Court Finds YESU Plc Not Gulity

YESU Plc, and its shareholders Yohannes Sisay and members of his family, who were co-defendants were found not guilty of charges of concealing income of half a billion Birr. On January 26 2017, the criminal bench of the Federal High Court of Lideta District gave a verdict in favour of YESU Plc. Yohannes, his niece Hirut Endale, Yohannes’s nephew, Abera Mengistu and Jember Teka were sound not guilty of all charges.

Shebel Plc and its shareholders, among them Sisay Molla, Yohannes’ father, were charged with similar crimes but were found guilty. The charges were filed by prosecutors of the Ethiopian Revenues & Customs Authority (ERCA).

Founded in 1990s, YESU is one of local producer of steel sheet while Shebel was founded in 1996 and engaged in the production of reinforcement bars. The former sells manufactured material to the latter, then Shebel sells to Lemon plc after it adds some value. The prosecutors explain that Lemon plc is a ghost company which was created for tax evasion purpose.

Six individuals from YESU Shebel and two companies were charged on 25 counts when the legal battle began in 2012. At that time YESU Plc and Shebel Plc, as well as some of their respective shareholders, were charged with income tax evasion and money laundering, value added tax evasion and making misleading statements on income tax and value added tax. The two companies and shareholders stand accused of one billion Birr worth of financial charges.

Yohannes, who used to own 93pc of the YESU’s share in 2012 , allegedly planned the crime, according to federal prosecutors. He was accused of supplying steel to Shebel Plc on credit and at lower than production costs with the intent of evading taxes. Yohannes has been in the business since the emergence of mixed economy.

Prosecutors claim that YESU accrued unpaid corporate income taxes of 81.5 million Br for the period between 2007 and 2010, and 123.8 million Br in unpaid VAT, for the period from 2004 to 2010. Yohannes was personally accused of having 83 million Br of unpaid income tax and 283 million Br of unpaid VAT.

He also stood accused of allegedly reporting reduced manufacturing figures on behalf of YESU. The company’s reports states that it had manufactured 286 pieces of corrugated iron from a single sheet of galvanized iron. The actual production was 372 sheets. Industrial standards dictate that a single sheet of galvanized iron should produce 285 pieces. Yohannes allegedly sold 86 of the corrugated steel sheets and transferred the revenue to his own account, as well as using it to upgrade YESU’s capital. He allegedly collected around 44 million Br.

Shebel Plc was charged with evading 36 million Br of income tax and 372 million Birr VAT.

Issayas Teklu, YESU’s Manager, was charged with declaring a false statement of loss amounting to 539 million Br from 2004 to 2010. YESU Plc, located in Gelan Town, in Oromia Regional State, made a gross profit of 451.75 million Br during that time.

“Even though all defendants were accused of money laundering, the public prosecutors were not able to prove the allegations,” said Nuredin Kedir, one of the judges presiding over the case.

All the defendants in the case pleaded not guilty to the charges.

YESU Plc’s defense stated that YESU’s capital was not increased in 2004 as indicated by the public prosecutors but in 2005, 2006 and 2008. The prosecution also asserted that corrugated iron that can be produced from a single galvanized iron sheet is 285 pieces, but there was no evidence presented to support the allegation, according to the defense. YESU also stated that the metal it bought was to manufacture a prefabricated house as an office for the company. The company’s defense stated that the money from the extra steel sheets was not used for the purchase, which cost 504 million Br not 44 million Br.

The three judges presiding over the case, Nuredin Kedir, Bertukan Ayele and Yohannes Negussie adjourned the trial for February 8, 2017 to pass the sentence on Shebel Plc on the counts of invading income tax, masking value added tax, and making misleading statements on income tax and value added tax.


Published on Jan 31,2017 [ Vol 17 ,No 874]



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