Ethiopia 2021

Ethiopia has seen a proliferation of corruption. In 2017 it was estimated in a Global Financial Integrity (GFI) report that between 2004 and 2014, up to 29 percent of Ethiopia’s total trade illicitly flowed out of the country.¹  In 2015, it was estimated that the failure to curtail illicit financial flows costs Ethiopia close to 6 percent of its GDP annually.² Furthermore, it was estimated that during 2000-2013, the average growth lost as a result of such capital flight was about 2.2 percentage points per year.³

While there is a commendable anti-corruption legislative and institutional framework in place, the implementation of these provisions is comparatively weak. Pervasive corruption remains to be one of the most serious challenges hampering the country’s development.⁴ The Transparency International 2020 Corruption Perception Index awarded 38 points to Ethiopia, ranking it 94^th out of 180 countries and Ethiopia ranks 101 out of 180 in the World Press Freedom Index.⁵

A 2015 World Bank enterprise survey revealed that 27% of surveyed firms in Ethiopia had experienced at least one bribe payment request, this rate is 5 percentage points higher than the sub-Saharan Africa average of 22%.⁶ Ethiopia’s business bribery risk score of 64/100 on the 2020 TRACE Bribery Risk Matrix is “high”, ranking it 163 out of the 194 surveyed countries.⁷

The proliferation of corrupt activities in Ethiopia has been condemned as an “existential threat,” and was declared a top priority by the Ethiopian Prime Minister, Abiy Ahmed at the outset of his premiership in 2018.⁸ Since then, there have been renewed efforts in the area of asset recovery domestically and internationally. However much more effort, and publicity surrounding corruption and asset recovery is needed.

Weak access to information laws have made the work of investigative journalists attempting to expose corruption almost impossible. Critical civic voices are greatly constricted in Ethiopia because they are at risk of surveillance, harassment, intimidation, imprisonment, and violence. Due to the armed conflict in the Tigray region of Ethiopia at the end of 2020, the tension between the government and media has grown and many laws that have been historically used against journalists have been reinforced.⁹ These intimidation tactics have resulted in a national media landscape that is dominated by a PR-driven journalism model, where investigative and critical reporting is discouraged.¹⁰

Ethiopia’s asset recovery process brings together a number of institutions, particularly the Federal Police Commission, the Office of the Federal Attorney General, the Financial Intelligence Center, and the Federal Ethics and Anti-Corruption Commission (FEACC). However, asset recovery is spearheaded by the Office of the Federal Attorney General. There are four additional directorates, the Cross-Border Crimes Directorate General, the Corruption Crimes Directorate General, the Economic Crimes Directorate, and the Asset Recovery Directorate General, that either directly or indirectly deal with asset recovery under the umbrella of the Corruption and Organized Crimes Department of the Attorney General’s Office.¹¹

These directorates conduct investigations on assets to be recovered, and to determine the modality of the administration of recovered assets.¹² In collaboration with the International Cooperation on Legal Affairs Directorate (within the Attorney General’s Office) information and evidence regarding illicit financial flows from the country is collected and is then used as a evidence in the work towards recovering such assets. The Directorate, in this regard, follows up on decisions passed by national and international courts in relation to assets to be recovered. The Directorate has a mandate to recover the proceeds of corruption both following a criminal conviction (conviction-based forfeiture) and without the need for a criminal conviction (non-conviction-based forfeiture).¹³

Ethiopia has made efforts to reform its procurement law since 2009, when it revised the existing procurement legislation, intending to achieve more transparency, efficiency, fairness, and impartiality in the procurement process.¹⁴ However, not much can be said to have improved in practice. Non-competitive procurement in the energy, construction, telecommunications, pharmaceuticals, land, and mining sectors is a major risk when it comes to grand corruption in Ethiopia.

Asset recovery reform

After Prime Minister Abiy Ahmed came to power, the country witnessed an unprecedented crackdown against grand corruption, resulting in the arrests of hundreds of public officials. While his efforts to step up anti-corruption action have been widely applauded, the arrests were also seen as selective and politically motivated, disproportionately targeting the members of the opposition Tigray People Liberation Front party (TPLF).¹⁵

When it comes to recovery of the proceeds of corruption, there appears to be a renewed effort and an increase in terms of the size of assets returned to government coffers.¹⁶ Asset recovery efforts have increased since investigative and prosecution powers were transferred to the Federal Attorney General. These however have to be taken with the caveat of political motivation in mind.

