Ethiopian Review

A simmering disagreement over ownership of a company – Land and Sea Development Ethiopia PLC – has turned into a public wrangle after one of the disputing parties posted an announcement on a newspaper that Michael Kassa Gebru in no way represented the company and that he was using the company’s seal illegally.

Kamal Patel and Mohandas Krishna, who posted the announcement on behalf of Land and Sea Development Ethiopia PLC on the one side, and Michael Kassa Gebru and his two American partners, Jay Nijjer and Dr. Bruce Fischer on the other, are now at loggerheads as to who owns the company. Michael Kassa Gebru’s side claims this is just an attempt to “steal” their company.

Two years after they co-founded Land and Sea Development Ethiopia Ltd in Washington DC., the three partners – Michael Kassa Gebru, Jay Nijjer and Dr. Bruce Fischer – in December 2006 made contacts with the RAB Capital Hedge Fund Group, through another incubation company, Ten 3, which agreed to facilitate a loan for the establishment of a bamboo factory in Assosa, in the Benishangul Gumuz Regional State, Michael Kassa Gebru told The Reporter.

“According to the arrangement, a partner company – Land and Sea Development Ltd – was established in Isle of Man. Land and Sea Development Ethiopia Ltd then transferred 45 percent of its share to Land and Sea Development Ltd for 10,000,000 dollars, 10 percent to Ten3, and retained 45 percent of the shares,” says Michael.

A Memorandum of Association dated May 19, 2006 shows Bruce Edward Fischer, Michael Kassa Gebru, and Jay Nijjer as the incorporators of Land and Sea Development Ethiopia Plc in Ethiopia, each with a share of 1 million birr, according to official documents.

In a meeting they held here in Addis Ababa in December that year, the three incorporators agreed to sell 3,192,301 shares to Land and Sea Development Ltd which was represented by Dr. E. Bruce Fischer.

That same month, Land and Sea Development Ltd gave Michael Kassa power of attorney signed by Andrew George Steele-Smith and Pritesh Ramesh Desai, who are both indicated on the document as Directors of Land and Sea Development Ltd and Joint CEOs/ Managing Directors of Land and Sea Development Ethiopia Ltd.
In February 2007, a sum of 9,500,000 USD was released to Land and Sea Development Ethiopia PLC “by the directors of Land and Sea Development Ltd – UK.

“The problems started when 5,000,000 dollars was withdrawn a year later, and when we began to inquire why that had happened. Bruce Fisher and I were fired and the consultants we had hired, Patel and Krishna, were made managers of Land and Sea Development Ethiopia PLC,” Jay Nijjer told The Reporter from Washington over the telephone.

Nijjer added that the agreement between Land and Sea Development Ethiopia PLC and Land and Sea Development Ltd registered in Isle of Man-UK was breached by the latter several times in that they first had not deposited the full amount of 10,000,000 dollars, and had failed to include one of the founders of Land and Sea Development Ethiopia Ltd in the board of directors in accordance with the deal.

“I travelled three times to London to speak with Andrew Steele-Smith, who is in the board of directors of Land and Sea Development Ltd, to discuss why Dr. Bruce and I had been fired and regarding the 5,000,000 dollars that was withdrawn. I did not get any satisfactory answers to my inquiry,” Nijjer said.

The Reporter however was not able to acquire the initial official documents detailing the agreement that was made between Michael Kassa Gebru and his partners, and Land and Sea Development Ltd of Isle of Man-UK until it went to press.

Documents obtained by The Reporter indicate that, in December last year, the directors of Land and Sea Development Ltd and Cavendish Trust Limited, both registered in England, were pursuing a move to sell 95 percent of Land and Sea Development Ethiopia PLC to a Dubai-based company called Green Fuel Tech Ltd., in which Kamal Patel and Mohandas Krishna have a stake.

Michael claims he was then prevented from entering the compound he uses as his office and residence and was forcefully evacuated from it.

