VZCZCXRO3866
RR RUEHROV
DE RUEHDS #1691/01 1720659
ZNR UUUUU ZZH
R 200659Z JUN 08
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 1027
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 04 ADDIS ABABA 001691 
 
SIPDIS 
DEPT FOR EB/IFD/OIA HGoether and KButler, L/CID GSwiney and 
CHolland, and AF/E 
 
E.O. 12958: N/A 
TAGS: EINV ETRD ECON ET
 
SUBJECT: ETHIOPIA: 2008 REPORT ON INVESTMENT DISPUTES AND 
EXPROPRIATION CLAIMS 
 
Ref: State 43784 
 
¶1. The United States Government is aware of four (4) claims by U.S. 
persons which may be outstanding against the Government of Ethiopia 
(GOE).  One claim included in the 2006 report has been resolved. 
There are two new reported claims. 
 
¶2. The U.S. Government is also aware of two other 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.  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 two cases of expropriation reported by U.S. 
citizens under the current government. 
 
¶3. Other cases occurred following the Ethiopian-Eritrean border 
conflict in May 1998. 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.  No cases resulting from the 
Ethiopian-Eritrean border conflict were reported to the Embassy 
during 2005-2008. 
 
¶4.  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 remains outstanding. 
 
At Claimant A's request, the U.S. Embassy has 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. 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. 
 
Update: The Department is not aware of any attempts or requests for 
further assistance. 
 
¶5. 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 overdue. In addition, Claimant B has incurred significant 
additional expenses in attempting to resolve outstanding issues and 
obtain final payment. 
 
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 not contacted the Embassy nor requested 
additional U.S. Government assistance. 
 
Update: The Department is not aware of any attempts or requests for 
further assistance. 
 
¶6. 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 Claimant C. A draft management contract was 
initialed in March 2001 but the final contract was never signed due 
 
ADDIS ABAB 00001691  002 OF 004 
 
 
to delays within the GOE. On June 11, 2002, the Public Enterprise 
Supervising Agency 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 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 had previously attempted to recover the bid security 
(amount not available), but feels that progress is slow or 
impossible. The 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. 
 
Update: The Department is not aware of any attempts or requests for 
further assistance. 
 
¶7. 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 which 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. 
 
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 
compensation claim.  To date, and contrary to long-standing Embassy 
advice, Claimant D has not sought legal counsel. 
 
Update: The Claimant has not contacted the Embassy since 2005. The 
Embassy continues to monitor this case closely. The case is still 
pending.  The Embassy is not aware of any attempts or requests for 
further assistance. 
 
¶8.  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 Claimant E's father in 1962. The 
Restitution Department of the Ethiopian Privatization Agency (EPA), 
as required by Ethiopian law, valued investments made to the 
property during the period of expropriation. These investments were 
valued by EPA at USD 770,000. The Claimant was not satisfied with 
the valuation and objected to the requirement that he pay the 
Ethiopian government to receive his property back. Claimant E 
requested that the EPA use a different method of valuation. 
Claimant considered pursuing legal action in the United States. 
Embassy officials have, over the past three years, discussed the 
case several times with the Claimant, EPA, and other GOE officials. 
 
Despite the Derg government's ouster in 1991, the GOE continued to 
control the property until April 2007.  In December 2006, Claimant 
informed Embassy officials that he had agreed to pay the GOE 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 
 
ADDIS ABAB 00001691  003 OF 004 
 
 
current government, the hotel had been operated by the Ministry of 
Tourism and Culture.  According to the Claimant, the hotel was 
renovated in 1986 and again in 1997, when it was 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 posession of 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 seven years of 
negotiations with the government), and was now operating it by 
himself.  In this way, the case has now been resolved. 
 
Update:  Claimant recently informed the Embassy that he is having 
difficulties obtaining the title to the hotel from the city of Addis 
Ababa.  Claimant has retained legal counsel and is not asking for 
any additional assistance at this time, but wanted the Embassy to be 
aware. 
 
¶9.  a. Claimant F 
 
b. 2001 
 
c. Claimant F was not a U.S. citizen at the time the claim arose. 
Claimant F was a U.S. national when the claim was submitted. 
Claimant F, who became a U.S. citizen in 1998, 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 F 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 the claim arose.  In 2007, he 
sought assistance from Embassy officials. 
 
