VZCZCXRO3147
PP RUEHROV
DE RUEHDS #1958/01 1731211
ZNR UUUUU ZZH
P 221211Z JUN 07
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC PRIORITY 6719
INFO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 05 ADDIS ABABA 001958 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EB/IFD/OIA: HEATHER GOETHERT 
DEPARTMENT FOR L/CID: SAM MCDONALD 
 
E.O. 12958: N/A 
TAGS: CASC EINV KIDE OPIC PGOV ET
 
SUBJECT: 2007 REPORT ON INVESTMENT DISPUTES AND EXPROPRIATION 
CLAIMS 
 
REF:  A.  STATE 55422 
 ¶B.  06 ADDIS ABABA 1592 (NOTAL) 
 ¶C.  05 ADDIS ABABA 2309 (NOTAL) 
 
¶1. (U) SUMMARY.  Post is aware of four (4) claims by U.S. persons 
which may be outstanding against the Government of Ethiopia.  One 
claim included in the 2006 report has been resolved.  There is one 
new reported claim.  (See update to case of Claimant E, and new 
claim by Claimant H).  Post is also aware of two disputes involving 
the confiscation of property that may involve outstanding claims 
against the GOE by current U.S. citizens who were not U.S. citizens 
at the time of the expropriations.  Per ref A, Post is also 
forwarding updates via email to EB/IFD/OIA.  END SUMMARY. 
 
¶2. (U) The U.S. Government is aware of four (4) claims by U.S. 
persons which may be outstanding against the Government of Ethiopia. 
 One claim included in the 2006 report has been resolved.  There is 
one new reported claim.  The U.S. Government is also aware of two 
disputes involving the confiscation of property that may involve 
outstanding claims against the Government of Ethiopia by current 
U.S. citizens who were not U.S. citizens at the time of the 
expropriations.  While the Act does not require a report on these 
claims, we have included the cases of Claimants D and E in this 
report.  These cases stem from the confiscation of property during 
the communist Derg regime which reigned from 1974 to 1991.  There 
have been no cases of expropriation reported by U.S. citizens under 
the current government. 
 
¶3. (U) Other cases occurred following the Ethiopian- Eritrean border 
conflict in May 1998.  The Government of Ethiopia 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.  No cases resulting 
from the Ethiopian-Eritrean border conflict were reported to the 
Embassy during 2005-2007. 
 
---------- 
CLAIMANT A 
---------- 
 
¶4. (U) Update on Pending Claim 
a) Claimant A 
b) 1987 
c) Claimant A 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 remain outstanding. 
 
¶5. (U) At Claimant A's request, the U.S. Embassy has contacted the 
Government of Ethiopia 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 of EDHC.  The Commissioner reasserted his willingness 
to help but neglected to arrange a meeting between Claimant A's 
local representatives and EDHC officials.  The dispute currently 
remains unresolved.  The Embassy continues to monitor this case and 
has raised it in meetings with government officials.  For the past 
six years, Claimant A has not contacted the Embassy nor requested 
additional U.S. Government assistance. 
 
¶6. (U) Update: We are not aware of any attempts or requests for 
further assistance. 
 
---------- 
CLAIMANT B 
---------- 
 
¶7. (U) Update on Pending Claim 
a) Claimant B 
b) 1998 
c) Claimant B entered into a contract with Ethiopia's 
Ministry of National Defense (MOND) in Addis Ababa, Ethiopia, to 
provide remote sensing and imagery processing services and 
equipment.  The contract was abruptly terminated and Claimant B was 
not paid for the completed portion of the contract.  Payment of 
approximately USD 230,000 is now almost four years overdue.  In 
addition, Claimant B has incurred significant additional expenses in 
 
ADDIS ABAB 00001958  002 OF 005 
 
 
attempting to resolve outstanding issues and obtain final payment. 
 
