VZCZCXRO4880
RR RUEHROV
DE RUEHDS #1339/01 1610542
ZNR UUUUU ZZH
R 100542Z JUN 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 5047
INFO RUCNIAD/IGAD COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 04 ADDIS ABABA 001339 
 
SIPDIS 
 
DEPARTMENT FOR EEB/IFD/OIA HEATHER GOETHERT, KIMBERLY BUTLER, AND 
PATRICK PEARSALL 
DEPT OF COMMERCE WASHDC FOR ITA MARIA RIVERO 
DEPT OF TREASURY WASHDC FOR REBECCA KLEIN 
 
E.O. 12958: N/A 
TAGS: EINV KIDE CASC OPIC PGOV ET
SUBJECT: ETHIOPIA: 2009 REPORT ON INVESTMENT DISPUTES AND 
EXPROPRIATION CLAIMS 
 
REF:  A. STATE 49477 
      ¶B. 2008 ADDIS ABABA 1691 
 
¶1. The United States Government is aware of seven (7) claims by U.S. 
persons which may be outstanding against the Government of Ethiopia 
(GOE).  There is one new reported claim. 
 
¶2. Included in these claims are three (3) disputes involving the 
confiscation of property by current U.S. citizens who were not U.S. 
citizens at the time of  expropriation.  These cases involve 
Claimants B, C, and D and stem from the confiscation of property 
during the Derg military regime, which reigned from 1974 to 1991. 
There have been two (2) recent cases of expropriation reported by 
U.S. citizens under the current government.  The remaining two (2) 
cases involve contractual investment disputes. 
 
¶3. The GOE confiscated many assets within Ethiopia during the 
Ethiopian-Eritrean border conflict of May 1998-June 2000.  During 
this time, the GOE deported tens of thousands of persons identified 
as Eritrean nationals, and in many cases confiscated their assets to 
pay for outstanding loans.  In 2000, Ethiopia and Eritrea agreed to 
the creation of the Ethiopia-Eritrea Claims Commission to address 
property claims arising out of the border conflict.  The Embassy and 
the Department of State provide information about the Claims 
Commission and other assistance to these Claimants, when 
appropriate.  Additionally, in May 2009, the GOE approved a 
directive calling for Eritrean citizens to reclaim any property 
seized during the Ethiopian-Eritrean conflict.  No cases resulting 
from the Ethiopian-Eritrean border conflict were reported to the 
Embassy during 2005-2009.  This conflict delayed Claimant B's case, 
as he was deported from Ethiopia during claim resolution 
discussions; however, his claim originated in 1977 and was not a 
direct result of this conflict. 
 
¶4. Note: The GOE's Privatization and Public Enterprises Supervising 
Authority (PPESA) was formerly known as the Ethiopian Privatization 
Agency (EPA) and the GOE's Agency for Government Housing (AGH) was 
formerly known as the Rented Houses Administration (RHA).  For the 
purposes of this report, PPESA and AGH will be used throughout to 
represent both itself and its predecessor agency.  End Note. 
 
¶5. a. Claimant A 
 
b. 1987 
 
c. Claimant A, a U.S. Citizen, entered into an agreement with the 
Ethiopian Development and Hotels Corporation (EDHC) for the design 
and construction of an extension to the Addis Ababa Hilton Hotel in 
¶1983.  Two associated firms were also involved in the agreement. 
Although construction was completed and premises were handed over in 
1986, due to disagreements over the contract, payment was not 
rendered to the construction firm until 1996.  Payment to Claimant A 
for design and professional services remains outstanding. 
 
At Claimant A's request, the U.S. Embassy contacted the GOE on 
numerous occasions to request resolution of this outstanding claim. 
The then-U.S. Ambassador raised this issue in March 2000 with 
Ethiopia's Tourism Commissioner, a former board member on EDHC.  The 
Commissioner reasserted his willingness to help but neglected to 
arrange a meeting between Claimant A's local representatives and 
EDHC officials.  For the past eight years, Claimant A has neither 
contacted the Embassy nor requested additional U.S. Government 
assistance. 
 
