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State-owned Commercial Bank of Ethiopia (CBE), in
its quest to recover costs from an unpaid 61 million
Br loan it gave to importer Mina Trading Plc, has
seized several houses, 212 trucks and an 11-storey
building. That is not enough, it says.
The Bank has convinced the Federal High Court’s 9th Civil
Bench to issue an injunction blocking Mina, a sister
company of Star Business Group, from transferring
ownership over an additional 22 trucks the Bank
claims that Mina owns.
CBE on November 12
filed a request with the court to prevent the
debtor, Mina, from transferring ownership of the
trucks by sale or gift to third parties. The court
ruled in favour of the CBE on November 19, issuing
an order to the Federal Transport Authority (FTA)
and the three branch offices of the Authority in
Ayertena, Asko and Megenagna to prevent any transfer
of the vehicles.
The Bank first filed an initial complaint on March
24, 2000, against Mina alleging that the company had
not serviced its original 40 million Br debt.
Although commercial banks have the right to seize
properties used as collateral for loans, there was
not enough collateral when CBE set out to recover
its loan. The Bank is now on a hunt to find other
properties owned by Mina, requiring the authority of
the Court to take possession of the assets.
When the CBE branch office at Anwar Mosque in
Mercato signed the 40 million Br additional
merchandise loan agreements with Mina, the only
property put up as collateral was a residential
belonging to Minwuylet Atnafu, a shareholder and
general manager of the company, with an assessed
value of 561,210 Br.
Mina was first established in the early 1990s by
Abebaw Desta, Minwuyelet and their spouses. The
company was restructured in 2003, registering a 20.5
million Br capital, shared equally between the two
businessmen. It is an industry leader in stationery,
timber, steel and sugar wholesale.
The company, however, came into trouble, along with
its sister companies, when Abebaw and Minwuylet were
arrested on charges of grand corruption. During
their five-year detention while fighting the
charges, their companies were placed under the
management of a caretaker team, the Receivership
Committee for Restrained Property, which was
appointed by the Federal High Court.
According to documents filed by CBE with the Court,
out of the 40 million Br initial loan, 2.9 million
Br was serviced by Mina in the first year before the
company’s owners were detained.
By the time the businessmen were released in 2006,
however, Mina and its sister company Tis Abay PLC
together owed 180 million Br in unpaid debt,
interest and penalties to CBE. The Bank moved to
foreclose their properties and refused to accept
various repayment plans forwarded by the debtors.
CBE started to auction the properties last month.
CBE has so far
foreclosed 212 trucks and six residential houses.
Five residential houses were auctioned two weeks
ago, recovering no more than 10 million Br, sources
at CBE told Fortune. CBE has brought the
latest charges to the Court on the grounds that
these collateralised assets are insufficient to pay
off the loan.
Of the 22 trucks now blocked from being transferred,
11 of them were bought with a different loan from
CBE that has been paid off by Mina, according to the
court documents. Though Mina has paid off the loans
used to buy the 11 trucks, CBE still has the titles.
A
letter undersigned by Minwuyelet and dispatched to
CBE’s Anwar Mosque Branch on October 18, stated that
the trucks have not been used as any kind of
collateral and that all of them are paid off. The
letter further warns the Bank to return the trucks’
titles should be handed over to Nile Insurance SC
immediately.
“If CBE does not hand over the titles to Nile
Insurance within the next five days it will be
liable for any damage occurring to the trucks,”
Menwielet’s letter says.
Additionally, CBE is currently trying to sell an
11-storey structure built at a cost of 31 million
Br, located off Ethio-China Friendship Avenue that
was used as partial collateral for a separate 60
million Br loan taken by Tis Abay.
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Gets Court Order to Freeze 22 Trucks