¶8. (U) The Embassy sent a diplomatic note in July 1999 to the 
Ministry of Foreign Affairs requesting it to transmit an attached 
letter to the Chief of Procurement at MOND and to help expedite a 
resolution to the dispute.  Following the issuance of the Embassy's 
diplomatic note, Claimant B has neither contacted the Embassy nor 
requested additional U.S. 
Government assistance. 
 
¶9. (U) Update: We are not aware of any attempts or requests for 
further assistance. 
 
---------- 
CLAIMANT C 
---------- 
 
¶10. (U) Update on Pending Claim 
a) Claimant C 
b) 2002 
c) Claimant C, a U.S.-registered company, bid on a competitive 
tender to manage a state-owned sugar plantation several hundred 
kilometers northwest of Addis Ababa.  After exhaustive reviews, the 
tender was awarded to the claimant.  A draft management contract was 
initialed in March 2001, but the final contract was never signed due 
to delays within the Ethiopian government.  On June 11, 2002, the 
Public Enterprise Supervising Authority of the Ministry of Trade and 
Industry finally notified the claimant that the tender had been 
canceled.  At the request of the claimant, Embassy officials have 
repeatedly brought the matter to the attention of the Minister of 
Trade and Industry and the Prime Minister, starting from July 2001 
when it became apparent that the government was delaying 
finalization of the contract.  Claimant is now attempting to recover 
the bid security (amount not available), but feels that progress is 
slow or impossible.  Last Claimant-initiated contact with Embassy 
was in October 2002 to update Embassy on attempts to resolve the 
case.  In June 2004, Claimant C privately advised the Embassy it 
does not intend to actively pursue the case. 
 
¶11. (U) Update: We are not aware of any attempts or requests for 
further assistance. 
 
---------- 
CLAIMANT D 
---------- 
 
¶12. (U) Update on Pending Claim 
a) Claimant D 
b) 1992 
c) Claimant D was not a U.S. citizen at the time of 
expropriation by the communist Derg government.  The property is a 
liquor and alcohol factory that supplies alcohol to other factories 
and retail distributors around Ethiopia.  The Ethiopian 
Privatization Agency (EPA), now the Privatization and Public 
Enterprises Supervising Authority, determined that the property 
qualified for compensation or restitution under 
Proclamation No. 110/1995.  A valuation study was subsequently 
Conducted, and the claimant was offered either compensation or 
restitution of the property.  Following an interruption of the 
processing of the case due to the Ethiopian-Eritrean border 
conflict, a subsequent proclamation was passed (No. 193/2000), which 
precludes restitution of certain properties.  Based on this 
proclamation, the Board of Management of EPA determined that the 
Claimant was only eligible for compensation.  EPA notified the 
claimant of the offer.  Claimant D has refused to accept the 
compensation claim, insisting that a) restitution should still be 
offered, and b) the claim does not accurately reflect the value of 
the property.  The compensation claim is valued by EPA at 
approximately USD 320,000. 
 
¶13. (U) Embassy officers have raised the issue in meetings with the 
Prime Minister, the General Manager and Deputy General Manager of 
EPA, 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 D.  EPA has provided documentation to 
Embassy officers on the case, including official correspondence from 
EPA to Claimant D.  This information states the compensation claim 
offered by EPA 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 has stated in writing his 
willingness to discuss the valuation figure with the Claimant. 
Claimant D indicated in May 2005 to Embassy officials that he may be 
willing to meet with the government to discuss the value of the 
 
ADDIS ABAB 00001958  003 OF 005 
 
 
compensation claim.  To date, and contrary to long-standing Embassy 
advice, Claimant D has not sought legal counsel.  The Claimant has 
not contacted the Embassy since 2005.  The Embassy continues to 
monitor this case closely.  The case is still pending. 
 
¶14. (U) Update: Our section is not aware of any attempts or requests 
for further assistance. 
 