¶6. a. Claimant B 
 
b. 1977 
 
c. Claimant B was not a U.S. Citizen at the time of expropriation by 
the communist Derg government in 1977.  The property is a liquor and 
alcohol factory in Addis Ababa which supplies alcohol to other 
factories and retail distributors around Ethiopia.  This property 
has since been consolidated under one GOE entity with four 
additional properties around Addis Ababa, including three 
distilleries and one office.  The Privatization and Public 
Enterprises Supervising Authority (PPESA) determined that the 
property qualified for compensation or restitution under 
Proclamation No. 110/1995. 
 
In 1998, a valuation study was conducted and the Claimant was 
offered either compensation for his share of the entity or the 
option to buy out the GOE's share of the entire entity.  Following 
an interruption of the processing of the case due to the 
Ethiopian-Eritrean border conflict leading to the Eritrean 
Claimant's deportation from Ethiopia in 1999, a subsequent 
 
ADDIS ABAB 00001339  002 OF 004 
 
 
proclamation was passed (No. 193/2000), which precludes restitution 
of certain properties.  Based on this proclamation, the Board of 
Directors of PPESA determined that the Claimant was only eligible 
for compensation, not restitution.  PPESA notified the Claimant of 
the offer in 2002.  Claimant B has refused to accept the 
compensation claim, insisting that restitution should still be 
offered.  The compensation claim was valued by PPESA at 
approximately $370,000, but has since been reduced to approximately 
$106,000 based on an additional valuation.  In May 2009, the GOE 
approved a directive calling for Eritrean citizens to reclaim any 
property seized during the Ethiopian-Eritrean conflict.  Since then, 
PPESA passed the Claimant's case on to Ministry of Foreign Affairs 
to review the decision under the regulations of this new directive. 
 
Over the past several years, Embassy officers have raised the issue 
in meetings with the Prime Minister, the General Manager and Deputy 
General Manager of PPESA, the Vice President of the World Bank's 
Multilateral Investment Guarantee Agency (MIGA), and officials at 
the Ministry of Foreign Affairs.  Embassy officers have also 
discussed the case on a number of occasions with Claimant B.  PPESA 
has provided documentation to Embassy officers on the case, 
including official correspondence from PPESA to Claimant B.  This 
information states the compensation claim offered by PPESA as well 
as the principles on which the valuation was calculated.  Embassy 
officers have also met with MIGA, who confirmed that the valuation 
of the property was done in accordance with MIGA principles.  The 
Finance Minister stated in writing his willingness to discuss the 
valuation figure with the Claimant. 
 
Claimant B did not contact the Embassy from 2005 through early 2009. 
 Embassy officers have met with the Claimant on almost a weekly 
basis from March 2009 through May 2009.  The Ambassador met with the 
PPESA General Manager in April 2009 to request that they allow 
Claimant B to re-acquire his property.  Claimant B subsequently 
obtained legal counsel to assist him in his dealings with the GOE. 
Embassy officers currently have a request in with PPESA's General 
Manager for another meeting to discuss this matter. 
 
¶7. a. Claimant C 
 
b. 1975 
 
c. Claimant C was neither a U.S. Citizen nor the owner at the time 
of expropriation by the communist Derg government in July 1975.  The 
property is a building containing a hotel, cafe, and laundromat in 
Addis Ababa established by Claimant C's father.  In April 1991, 
PPESA indicated that the hotel's asset was valued at $1.8 million, 
out of which the GOE's share of the asset was worth $760,000.  The 
Claimant's assessment of the GOE's share was $99,000.  In 1999, 
Claimant C became the legal heir of the property following his 
father's death.  Claimant C disputed the amount to be paid to the 
GOE for several years, but finally paid it and took delivery of the 
property in April 2007. 
 