The GOE has asserted that Claimant's claim was covered by the 1985 
U.S.-Ethiopia claims agreement referred to above, and that therefore 
the 1985 claims agreement relieves the GOE of any obligations or 
liabilities related to the claim.  In contrast, the U.S. Department 
of Justice has indicated that the claim never fell within the scope 
of the 1985 claims agreement because Claimant was not a U.S. citizen 
at the time the claim arose.  Ethiopia's Ministry of Finance and 
Economic Development (MOFED) claims to have sent a letter to the 
Embassy's Commercial Attache more than ten years ago; however, the 
Embassy has no record of this letter and 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 MOFED's 
correspondence.  Repeated attempts to contact MOFED officials have 
failed to produce any additional results, as the few individuals 
tracking this issue in MOFED have either transferred or are on 
extended vacations. 
 
Claimant F has requested that the Embassy send MOFED a letter 
correcting MOFED's assertion about Claimant's eligibility under the 
1985 claims agreement and requesting that the Ministry work with the 
Claimant on a settlement.  In May 2007, Embassy officials attempted 
to contact Claimant F to obtain further information on his 
correspondence with MOFED and on any new developments 
 
Update: Claimant F re-contacted the Embassy in January 2008 noting 
that the government of his citizenship at the time of expropriation, 
and still his dual-citizenship (Greece), is pursuing the matter with 
the GoE.  As such, the claimant requested the Embassy to temporarily 
stand down in advocating for his case. 
 
¶10. a. Claimants G & H 
 
b. 2007 
 
c. Claimants G & H were U.S. citizens at the time of the 
expropriation of an 85 hectare farm inherited from the late father 
of Claimant G by the Bora Wereda administration of the Oromia 
Regional Government. This 85 hectare farm land had been managed by 
Claimant G (legal co-owner and representative of his three brothers 
residing in the United States who are entitled to the heir) and 
Claimant H who is co-investor. 
 
The Claimants had presented an investor certificate issued by the 
Federal Investment Agency and copies of income tax receipts paid up 
to December 2007. 
 
The Claimants estimate the property confiscated worth about USD 
16,000,000. The property comprises of 17 hectares of ready to 
harvest land planted with vegetables, fruits and food crops, 3.5 
 
ADDIS ABAB 00001691  004 OF 004 
 
 
hectares of seedling nursery, residential building, barn, 37 live 
cattle, generators, irrigation pumps, a pesticide sprayer, a variety 
of farm tools and supporting equipment.  There is no official or 
third-party valuation of the land in question. 
 
The Claimants allege that they were forced out of the farm land 
under duress and forcibly removed from the farm at gun point by 
Eastern Oromia Administration, Bora Wereda Officials and the local 
farmers association ledership. 
 
The Claimants have appealed at the Regional as well as higher, 
national authorities in order to find administrative solutions but 
to no avail so far. They have asked the Embassy to delay involvement 
until they exhaust every available venue.  Claimants G&H last 
contacted the Embassy in March 2008. 
 
 
¶11. a. Claimant I 
 
b. 2008 
 
c. Claimant I was an American Citizen at the time of the 
expropriation of his land and other properties. Claimant I returned 
to Ethiopia in 2005 to partake in commercial farming in the Amhara 
regional state. 
 
The property confiscated is a 400 hectare land and other farming 
implements (tractors, generator sets etc.) and recent harvest  years 
produce of sesame seeds. 
 
The Claimant reported to Embassy that the 400 hectares leased to him 
by the Amhara National Regional State Land Administration Bureau in 
August 2005 for 15 years. The land is in Gondar, at the Wereda of 
Quara which is along the international border with Sudan. 
 
The Claimant alleges that, one morning, government troops of the 
Sudan government, ransacked his residence, burned his house and 
whole farm, kidnapped his workers, and took away everything from his 
farm land with no compensation at all. 
 
He appealed for the assistance at the kebele, wereda and federal 
authority level but to no avail, receiving only a complete denial of 
the incident. 
 
Claimant I was afraid for the life of his workers and relatives 
allegedly kidnapped by Sudanese troops from his farm, and also for 
his wife and two siblings when he reported this incident. 
 
This Claimant has asked for Embassy's intervention in this matter 
only after he exhausts his efforts at the Federal level. 
 
Embassy has advised the Claimant to retain legal counsel to further 
follow up the matter.  A list of attorneys has been provided. 
 
 
¶12. List of Claimants: 
Claimant A: Ed Reidel, WBTL Associates 
Claimant B: Jim Fry, Earth Satellite Corporation 
Claimant C: Schaffer and Associates International, Finchaa 
Management Contract 
Claimant D: Berhane Gebremedin, National Alcohol and Liquor Factory 
 
Claimant E: Bisrat Seifu, Hotel d'Afrique 
Claimant F: Paul Constantinou 
Claimant G: Yared Eshetu H. Giorgis 
Claimant H: Hagos Girma 
Claimant I: Tilahun Tedla 
 
YAMAMOTO