Court hears expert witness in Melaku Fenta et al case

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Addis Ababa, 17 July 2014 (WIC) – The 15th criminal bench of the Federal High Court presiding over a grand corruption case involving Melaku Fenta yesterday heard the testimony of an expert witness.

The witness, 61, is a former employee of the Ethiopian Revenues and Customs and Authority (ERCA) who has now retired. He has worked in audit investigation and tax divisions of ERCA.

The witness was called to the stand by anticorruption prosecutors to prove one charge against Melaku, ERCA’s former director general, Gebrewahid Gebretsadik, former deputy director general of Law Enforcement, and Belachew Beyene, former Tax Audit Directorate director.

The charge also includes Simachew Kebede, owner of Intercontinental Hotel, who, allegedly, abused duty free privileges for investments in hotel and tourism services. However, investigations into the alleged duty free abuse was ‘unlawfully’ suspended, prosecutors allege in their charge.

The witness brought on Wednesday claimed to have done income tax and value added tax assessments for Intercontinental Hotel based on a report submitted to him after a surprise audit was conducted at the hotel.

Intercontinental Hotel was among ten hotels where ERCA auditors conducted ‘surprise’ audit four years ago following an intelligence report of an abuse of duty free privileges. In previous hearings, witnesses who claimed to have conducted the surprise audit at Intercontinental Hotel that lasted for five days said a property worth some nine million birr was unaccounted for. The amount was reduced to eight million birr after a second audit, it was testified.

“We conducted the tax assessment on the property which was unaccounted for,” said the witness in his testimony. “Based on our assessment, the taxpayer would have paid 1.2 million birr in income tax and 610,000 birr in value added tax had the properties were not imported duty free.”

The witness said they have submitted their assessment report to Higher Taxpayers Branch Office, to the audit directorate director and to law enforcement division.

During cross examination, the witness said the Tax Appeal Commission has ordered a re-assessment citing the valuation was founded on erroneous information.

Cross examination of the witness is expected to continue today.