New problems emerged when Claimant C requested the title for the 
property.  Without the title, the claimant cannot secure financing 
for property renovations.  The GOE's Agency for Government Houses 
(AGH) claimed that it still held ownership rights to the cafe and 
laundromat.  Claimant C contested this claim, stating that the two 
businesses were part of the building's original blueprint and were 
never transferred to a third party.  PPESA offered to compensate 
Claimant C for the two businesses he allegedly re-acquired in 2007 
or suggested that Claimant C negotiate with AGH to pay them rent for 
these businesses.  Claimant retained legal counsel to assist with 
acquisition of the property title. 
 
Over the past several years, Embassy officers have discussed the 
case with the Claimant, PPESA, and other GOE officials.  In April 
2009, the Ambassador met with the PPESA General Manager to urge the 
GOE to issue Claimant C the property title as soon as possible. 
PPESA informed the Ambassador that the GOE was reviewing the matter 
and thought that a decision would be returned for Claimant C in the 
near future.  Embassy officers currently have a request in with 
PPESA's General Manager for another meeting to determine if there 
has been a decision in this matter. 
 
¶8. a. Claimant D 
 
b. 1976 
 
c. Claimant D was neither the owner nor a U.S. Citizen when the 
property was expropriated by the Derg government in 1976.  The 
property includes a machine shop and garage as well as a truck 
company that was originally owned by the Claimant's father, a Greek 
Citizen.  Claimant D, who became a dual U.S.-Greek Citizen in 1998, 
 
ADDIS ABAB 00001339  003 OF 004 
 
 
originally tried to resolve his claim through a MIGA-GOE agreement, 
whereby MIGA would help facilitate resolution of claims by foreign 
nationals.  Claims by citizens of the United States and Greece were 
not covered by this agreement since other bilateral agreements were 
in place. MIGA was not successful in this case, and the agreement 
has since expired.  Claimant D subsequently applied for assistance 
under a 1985 U.S.-Ethiopian claims agreement.  However, according to 
the U.S. Department of Justice he was ineligible, since he was not a 
U.S. Citizen at the time the claim arose or at the time of the 1985 
agreement.  In 2007, Claimant D sought assistance from Embassy 
officials. 
 
The GOE asserted that this claim should be covered by the 1985 
U.S.-Ethiopia claims agreement referred to above, and therefore, the 
agreement relieves the GOE of any obligations in this matter.  In 
late 2007, Claimant D requested Embassy support to urge the Ministry 
of Finance and Economic Development (MOFED) to correct its assertion 
about Claimant D's eligibility under the 1985 claims agreement and 
request that the Ministry work with the Claimant on a settlement. 
In January 2008, Claimant D informed the Embassy that the Greek 
Embassy was pursuing the matter with the GOE.  Claimant D requested 
the Embassy to stand down temporarily in advocating for his case 
since the Greek Embassy was taking the lead.  The Embassy has not 
had any contact with Claimant D since early 2008. 
 
¶9. a. Claimants E and F 
 
b. 2007 
 
c. Claimants E and F were U.S. Citizens at the time of the alleged 
confiscation of an 85-hectare farm inherited from the late father of 
Claimant G by the Bora Wereda administration (local government) of 
the Oromia Regional Government.  Claimant E (legal co-owner and 
representative of his three brothers residing in the United States 
who were entitled as heirs) managed this 85-hectare farm along with 
Claimant F who is a co-investor.  The Claimants presented an 
investor certificate issued by the Ethiopian Investment Agency and 
copies of income tax receipts paid through December 2007. 
 
The Claimants allege that they were forcibly removed from the farm 
at gunpoint by the Eastern Oromia Administration, Bora Wereda 
Officials, and the local farmer's association leadership.  The 
Claimants estimated the confiscated property to be worth about $16 
million.  The property is comprised of: 17 hectares of 
ready-to-harvest land planted with vegetables, fruits and food 
crops; 3.5 hectares of seedling nursery; a residential building; a 
barn; 37 live cattle; generators; irrigation pumps; a pesticide 
sprayer; and a variety of farm tools and supporting equipment. 
There is no official or third-party valuation of the land in 
question. 
 
The Claimants appealed to regional and national authorities in order 
to find administrative solutions to this matter, but have not had 
success to date.  They asked the Embassy to delay involvement until 
they exhaust every available avenue.  Claimants E and F last 
contacted the Embassy in March 2008. 
 