Domestic recovery

In 2020, over 30 buildings, worth millions of dollars, previously owned by members of the leadership of the Tigray People Liberation Front (TPLF), were transferred away from them by the Federal First Instance Court.¹⁷ In addition, bank accounts of 34 TPLF companies have been frozen due to evidence indicating their alleged involvement in various criminal activities including tax evasion and corruption.¹⁸

International Recovery

On May 15, 2018 Prime Minster Abiy Ahmed announced that his  government was conducting investigations into assets that were stolen and deposited in foreign banks, although details of the investigation have not been made public.¹⁹

In connection with allegations of embezzlement involving hundreds of millions of US dollars, Ethiopia’s government arrested and charged over 40 officials within the army-owned Metal Engineering Technology Corporation (MeTEC) in September of 2018.²⁰ Allegations filed against the CEO of MeTEC, Kinfe Dagnew, relate to 30 international procurement deals concluded without competitive tenders between 2010 and 2018 and amounting to a total of USD 1 billion. Moreover, the Deputy CEO, Tena Kurunde, is alleged of conspiring with employees of MeTEC to conduct international procurement worth around USD 2 billion without legal procurement procedures.²¹ These court cases are ongoing and information is not available about whether the relevant bodies have acted towards recovering any assets.

In the same period, the government also arrested another 59 officials and businessmen suspected of grand corruption from the following government institutions: the Public Procurement & Property Disposal Service, the Food & Drug Administration Agency, the Pharmaceuticals Fund & Supply Agency, and the Ethiopian Water Works Construction Enterprise.²²

Ethiopia has ratified the IGAD Convention on Mutual Legal Assistance (MLA)  in Criminal Matters which includes cooperation on asset recovery, freezing and confiscation of the proceeds of crimes, including corruption.²³ The coming into force of this Convention created a framework for international cooperation between Ethiopia and the neighbouring eight IGAD member states.

Apart from the convention, Ethiopia has three bilateral treaties on international cooperation with Sudan (covering mutual legal assistance and judicial cooperation in civil and criminal matters), Djibouti and Yemen (covering extradition).²⁴ Ethiopia has undertaken to negotiate further treaties on international cooperation (on extradition, MLA, and the transfer of sentenced persons) with Botswana, South Africa, the United Arab Emirates, India and China.²⁵ Apart from such agreements, Ethiopia recognizes the principle of reciprocity as a basis for international criminal cooperation.²⁶

Regionally, Ethiopia is a member to the East African Association of Anti-Corruption Authorities (EAAACA) and the Eastern Southern Africa Anti-Money Laundering Group (ESAAMLG), a regional body implementing the FATF Recommendations.  According to the ESAAMLG follow-up report published in 2021, Ethiopia was found to be compliant on 9 recommendations, largely Compliant on 24 recommendations, and partially compliant on 4 of the FATF 40 recommendations.²⁷  According to the ESAAMLG follow-up report published in 2021, Ethiopia was found to be compliant on 9 recommendations, largely Compliant on 24 recommendations, and partially compliant on 4 of the FATF 40 recommendations.²⁸

The country is a member to Asset Recovery Inter-Agency Network for Eastern Africa (ARIN-EA), a regional platform to pursue asset recovery. The Federal Ethics and and Anti-Corruption Commission has established a focal point for asset recovery matters involving ARIN-EA and the StAR / INTERPOL Asset Recovery Focal Points network.²⁹

Only one specialised anti-corruption civil society organisation (CSO) exists in Ethiopia and very little information about asset recovery in the country is made available to the public. Although he began his tenure on a strong note on empowering CSOs, Prime Minister Aiby has allowed the governemnt to impose internet shutdowns and commnication blackouts in response to the growing tensions in Tigray.

Despite the improving prosecution and conviction rates for corruption-related crimes, asset recovery is lagging behind. In the past couple of decades alone, courts have sentenced senior government officials for their involvement in corruption worth billions, even though most of these may have been politically motivated charges. While the lack of information makes it difficult to establish the amount of assets being recovered in Ethiopia, the known cases suggest the amounts recovered are small.