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Cablegate: Fake Gold Found at Ethiopia's Central Bank

VZCZCXRO3660
RR RUEHROV
DE RUEHDS #0722 0730925
ZNR UUUUU ZZH
R 130925Z MAR 08 ZDK
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 9934
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS ADDIS ABABA 000722

SIPDIS

SIPDIS
DEPT FOR EEB

E.O. 12958: N/A
TAGS: EFIN ECON ET
SUBJECT: Fake Gold found at Ethiopia's Central Bank


1. SUMMARY: Since December 2007, the Ethiopian financial sector has
been gripped by a who-done-it tale of fake gold in the vaults of the
National Bank of Ethiopia (NBE), Ethiopia's central bank. To date,
21 suspects ranging from local businessmen to high-ranking NBE
officials are being held on unspecified corruption charges. It is
estimated that the fake gold has cost the Government of Ethiopia
(GoE) over 158 million birr (about $16.7 million). The total extent
of the scam has not yet been determined. END SUMMARY.

2. The saga began on December 7, 2007 when the Ethiopian Federal
Police announced the arrests of four NBE employees. A random check
conducted on gold reserves in NBE's vault had found that 96.5
million birr worth of "gold" bars were actually gilded steel or
stone. In the past, NBE sent its gold to Switzerland to be
inspected and verified. However, in 2005 the responsibility shifted
to Ethiopia's Ministry of Mines and Energy (MME).

3. Following the initial discovery and the arrest of NBE officials
with responsibility for procuring gold, the investigation went after
those who supplied the gold and those at MME who were responsible
for its certification. The probe eventually found over 20 boxes of
fake gold in NBE's vaults and led to the arrest of a total of 21
suspects. The scam appears to have been in place for some time, as
one of the fake bars was deposited with NBE five years ago. Among
those charged are five brothers, all owners of prominent local
businesses who are accused of supplying the fake bars, and three
employees of the MME's Ethiopian Geological Survey. Members of the
Federal Police were arrested after fake gold was also found in the
Federal Police evidence vault. The Federal Ethics and
Anti-Corruption Commission, which is investigating the crimes, has
frozen the assets of the accused. The assets include a large
garment factory.

4. COMMENT: The investigation into this caper is ongoing, and no
specific charges have been brought against any of the suspects.
However, this points out severe weaknesses in oversight at NBE, at
least when it comes to the country's gold reserves. Ethiopia is
strapped for foreign exchange, and a loss of at least $16 million is
not a small matter. As the investigation and trials progress, post
will report on any further developments and impacts. END COMMENT.

YAMAMOTO

© Scoop Media

 
 
 
 
 
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