---------- 
CLAIMANT E 
---------- 
 
¶15. (U) Update on Pending Claim 
a) Claimant E 
b) 1998 
c) Claimant E was not a U.S. citizen at the time of 
expropriation by the communist Derg government in July 1975.  The 
property is a hotel in Addis Ababa established by the claimant's 
father in 1962.  The Restitution Department of the Ethiopian 
Privatization Agency (EPA) has completed its valuation of property. 
As required by Ethiopian law, the EPA valued investments made to the 
property during the period of expropriation.  These investments were 
valued by EPA at USD 770,000.  The Claimant is not satisfied with 
the valuation and objects to the requirement that he pay the 
Ethiopian government to receive back his property.  Claimant E has 
requested that the EPA use a different method of valuation.  Embassy 
officials have, over the past three years, discussed the case 
several times with the Claimant and with EPA and other Ethiopian 
government officials. 
 
¶16. (U) Update: Despite the Derg's ouster in 1991, the current 
government of Ethiopia continued to control the property until April 
¶2007.  In December 2006, Claimant informed Embassy officials that he 
had agreed to pay the Government of Ethiopia the USD 770,000 that 
EPA had decided to charge him, in order to recover title to his 
hotel.  The EPA arrived at the USD 770,000 figure by claiming it had 
invested an equivalent sum in upgrading the hotel (e.g., purchasing 
new furniture); when under the control of the current government, 
the hotel had been operated by the Ministry of Culture and Tourism. 
According to the Claimant, the hotel was renovated in 1986 and again 
in 1997, when under the control of the former Communist Derg 
government and then the current government, respectively.  As a 
condition of recovering title, the Claimant is responsible for 
maintaining 120 hotel employees hired by the current government, a 
sharp increase from the 46 original employees working at the hotel 
when originally operated by the Claimant's father.  The Claimant has 
now recovered title to his hotel, and is seeking financing for 
further renovations.  The Claimant informed the Embassy in June 2007 
that he had taken custody of the hotel as of April 1, 2007 
(following 7 years of negotiations with the government), and was now 
operating it by himself.  The case has now been resolved. 
 
---------- 
CLAIMANT F 
---------- 
 
¶17. (U) Update on Pending Claim 
a) Claimant F 
b) 2003 
c) Claimant F purchased an animal feed processing plant, located in 
Addis Ababa, from the Ethiopian Privatization Agency (EPA) through a 
public auction.  Claimant F paid approximately USD 240,000 for the 
property.  Under the contract between EPA and Claimant F, all 
ownership documents were to be transferred to the Claimant. 
However, when Claimant F requested the title deed transfer from the 
Addis Ababa City Administration, he  was sent a bill for 
approximately USD 60,000, based on a valuation of the property 
conducted by the City Administration.  The Claimant and the Minister 
of Trade and Industry have written the City Administration 
requesting that the title be transferred in accordance with the 
contract signed with EPA.  The City Administration never formally 
responded.  At the Claimant's request, Embassy officials raised the 
case several times in 2005 with both EPA and the City 
Administration.  The City Administration advised Embassy officials 
in May 2005 that they were in discussions with the federal 
government and hoped to reach a settlement shortly.  In September 
2005, the Addis Ababa City Administration transferred the title to 
the Claimant in accordance with the contract.  The case is 
resolved. 
 
---------- 
CLAIMANT G 
---------- 
 
¶18. (U) Update on Pending Claim 
 
ADDIS ABAB 00001958  004 OF 005 
 
 
a) Claimant G 
b) 2004. 
c) Claimant G was threatened with legal action and potential closure 
of its operations by Ethiopia's Federal Inland Revenue Authority 
(FIRA) over alleged non-payment of tax arrears.  The property 
includes two bottling plants located in Addis Ababa and Dire Dawa. 
The Claimant appealed the tax assessment provided by FIRA by stating 
that certain production costs should not be subject to excise taxes 
under Ethiopian law.  FIRA informed Claimant G that the appeal 
period had expired, and that payment on all tax arrears was 
expected.  A payment scheme was offered by FIRA to Claimant G.  The 
Claimant was temporarily denied the right to renew its trade 
license. 
 