“This is totally outrageous because they can not do this. I have not sold them my share and if they can provide proof attesting I have done so, I am willing to pack my things and leave this country today,” Michael said.

Michael alleges that he was offered one million dollars in return so that he withdraws the remaining four million dollars that was in the bank and wind up the company.

“I fought hard and proposed to London that the money be used here in Ethiopia for a flooring, chopstick and toothpick factory project. In March this year however I was informed that I have been removed from my position as director of the company,” Michael said.

Government notice of caution

The Ethiopian Investment Agency however does not agree with the claims of Michael and his partners.

“This is a very serious matter and one should not go about such matters on hearsay and unsubstantiated claims. We have rejected their claims on a legal basis. We have updated and accurate information regarding the matter. As far as the legal side of the issue is concerned, the shareholders of the company are Land and Sea Development Ltd and Cavendish Trust Limited. Mr. Patel and Krishna are employees of these shareholders. What ever internal arrangement there is in these companies does not concern us. We know they are operating legally and that the investment is being conducted according to their agreement with the government,” Negussie Gurmu, Director of Investment and Facilitation and Aftercare Department told The Reporter.

Negussie said that his office does not have any information regarding the sale of Land and Sea Development Ethiopia PLC to Green Fuel Tech.

“We are the appropriate government office and we are here to ensure that foreign investors can operate in this country without any obstacles, and we have cautioned all other concerned parties who may have had a distorted impression on the matter,” he added.

That cautionary remark seems to also be directed at the Benishangul-Gumuz Regional State which in March this year wrote a strong worded letter to the Ministry of Trade and Industry stating that it did not recognize Land and Sea Development Ltd-UK and that the sale of Land and Sea Development Ethiopia PLC was illegal.

The letter said that the UK holding company was conducting what it termed as “international business trafficking” in Ethiopia.

The other side of the story

Kamal Patel, who now heads Land and Sea Development Ethiopia PLC, says the whole issue is a result of lack of understanding of how venture capital funding is done on the part of the other party.

“It is true that the company was established in 2004 by Michael Gebru, Jay Nijjer and Bruce Fischer. But when they went into agreement with Land and Sea Development Ltd in the UK in 2006, it was under the arrangement that they sell hundred percent of their shares in return for a minority share in the UK holding company which is Land and Sea Development Ltd. We have documents to prove that,” Patel told The Reporter.

As for the reasons that led to the firing of the initial founders of the company, Patel said it was because the UK holding company had established that there was misappropriation of funds, destruction of company documents and embezzlement.
“Here you have these guys, drawing away five and a half million dollars and they are flying first class and chartering private jets, when not even a brick was laid here at the project site. Now the money legitimately belongs to the UK holding company, and it has the right to ask where it went. The man [Michael Gebru] has been signing off cheques and he has not even seen a single bank statement in two years. Our auditors have told us that we can and should file charges to get our money back,” Patel said.

Patel also said that the claims Land and Sea Ethiopia PLC had been sold to Green Fuel Tech were incorrect and described the reaction from the Benishangul Gumuz Regional State as a “gross error of judgment.”

Patel claims that when Michael heard of the negotiations with Green Fuel Tech Ltd, “he, in a written document offered to buy Land and Sea Development Ethiopia PLC. How does one say that a company belongs to him and then again offer to buy it from the holding company?”

“What is happening is that a Memorandum of Understanding has been signed between the holding company and Green Fuel Tech Ltd. Companies get bought and sold, and even if we do buy the company, we are not taking it for free. And if and when the transaction is complete Mr. Gebru will get his share from the holding company as a minority shareholder,” Patel said.

“Mr. Gebru’s problems are not here in Ethiopia; his problems are in the UK.”
If the deal is concluded, Patel says that his company Green Fuel Tech is planning to bring in an investment worth 15 million dollars to establish a bio-mass-to-energy plant using bamboo as fuel. The investment would later increase to 80 million dollars.

- By Namrud Berhane | The Reporter