The Federal High Court of Lideta Civil Bench gives final verdict on high profile business individuals on the Cosmo Trading PLC case, with a ruling in favor of the defendants.
Owners of Cosmo Trading have also filed a compensation case of over 25 million birr in expense incurred in connection to the legal proceedings.
A little over three years ago, the first and second plaintiffs, JJ property Management PLC and Azeb Mihretab, a major shareholder and general manager of JJ property, filed a case to the high court against the major shareholder of Cosmo Trading and first defendant, Haileyesus Mengistu, for the settle of a case in which the first defendant agreed to transfer 19.9 million birr worth of shares at the company to the second plaintiff but failed to proceed as per the agreement.
In his defense, the first defendant claimed that he was forced to sign the agreement without his will. He argued that he was detained and threatened for his life when he signed the agreement as he received 50 million birr from parties associate with the plaintiffs through collateral of a seven story building that is located around Wolo Sefer, Bole and registered under Cosmo.
On its judgment, the 5th Civil Bench of the court that examined the case stated that the share selling contract agreement was conducted without full willingness of either party and was thus ruled as an invalidated contract agreement and in regards to registration as per related commercial code and other related laws and proclamations, the court also cited that it doesn’t have legal grounds regarding formality or registration or non examination, since the contract agreement was void.
During the lawsuit process, the 1st defendant was found to have better proved that the share transfer contract agreement which he signed on August 5, 2018 regarding the company, namely, Cosmo Trading, was forcefully done through threatening of him and his families’ lives by the evidences of human witnesses and documental evidences.
On the flipside, the evidences presented by the plaintiffs were unable to conclusively prove that the defendant signed these contract agreements without threats, forcefulness or his free will.
In general, it was proved that the share selling contract agreement was done by threatening and forceful means, which led the court to decide that the contract agreement entered between the plaintiff and 1st defendant to sell the shares of Cosmo Trading plc as revoked pursuant to the provision of civil code no. 1678/A/, 1706 and revised family law article 218, 306 and the provisions of Federal Supreme Court cassation file no. 46490, 54827, 103151.
“The litigation of the plaintiffs’ claiming that the defendant must transfer the title deed of shares based on the obligation he signed, is thus not acceptable,” the verdict read.
Following the final verdict given by the 5th Bench, the defendant likewise filed a claim for the plaintiffs to compensate the expense he lost in related with the court process. The 1st defendant argued that the expense was well over 25 million birr. He claimed that they had to commit to settle five percent of the property, which is estimated at over 500 million birr, for their lawyers and other court expenses.
The case which is still under fire, owing the other criminal charge tags from the office of the Attorney General of the Ministry of Justice, is expected to appear in court in the first week of June.
The Attorney General filed massive criminal charges on ten individuals and companies in relation to involvement with eight criminal acts including money laundering, financing of terrorism, illegally confiscating others property and illegal money transfer.
The charge was filed at the Federal High Court- Lideta Criminal Bench and indicated that seven individuals and three companies, have been sued on allegation of criminal acts that they did from 2016.
The individuals that were sued are Azeb Miretab, Efrem Mulatu, Temesgen Yilma, Adefres Habte, Daniel Tibebu and Mesfin Asmamaw. The companies included on the charge file are; JJ Properties Management PLC, TTH Trading PLC and Boston Real-estate.
The file indicated that the individuals were involved in an illegal act that entailed forceful confiscation of a seven floor hotel property owned by Cosmo Trading PLC, located at Wolo Sefer, Bole and was confiscated as collateral for the compensation of a loan.
The charges stated as follows: Efrem (Defendant 3) had swayed Haileyesus Mengistu, major shareholder of Cosmo, to take a loan from Azeb (Defendant 2) when he was faced with a liquidity crunch.
Azeb and Efrem (Defendant 2 and 3) were witness signatories to the traditional agreement. In addition, the collateral for the loan was the seven-storey building which has an estimated worth of 250 million birr, the charge stated.
According to the charge, whilst the two parties had agreed on a 50 million birr loan, only 3.2 million birr was transferred from Azeb’s United Bank account to Cosmo Trading PLC of the same bank.
The charge further states, that the defendants accused Cosmo Trading PLC for not paying the 50 million birr (of which they only gave 3.2 million) and as a result forcefully secured the property that the company placed as collateral. JJ Property Management PLC bought the company for 60 million birr, despite the company not having any legal registration.
Following this acquisition, Azeb and Temesgen (Defendant 2 and 4) got the right to administer Cosmo Trading PLC. Using this privilege, they received a 61 million birr long term loan from Awash Bank using Cosmo’s 7 storey building as collateral.
From the 61 million birr approved by Awash bank, 21 million birr went into paying the loan that the company had at United Bank (Friday, the 22nd of March, 2019). The remainder, 40 million birr, was wired to Cosmo’s account the following Monday. (25th March, 2019).
The charge indicated that on the same day Cosmo received the 40 million, from the amount, 32.5 million was wired to JJ Property Management’s account, of which Azeb is a major shareholder and general manager whilst Temesgen has the power of attorney.
According to the charge from the stated date of the first money transfer, several similar money transfers had been done to different accounts of individuals and companies from the remainder of the 40 million birr.
Some of the transfers on individual accounts are stated as money sent from abroad for different residents, which the Attorney General called for witnesses on the charge.
The charge file claimed that the 2nd, 4th, 5th and 9th defendant conducted illegal banking businesses as well as involvement in money transfer that affected the foreign currency revenue that the government obtains.
Apart from the stated amount, an additional ten million birr over a draft short term loan was released by Awash Bank to the company in August 2019.
The charge claimed that in exclusion of the 21 million birr paid to the United Bank for the loan settlement by Awash Bank, the rest of the money was spent on unrelated businesses that were not in direct benefit to Cosmo.
The Attorney General’s charge also claimed that the 2nd defendant gave a misleading testimony to the Federal Police in March 2017 on police investigations in relation to the USD 1.8 million transfers.