Fabricated Claims Lands Addis Prefab In Hot Water

The serious fraud charge filed against some of the founders of the Addis Prefab Houses Manufacturing Industry S.C. has been adjourned until Tuesday, January 21, 2014. This decision came following the prosecutor’s request for further investigation time, Fortune reported.

The case of the founders – who were accused of enlisting hundreds of buyers by making false claims of having already leased the land – was first brought to court in December 2013.

Addis Prefab was established in February 2009, with an initial capital of 42.9 million Br, by six co-founders: Gezahagn Yaineshet, Yoseph Asegedom, Fikramaiam Alemu, Tigist Atenafu, Semayawit Geber Michael and Tesfaye Wobeshet. It had 861 people registered as shareholders by the end of 2013.

Only three, Yoseph, Fikremariam and his pregnant wife Tigist, were present in court. Tigist alone was released on bail because of her pregnancy. Later on, the federal prosecutor separated the cases of Fikremariam, CEO, and Yoseph, one of the board directors, and took it to the federal High Court, which, on Wednesday January 15, allowed more time for investigation.

The two were charged with 37 counts.

The two founders were charged with falsely telling potential home buyers that they had purchased land on a lease for real-estate from the government in the Bole Bulbula, Summit Condominium and Bole Beshale areas – all in Bole District – in the name of Addis Prefab, the Company.

The two were also charged with erecting posters and boards on plots of land which they had not received, promoting themselves as a real-estate company and promisingto build different kinds of houses for delivery within a short period of time.

Another charge brought against them was collecting money from the plaintiffs through the Company’s account. The prosecutor also claimed that the founders had started collecting money starting in 2011, although Addis Prefab was only established in November 2012. The Company has not received any land in Bole District, the prosecutor also argued.

The prosecutor has already submitted a list of 37 eyewitnesses, along with other written testimonials, such as – receipts ascertaining that the plaintiffs made payments to the Company, the contractual agreements between the Company and plaintiffs and confirmation paper from the Bole District Land Administration Department, as well as other written documents from the Ministry of Trade (MoT).

During the hearing, Yoseph’s attorney complained to the court that journalists should be banned from attending the session as the case is still under investigation and the defendants have not yet been convicted.

His pleas were not, however, heard by the presiding judge.

“We do not have any legal authority to ban journalists from attending the court session,” the judge responded. “Journalists have a legal right to attend court proceedings and report the truth to the public.”

Fikremariam’s attorney complained in court that neither he nor the defendant have received copies of the evidence filed to the court by the prosecutor and that the charges are not fully presented.

“The charge does not limit the defendant’s right to be released on bail,” the attorney claimed.

The counterargument from the prosecutor was that the defendants, each of whom hold high positions in the Company, could influence and lead witnesses astray if released on bail. Therefore, he requested to the Court for their rights of bail to not be respected.

But the request from Yoseph’s attorney provoked anger and protest from homebuyers He cited a letter explaining that negotiation is underway with Zekarias to give more weight to his argument that bail right be respected.

Shareholders, gathered in the courtroom, protested angrily, saying that Zekariyas does not represent them, as he is the attorney of only one of the plaintiffs.

The court then adjourned the case until January 21, 2014, arguing that even if the charges do not limit the defendants right to be released on bail, it doubts that the defendants can fulfill the responsibilities of bail fully.

The Company had promised to 452 homebuyers houses it called Light Gauge Steel Structure by March 9, 2014. Light Gauge Steel are made from thin sheets of galvanized steel, which can be formed into steel studs for structures used in residential and commercial buildings.

Out of a total of 452 houses 275 were to be erected in theSummitarea, 13Km from Addis Abeba, in the southeast part of the city.

The remaining houses were to be built in the Bole Bulbula area, according to its annual report for the year 2013, released during its general assembly meeting on March 9, 2013, at the Global Hotel, in the Lancha area, onSerra Leone Street.

However, the Company has changed these two areas into Bole Beshale, because of the joint venture agreement that the company signed with Milki Burayu S.C, through which it received 5,000 sqm of land.

The Company’s manufacturing plant for light gauge steel and calcium silicate board is located in Sendafa town in theOromiaRegionalState- located 37 km north of Addis Abeba.

The factory is situated on 50,000sqm of land from the Oromia Region on an 80-year lease contract. In addition to that, it has a fixed asset cost of 123,561,750Br.

Real estate, manufacturing, construction and trading business are the four business units operated by the Company.

Source: Fortune