public servant, being or having been in a public office, who (a) maintains a standard of living above that which is commensurate with the official income from his present or past employment or other means or (b) is in control of pecuniary resources or property disproportionate to the official income from his present or past employment or other means shall, unless he gives a satisfactory explanation to the court as to how he was able to maintain such a standard of living or how such pecuniary resources or property came under his control, be punished, without prejudice to the confiscation of the property or the restitution to the third party, with simple imprisonment or fi ne or, in serious cases, with rigorous imprisonment not exceeding five years and a fi ne.

2. Where the court, during proceeding under Sub Article l(b), is satisfied that there is reason to believe that any person, owing to his closeness to the accused or other circumstances, was holding pecuniary resources or property in trust for or otherwise on behalf of the accused, such resources or property shall, in the absence of evidence to the contrary, be presumed to have been under the control of the accused.

It is however naïve that this can be possible under the current political environment. Many successful sovereign asset recoveries became possible after political changes. For instance, the Nigerian Government recovered Billions of Dollar after President Buhari took over power13. These recoveries have been both from within Nigeria itself and from abroad. The Ethiopian Government itself has the necessary tools to pursue the perpetrators if it is genuine concerned about eradicating the problem. Many successful anti-corruption programs succeeded when the Government went for the big fish first.

Conclusion and Suggestions: This essay is intended to start discussion on tracking (tracing), freezing and potential recovery of the assets. The good thing is that the international (and also the Ethiopian) legal environment is conducive for the purpose. Under the circumstances, what could Ethiopians in Diaspora do in the process of asset recovery?

The first and foremost task would be to set up an independent and informal discussion forum to elicit ideas on the issue that would lead towards the setting-up of a multi-disciplinary non-profit organization (NGO) that would become a focal point for eventual legal action or moral suasion. It is suggested that the forum become independent of the political parties in order to be able to mobilize resources, partnership, and stay objective14.

Secondly, it could serve as a repository of information and create opportunities for whistle-blowers to document suspicious wealth among Ethiopians in Diaspora who are supposed to be connected with the ruling party in Ethiopia.

Thirdly, the forum (or eventually an NGO) put pressure on the Government to take legal action against those people who have enriched themselves through contacts with officials in Ethiopia or serve as front men for them abroad.

Fourth, the NGO would liaise with similar global non-profit NGOs to cooperating on freezing assets that have already been traced (tracked)15.

References and Notes

1 Asayehgn provides a brief review of the literature on corruption in general and as it relates to Ethiopia. He also provides macro-level recommendation to establish a multi-party democratic system and to enshrine democratic autonomy at the local level. Asayehgn Desta, Curbing Corruption in Ethiopia: Applying Democratic Autonomy at the Local Level, Ethiomedia, November 21, 2016

2Ermias Legesse, Ye Melese Liqaqit, Nov 7, 2016. Watch the following ESAT Special Discussion video at https://www.youtube.com/watch?v=78CfvnVG-T4

3Dev Kar and Joseph Spanjers,  Illicit Financial Flows from Developing Countries: 2004-2013, Global Financial Integrity, December 2015; http://www.gfintegrity.org/wp-content/uploads/2015/12/IFF-Update_2015-Final.pdf

4 http://www.feac.gov.et/index.php/commissioners-corner-en. The number provided is however contradictory. On the same web-site, The Assets Disclosure and Registration Directorate provides a number of “nearly 30,000”. HTTP://WWW.FEAC.GOV.ET/INDEX.PHP/ORGANIZATIONAL-FUNCTIONS-EN/ASSET-DICLOSURE-AND-REGISTRATION-EN. Still a third source originating from the Commission provides a figure of 50,201. A report in Amharic entitled Federal Ethics and Anti-Corruption Commission, Report on Asset Declaration and Disclosure, 2003-2004 (Eth Calendar).  One possible source for these difference is conceptual; i.e. one may be measuring the cumulative number while others measure the annual increment in registration.

5 In a letter addressed to Ethiomedia, Abay discusses about corruption within the Commission which are not related to the integrity of the practice and the product. Abay Alemu, (October 1, 2003), Corrupt practices of the anti-corruption commission, http://www.ethiomedia.com/press/anti_corruption_commission.html

6Annex 6 was part of the Report when it was originally presented to Parliament in May 2016 and was available on the Office’s web page. The Annex has been dropped in the current version.

7 The Author’s email request for further explanation of the data on whether they show flows (new excess expenditures) or stocks (accumulated balances) and on measures that are being taken to recoup the balance has not been heeded.

8 Wage Indicator 2016 – MyWage.org/Ethiopia – Ministry of Transport and Communication

9According to the household consumption expenditure of 2010-11 the family size at the highest expenditure quintile is 4.7 people and the family expenditure amounts to Birr46,095/month. The relevant income tax is 35 Percent. Assumed 6 percent interest.

10Jacey Fortin, Ethiopia: The Addis millionaire’s club, The Africa Report, 9 March 2015, http://www.theafricareport.com/East-Horn-Africa/ethiopia-the-addis-millionaires-club.html

11United Nations Office of Drugs and Crime, General Assembly resolution 58/4 of 31 October 2003, United Nations Convention against Corruption, Vienna; https://www.unodc.org/unodc/en/treaties/CAC/ ; and Africa Union, African Union Convention on Preventing and Combating Corruption, Adopted by the 2nd Ordinary Sessionof the Assembly of the Union, Maputo, 11 July 2003;

https://au.int/en/sites/default/files/treaties/7786-file-african_union_convention_preventing_combating_corruption.pdf

12As quoted in Lindy Muzila, Michelle Morales, Marianne Mathias, Tammar Berger, On the Take: Criminalizing Illicit Enrichment to Fight Corruption, Appendix A. Illicit Enrichment

Provisions, Stolen Asset Recovery Initiative,  The World Bank and UNODC, 2012

13 Samuel Agundipe, Nigeria publishes details of recovered assets, withholds names of looters, Premium Times, June 4, 2016; http://www.premiumtimesng.com/news/headlines/204676-nigeria-publishes-details-of-recovered-assets-withholds-names-of-looters.html

14 A discussion on ESAT insinuates the need for such a body http://ethsat.com/2016/12/esat-bezhisamint-december-25-2016-dr-semahegne-gashu-ermias-legesse/

15For instance, the Indian authorities seized 3 kg of gold at IGI Airport. The existence of such an organization could follow-up on the matter and hopeful get it frozen by the Indian Authorities.

*asefa.belachew@gmail.com