¶10. a. Claimant G 
 
b. 2008 
 
c. Claimant G was a U.S. Citizen at the time of the claimed 
expropriation of his land and other properties. Claimant G returned 
to Ethiopia in 2005 to partake in commercial farming in the Amhara 
regional state.  The property confiscated includes 400 hectares of 
land and farming equipment (tractors, generator sets, etc.) and 
recent harvest years' production of sesame seeds.  The Claimant 
reported to the Embassy that the 400 hectares were leased to him by 
the Amhara National Regional State Land Administration Bureau in 
August 2005 for 15 years.  The land is in Gonder, in the Wereda of 
Quara, which is along the international border with Sudan. 
 
The Claimant alleged that Sudanese government troops ransacked his 
residence, burned his house and farm, kidnapped his workers and 
relatives, and removed everything from his farm without 
compensation.  He appealed for assistance at the local and federal 
authority levels, but authorities simply denied the occurrence of 
the incident.  Claimant G feared for the life of his workers and 
relatives allegedly kidnapped by Sudanese troops from his farm as 
well as his wife and two siblings when he reported this incident. 
 
This Claimant asked for the Embassy's intervention in this matter 
only after he exhausts his efforts at the federal level.  The 
Embassy suggested that the Claimant retain legal counsel to 
follow-up on the matter and provided a list of attorneys.  The 
 
ADDIS ABAB 00001339  004 OF 004 
 
 
Embassy has not had contact with the Claimant since May 2008. 
 
¶11. a. Claimant H 
 
b. 2008 (new claim) 
 
c. The Addis Ababa Police Commission signed a contract with Claimant 
H, a U.S. Citizen, to supply 30 BMW police cruiser motorcycles. 
Claimant H delivered the motorcycles in October 2008 after a 
six-month delay.  The Addis Ababa Police Commission assessed an 
approximately $53,000 penalty to Claimant H for the delayed 
delivery.  The penalty came in the form of withholding Claimant H's 
performance bond deposit it paid upon award of this tender. 
Claimant H alleged that the product delivery delay was beyond its 
control and is seeking the return of its deposit based on the 
contractual terms that make exception for these instances.  Claimant 
H stated that it incurred a processing delay because it was unable 
to secure a bank letter of credit based on Ethiopia's severe 
shortage of foreign exchange.  This delay caused the products to 
miss the shipping departure date of the Ethiopian Shipping Lines' 
vessel traveling to Ethiopia.  The GOE requires all imports to be 
transported by Ethiopian Shipping Lines. 
 
Claimant H approached the Embassy seeking assistance to reclaim its 
bond deposit.  Embassy officers have met with and held discussions 
with several officials from the Addis Ababa Police Commission, the 
Federal Police, and the Mayor of Addis Ababa himself.  Embassy 
efforts have been unsuccessful to date and the last contact we had 
with Claimant H was in February 2009. 
 
¶12. List of Claimant's Names: 
 
Claimant A:  Ed Reidel, WBTL Associates, U.S. Citizen when the 
dispute arose 
Claimant B:  Berhane Gebremedhin, National Alcohol and Liquor 
Factory, not/not a U.S. Citizen when the expropriation claim 
occurred 
Claimant C:  Bisrat Seifu, Hotel d'Afrique, not/not a U.S. Citizen 
when the expropriation claim occurred 
Claimant D:  Paul Constantinou, not/not a U.S. Citizen when the 
expropriation claim occurred 
Claimant E:  Yared Eshetu H. Giorgis, U.S. Citizen when the 
expropriation claim occurred 
Claimant F:  Hagos Girma, U.S. Citizen when the expropriation claim 
occurred 
Claimant G:  Tilahun Tedla, U.S. Citizen when the expropriation 
claim occurred 
Claimant H:  Alemayehu (Alex) B. Ayalew, New York International 
Business, PLC, U.S. Citizen when the dispute arose 
 
Note:  Post is not aware of any signed Privacy Act Waivers involving 
the Claimants listed in this report. End Note. 
YAMAMOTO