The TPLF had received huge amounts of international assistance,
particularly from the United States, throughout the 1980s........the fool
Siye
11.08.2013
VZCZCXRO3772
OO RUEHROV
DE RUEHDS #0677/01 0781204
ZNY CCCCC ZZH
O 191204Z MAR 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4162
INFO RUCNIAD/IGAD COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUZEFAA/HQ USAFRICOM STUTTGART GE PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORP PRIORITY
RUEPADJ/CJTF HOA PRIORITY
RUEKDIA/DIA WASHINGTON DC PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
RHEHAAA/NSC WASHDC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
C O N F I D E N T I A L SECTION 01 OF 03 ADDIS ABABA 000677
SIPDIS
E.O. 12958: DECL: 03/18/2019
TAGS: <
http://wikileaks.org/tag/ECON_0.html> ECON
<
http://wikileaks.org/tag/PGOV_0.html> PGOV
<
http://wikileaks.org/tag/EAID_0.html> EAID
<
http://wikileaks.org/tag/ET_0.html> ET
SUBJECT: PARTY-STATALS: HOW THE RULING PARTIES'
"ENDOWMENTS" OPERATE
ADDIS ABAB 00000677 001.2 OF 003
Classified By: Ambassador Donald Yamamoto for reasons 1.4 (B) and (D).
SUMMARY
-------
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par1> ¶1. (C) Upon
taking power in 1991, the ruling Tigrayan
People's Liberation Front (TPLF) liquidated non-military
assets held by the movement to found a series of companies
whose profits would be used as venture capital to
rehabilitate the war-torn Tigray region's economy. The
TPLF bestowed a portion of this initial roughly US $100
million to each of the three other component parties in the
ruling Ethiopian People's Revolutionary Democratic Front
(EPRDF) coalition to establish similar endeavors in each of
their home regions. While companies were initially
established in the names of party loyalists, they were
formally transferred to the Endowment Fund for the
Rehabilitation of Tigray (EFFORT) under the "endowment"
provisions within the Ethiopian civil code, which prevented
individuals from withdrawing money from enterprises for
their own gain. Although the Board of Directors of EFFORT
closely monitors the finances and business plans for each
company under its umbrella, EFFORT's books themselves are
not subject to any transparent external review. Throughout
the 1990s, EFFORT commissioned feasibility studies and
provided capital for various commercial ventures throughout
Tigray. In this decade, however, no new EFFORT ventures
have been established despite significant profits, lending
credibility to the popular perception that the ruling party
and its members are drawing on endowment resources to fund
their own interests or for personal gain. End Summary.
LIQUIDATED AID RESOURCES USED TO FOUND THE ENDOWMENTS
--------------------------------------------- --------
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par2> ¶2. (C)
Seeye Abraha (strictly protect), the Chief Executive
Officer of EFFORT from 1995 until his expulsion from the
TPLF in 2001, detailed EFFORT's founding and operations to
Pol/Econ Chief in a two-hour discussion on March 17. Seeye
noted that the TPLF had received huge amounts of
international assistance, particularly from the United
States, throughout the 1980s to support its struggle
against the Derg government and to provide relief to the
Tigrayan people. Whatever food or other in-kind support
that they could use or transport into Tigray, they would.
They sold the excess food and support items in Sudan for
cash. At the end of the struggle, the TPLF incorporated
whatever military materiel it held into the Ethiopian
military's inventory, kept all of its more than 100
transport lorries, and liquidated most of the remaining
stock held. Seeye estimated that in 1991 the TPLF had
roughly $100 million liquidated. Acknowledging that these
resources did not belong to individual TPLF members, the
party decided to use the funds as a perpetual relief
mechanism for the Tigrayan people who suffered the costs of
the struggle.
VENTURE CAPITAL TO REHABILITATE TIGRAY
--------------------------------------
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par3> ¶3. (C)
Initially, the party allocated a portion of the
funds available to assist families of those who died in the
struggle directly. The bulk, however, was used as venture
capital to establish companies to generate perpetual income
sources for new ventures. From 1991 to 1995, these
companies were coordinated under the Economic Affairs
Department of the TPLF under the leadership of Sebhat
Nega. Convinced that party insiders were more loyal to the
party than interested in personal gain, the initial
companies were established with individual party insiders
listed as the owners. Additional resources were used to
fund feasibility studies for other local-resource intensive
ventures of interest.
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par4> ¶4. (C) In
1995, the Defense Minister and long-time
confidant of Prime Minister Meles, Seeye Abraha assumed
control of the rehabilitation-intended entities.