¶19. (U) Claimant G requested U.S. Embassy assistance in February 
¶2005.  Following a meeting between Embassy officials and the 
Claimant, the then-Ambassador wrote a letter dated to the Ministers 
of Revenue, Trade/ Industry and Finance/Economic Development.  In 
response, the government formed a committee to investigate the case 
and propose solutions.  In March 2005, Embassy officials were 
informed by the government that no legal action would be taken 
against the Claimant until a full investigation was conducted. 
Claimant G was subsequently granted a temporary renewal of its trade 
license and was allowed to continue operations.  The Claimant 
informed the Embassy in August 2005 that the Government of Ethiopia 
had agreed to waive all pre-2003 tax arrears.  A final agreement was 
subsequently negotiated.  The case is resolved. 
 
---------- 
CLAIMANT H 
---------- 
 
20 (U) New Claim 
a) Claimant H 
b) 2006 
c) Claimant H, who became a U.S. citizen in 1998, originally tried 
to resolve his claim through a MIGA-GOE agreement, whereby MIGA 
would facilitate resolution of claims by foreign nationals.  Claims 
by citizens of the United States and Italy 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. 
The claimant subsequently applied for assistance under a 1985 
U.S.-Ethiopian claims agreement.  However, he was ineligible, since 
he was not a U.S. citizen at the time of the expropriation.  In 
2007, he sought assistance from Embassy officials. 
 
¶21. (U) Contrary to correspondence from the U.S. Department of 
Justice, the GOE asserts Claimant H is eligible to pursue relief 
through the U.S. Claims Commission, and claims that the GOE 
therefore has no further obligations related to the case. 
Ethiopia's Ministry of Finance and Economic Development (MOFED) 
claims to have sent a letter regarding this claim to the Embassy's 
Commercial Attache more than 10 years ago; however, MOFED officials 
cannot identify the attache, nor can they produce copies of the 
letter.  In September 2006, Embassy officials requested that MOFED 
provide the Embassy with a copy of the letter mentioned in the 
Ministry's correspondence. Repeated attempts to contact MOFED 
officials have failed to produce any additional results, as the 
individuals tracking this issue have either transferred or are on 
extended vacations. 
 
¶22. (U) Claimant H has requested that the Embassy send MOFED a 
letter correcting MOFED's assertion about the 1985 claims commission 
and requesting that the ministry work with the claimant on a 
settlement.  In May 2007, Embassy officials attempted to contact 
Claimant H to obtain further information on his previous 
correspondence with MOFED and on any new developments.  However, the 
Embassy has not been able to contact Claimant H.  The Embassy will 
continue efforts to contact Claimant H and to monitor his claim. 
 
---------------- 
CLAIMANTS' NAMES 
---------------- 
 
¶23. (SBU) Per ref A, claimant information is provided separately 
below (only Claimant D has signed a Privacy Act Waiver): 
 
Claimant A: Ed Reidel, WBTL Associates; U.S. citizen. 
 
Claimant B: Jim Fry, Earth Satellite Corporation; U.S. citizen. 
 
Claimant C: Schaffer and Associates International, Finchaa 
Management Contract; U.S.-registered company. 
 
Claimant D: Mr. Berhane Gebremedin, National Alcohol and Liquor 
 
ADDIS ABAB 00001958  005 OF 005 
 
 
Factory; Ethiopian citizen at time of expropriation, but now a U.S. 
citizen.  Has signed Privacy Act Waiver limited to family members 
only. 
 
Claimant E: Mr. Bisrat Seuifu, Hotel d'Afrique; Ethiopian citizen at 
time of expropriation, but now a U.S. citizen. 
 
Claimant F: Mr. Fasil Tsegaye, Akaki Feed Plant; U.S. citizen at 
time of dispute.  Has registered with Embassy Consular Section but 
has not/not signed a Privacy Act Waiver. 
 
Claimant G: East Africa Bottling Company S.C. (franchise bottler of 
Coca Cola, but owned by South African nationals not U.S. citizens). 
 
Claimant H: Mr. Paul Constantinou; not a U.S. citizen at time of 
expropriation. 
 
YAMAMOTO