Zemen Bank have inked a deal with a foreign construction company to erect its headquarters at the heart of Ethiopia’s financial district, along Ras Abebe Aregay Street, at a cost of 1.23 billion Br.
The signing was held at the Radisson Blu Hotel on August 19, 2016, by Tsegaye Tetmke, president of Zemen, and Cai Hailong, general manager of Wu Yi’s branch in Ethiopia.
This comes soon after the recent harsh measures by the Central Bank on its two senior managers, with outstanding allegations of abuse over 100-million-150 million birr in loans. Shareholders presented their issues to the National Bank in February this year.
Amidst the shock, Zemen managed to award the construction contract to a Chinese company, China Wu Yi Ltd.
The contractor has managed to win its first endeavour in the country, after snatching the bid from 15 companies – both local and foreign.
On the continent, however, this is its second project, after its 2011 construction of a 26-storey building for the KCB bank in Kenya.
Zemen’s HQ project is a 32-storey building that will rest on 2,304sqm of land. The foundation work has already been finalised. Anchor Foundation Plc is the local company behind this initial work.
The same company, specialising in foundation works, has also carried out work for United Bank, Nib International Bank, Marriot International and the Addis Abeba Light Railway Transit Kality terminal.
“The bank has opted to do the two parts separately, focusing on specialisation”, said a public relations head at the bank.
The management is pushing forwards despite the bumpy relations it has had with its shareholders and harsh measures by the Central Bank mandated to regulate and control the financial sector.
This is the second time the Bank has taken measures to suspend and ban individuals from the management of the bank.
The first, again initiated by shareholders on procedural as well as substantial grounds, removed Ermias Amelga, founding member of the Bank, from any executive post, in February 2012.
Conflict of interests was the basic grounds for his removal, with supporting cases in point.
Zemen is having a dejavu now after four years, with conflict of interests and abuse at the centre of the measures taken and allegations recounted by the Shareholders’ appeal
“Then, it cost the bank, particularly putting its credibility under serious doubt with shareholders and clients,” said one of the shareholders who took part in a group that presented a 12-page appeal to the Central Bank.
“Some are cases pending in court and others are still under investigation.”
The letter addressed to the Central Bank and copied to the then Federal Ethics and Anti-Corruption Commission demands the institutions take measures in their mandate to save the bank from what they called “systematically organised abuse” by some board members and executive mangers.
To substantiate their cases, they identified four different clean loan procedures, which they argued were done in a way that benefits the debtors.
Among the Four cases counted in the appeal are two cases that were mentioned by the National Bank as grounds to remove the two senior executives two weeks ago.
The first involved money extended to Pioneer Agro Industry, in which the former president of the bank, Ermias Amelga, owns a majority share, as a clean loan.
The second one narrates what the group of shareholders claim is unfair treatment of a friend of one of the vice-presidents, and selling a building for an undervalued price – two million birr less than the outstanding loan, which the collateral was held against.
Another issue raised by shareholders was a loan given to the bankrupt Holland Car Plc. In this respect, different and inconsistent figures were reported by the Bank, such as 77 million Br, 66 million Br and 55 million Br. Zemen’s management has even dared to give loans to the company knowing that it was reporting losses.
Out of the 150 million Br loan, the Bank has given 30 million Br to a company called Shag Import Export Enterprise as a clean loan without having a collateral. The company has also managed to get another loan amounting to 25 million Br.
In addition, Agro Industry Plc and Genet Plc, are said to have reluctantly been given loans without any credit appraisal analysis or any collateral.
Listing all these problems, the shareholders express their fear of the danger on the coming projects and operations of the bank.
The shareholders finally demand for an investigation on the failed 150 million Br loans and to bring perpetrators to justice.
The president of the bank, Tsegaye, has refused to comment on the issue upon a request from Fortune. The issues are ongoing and some of them are under court proceedings.
Over the past fiscal year, the bank has reported an audited profit of 272.2 million Br. Last year’s net profit was 153 million Br.
Zemen is one of several banks to spot a location in the financial district and seal a construction contract over the past few years.