Recognizing the potential liability of having massive
resources held in private names, Seeye and the TPLF
established EFFORT as a caretaker foundation for the
rehabilitation efforts. Seeye acknowledged that some
capital had been lost in the years prior to his assuming
control, but declined to give details. Having inherited
only a relatively primitive civil code, the party decided
that the "Endowment" provisions therein offered the best
means to secure the resources available for rehabilitation
without any loopholes to allow individuals to withdraw
capital for personal gain. The TPLF gave a portion of its
wealth to each of the other three parties in the EPRDF to
establish their own endowment funds. The Amhara National
Democratic Movement's (ANDM) endowment is called Tirit, the
Southern Ethiopian People's Democratic Movement (SEPDM)
founded Wendo Trading, and the Oromo People's Democratic
Organization (OPDO) established Dinsho. (Note: While Seeye
confirmed that the TPLF provided funds for these other
rehabilitation funds, which later became endowments, he
never had direct involvement in any of those
funds/endowments operations. End Note.)
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par5> ¶5. (C) Once
established under EFFORT, each company was
transformed into a shareholder company. Seeye argued that
the TPLF's intention in the mid-1990s was for EFFORT to
study, and then establish, profitable companies that used
locally-available resources and provided employment for
Tigray. Examples of firms established early include a
transportation company to use the trucks used in earlier
relief efforts, the Messebo Cement plant outside of Mekele,
a trading house, and Almeda Garments outside of Mekele
which would use cotton grown in Tigray as an input.
Feasibility studies were done for a marble factory, a gold
mine (in joint venture with Ghana's Ashanti Gold), and
construction firms. EFFORT intended to establish companies
under a Build-Operate-Transfer (BOT) model offering the
sale of established companies to citizens through the sale
of shares with the profits and proceeds going to fund new
commercial ventures. EFFORT was charged with reviewing
each company's finances and business plans. While EFFORT
was controlled by a CEO and Board of Directors drawn solely
from TPLF party loyalists, Seeye confirmed that each
company it controlled was managed and reviewed by
professionals with significant expertise in each company's
relative sector. Managers were expected to keep and
provide detailed financial accounting, but to transfer
profits not being re-invested to EFFORT. EFFORT accounts
were only internally reviewed by the party.
AN APPARENT SHIFT SINCE 2001
----------------------------
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par6> ¶6. (C)
During the rift within the TPLF in 2001, much of the
EFFORT Board of Directors sided with their CEO Seeye and
were expelled from the party. One who did not, Sebhat
Nega, was rewarded with the CEO position. (Note: As Seeye
has not been involved in EFFORT since 2001, and is now in
the political opposition, his perceptions of EFFORT
dynamics since 2001 may be skewed or intended to
influence. Still, his long-term, close relationships with
those who do remain in the party's top echelon and his --
and his family's -- attention to Tigray and continued
friendships with many still in office, do lend some
credibility to his analysis of EFFORT activities since
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par2001> ¶2001.
End Note). According to Seeye, upon Sebhat's
assumption of the CEO position, all EFFORT companies were
re-registered from shareholder companies to private limited
companies -- potentially reflecting a shift in the BOT
approach previously pursued. While we do not know how
profitable all of the EFFORT companies are, we can assume
that government protectionism and excess demand in major
sectors such as transportation, cement, and construction
has ensured that many of the larger EFFORT companies are
reaping large profits. At the same time, Seeye confirms
that none of the ventures for which feasibility studies or
analyses were conducted while he remained at EFFORT have
been established in the interceding years -- suggesting
that profits are not being rolled over into new Tigray
rehabilitation endeavors, but diverted elsewhere.
<
http://wikileaks.org/cable/2009/03/09ADDISABABA677.html#par7> ¶7. (C)
Seeye argued confidently that the business community's
perception that EFFORT's and similar EPRDF parties
endowments' companies receive preferential access to
limited credit and/or foreign exchange stocks, or treatment
on government bids and contracts, customs clearance, and
import/export license is certainly true. He went so far as
to argue that these "party-statals" likely receive
preferences even over the special treatment received by
state-owned enterprises. Seeye argued that, much like
Sebhat Nega's removal from the TPLF Central Committee in
2006, his removal as CEO of EFFORT in late 2008 likely
reflects tensions between Sebhat and Prime Minister Meles'
wife Azeb Mesfin. While former regional Vice President of
Tigray Abadi Zemo has taken over the CEO position at
EFFORT, Seeye argued that Azeb's ascendance to the EFFORT
Vice Chairmanship reflects an increasing consolidation of
influence within the party and control over resources by
Meles and Azeb.
YAMAMOTO
[A
Received on Sun Aug 11 2013 - 21:31:18 EDT