Ethiopia agreed to pay about six million dollars to settle U.S. Securities and Exchange Commission (SEC) charges for unauthorized sell of bonds.
The state-monopoly Ethiopian Power Utility(EEP) have been selling bonds for Ethiopians and American-Ethiopians in the United States as part of the effort to raise fund for the construction of Grand Ethiopian Renaissance dam project.
In an order issued today, the SEC, which is in charge of the financial market, said that:
“EEP offered the bonds in the U.S. through television and radio advertisements targeted at the Ethiopian diaspora community, and through events sponsored by the Embassy of Ethiopia in Washington, D.C. and in other major U.S. cities. EEP also offered the bonds through the Embassy’s website.”
The Renaissance dam project, which is now two-third complete is estimated to cost about 5.5 billion dollars, was launched in April 2011. Since then, the government has been raising funds from the pubic through several means including the sell of bonds, which are backed by EEP.
The charge against EEP is due to the bonds soled in the United States between 2011 and 2014. According to SEC:
“more than 3,100 U.S. residents purchased Bonds in denominations of $5 to $10,000, for total investments per investor ranging from $50 to $1 million. In aggregate, U.S. purchasers invested approximately $5.8 million in the Bonds. Most of the investors—64%— reported that they were U.S. citizens. Although the Bonds generally have not yet reached maturity, to date most of the Bondholders have not received periodic interest payments.”
The SEC ruled that EEP violated Sections 5(a) and 5(c) of the Securities Act, because it “did not register its bond offering […] and there was no available exemption from the requirement that the offering be registered”. The representatives of EEP apparently admitted fault and offered to settle the charges, which SEC approved.
Accordingly SEC has ordered that, EEP to cease and desist from committing or causing any violations and any future violations of Section 5 of the Securities Act.
EEP is also ordered to pay 6,448,854.87 US dollars to the Bondholders.
The Bondholders will be entitled to get their principal investments, any Bond interest accrued to them and compensation “to redress investor harm”.
EEP will have to deposit the money in a US bank and assign an administrator that will handle the repayment under SEC supervision.
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