Ethiopia: The Art of Bleeding a Country Dry By Alemayehu G Mariam

December 12th, 2011 Print Print Email Email

Ethio-Corruption, Inc. (Unlimited)

“The people of Ethiopia are being bled dry. No matter how hard they try to fight their way out of absolute destitution and poverty, they will be swimming upstream against the current of illicit capital leakage”, wrote Economist Sarah Freitas who co-authored an upcoming report with Lead Economist Dev Kar of Global Financial Integrity (GFI). The GFI report entitled, “Illicit Financial Flows from Developing Countries over the Decade Ending 2009,” previewed in the Wall Street Journal, found that

Ethiopia, which has a per-capita GDP of just US$365, lost US$11.7 billion to illicit financial outflows between 2000 and 2009. In 2009, illicit money leaving the economy totaled US$3.26 billion, which is double the amount in each of the two previous years… In 2008, Ethiopia received US$829 million in official development assistance, but this was swamped by the massive illicit outflows. The scope of Ethiopia’s capital flight is so severe that our conservative US$3.26 billion estimate greatly exceeds the US$2 billion value of Ethiopia’s total exports in 2009.”

Two weeks ago in my commentary, “Why is Ethiopia Poor?”, I highlighted the fact that the Legatum Institute (LI), an independent non-partisan public policy group based in London, had recently ranked Ethiopia a pretty dismal 108th/110 countries on its 2011 Prosperity Index (LPI). Last year, the Oxford Poverty and Human Development Initiative (OPHDI) Multidimensional Poverty Index 2010 (formerly annual U.N.D.P. Human Poverty Index) ranked Ethiopia as the second poorest (ahead of famine-ravaged Mali) country on the planet. According to OPHDI, the percentage of the Ethiopian population in “severe poverty” (living on less than USD$1 a day) in 2005 was 72.3%. Six million Ethiopians needed emergency food aid in 2010 and many more millions needed food aid in 2011 in what the U.N. described as the “worst drought in over half a century to hit parts of East Africa”.

The cancer of corruption is deeply embedded in the marrow of the Ethiopian body politic. The recently released Transparency International (TI) 2011 Corruption Perception Index report on Ethiopia confirms the findings of GFI and other anti-corruption international organizations. For the past decade, TI has ranked Ethiopia at the bottom of the barrel of countries ruled by the most corrupt governments. In fact, for the past ten years Ethiopia’s score on the TI index has remained virtually unchanged (TI ranks countries on a 0 (“highly corrupt”) to 10 (“very clean”) scale.

TI Corruption Index Score for Ethiopia by Year

2011 2.7

2010 2.7

2009 2.7

2008 2.6

2007 2.4

2006 2.4

2005 2.2

2004 2.3

2003 2.5

2002 3.5

In light of the 2011 GFI and TI reports, is there any doubt today why Ethiopia is the second poorest nation in the world? Is it rocket science to figure out why Ethiopians are the second poorest people on the planet? Ethiopians are poor because they have been robbed, ripped off, flimflammed, bamboozled, conned, fleeced, scammed, hosed, swindled, suckered, hoodwinked, victimized, shafted and taken to the cleaners by those clinging to power like bloodsucking ticks on an African milk cow. Is it not mindboggling that the US$3.26 billion stolen out of Ethiopia in 2009 was double the amount stolen in 2008 and 2007!?!

The Art of Bleeding Ethiopia Dry

I have long argued that the business of African dictatorships is corruption. In a November 2009 commentary entitled “Africorruption Inc.”, I wrote the following about corruption in Ethiopia:

The devastating impact of corruption on the continent’s poor becomes self-evident as political leaders and public officials siphon off resources from critical school, hospital, road and other public works and community projects to line their pockets. For instance, reports of widespread corruption in Ethiopia in the form of outright theft and embezzlement of public funds, misuse and misappropriation of state property, nepotism, bribery, abuse of public authority and position to exact corrupt payments and gain are commonplace. The anecdotal stories of corruption in Ethiopia are shocking to the conscience. Doctors are unable to treat patients at the public hospitals because medicine and supplies are diverted for private gain. Tariffs are imposed on medicine and medical supplies brought into the country for public charity. Businessmen complain that they are unable to get permits and licenses without paying huge bribes or taking officials as silent partners.

Publicly-owned assets are acquired by regime-supporters or officials through illegal transactions and fraud. Banks loan millions of dollars to front enterprises owned by regime officials or their supporters without sufficient or proper collateral. Businessmen must pay huge bribes or kickbacks to participate in public contracting and procurement. Those involved in the import/export business complain of shakedowns by corrupt customs officials. The judiciary is thoroughly corrupted through political interference and manipulation as evidenced in the various high profile political prosecutions. Ethiopians on holiday visits driving about town complain of shakedowns by police thugs on the streets. Two months ago, Ethiopia’s former president Dr. Negasso Gidada offered substantial evidence of systemic political corruption by documenting the misuse and abuse of political power for partisan electoral advantage. Last week, U.S. State Department spokesman Ian Kelley stated that the U.S. is investigating allegations that “$850 million in food and anti-poverty aid from the U.S. is being distributed on the basis of political favoritism by the current prime minister’s party.” [As of December 2011, over two years after the investigation was launched, the State Department has not publicly released the results of its investigation.]

Deceit, chicanery, paralogy and sophistry are the hallmarks of Meles Zenawi’s regime in Ethiopia. The cunning dictator has been able to shroud his corrupt empire by pursuing a propaganda policy of mass distraction and by staging one farcical political theatre after another. Zenawi has successfully distracted public attention from rampant corruption by

Making wild allegations of terrorism against his critics, persecuting and prosecuting his opponents and by jailing and exiling independent journalists (a couple of weeks ago, Zenawi shuttered Awramba Times);

Proclaiming a bogus Growth and Transformation Plan that will “double economic growth by an annual average of 14.9 percent” by 2015;

Selling Ethiopia’s most fertile land for pennies above the table and for millions under the table;

Panhandling the international community for famine and humanitarian aid and misusing that aid for political purposes;

Taking massive loans from international banks without any significant accountability on how it is spent;

Trying to shame and intimidate Western bankers and donors by hectoring them of the evils of “neoliberalism”;

Proclaiming the construction of an imaginary hydroelectric dam over the River Nile;

Sending troops to occupy Somalia and threatening war with other neighboring countries;

Vilifying international human rights groups, election observers and officials of multilateral organizations who disagree with him;

Dispatching swarms of officials to panhandle the Ethiopian Diaspora for nickels and dimes to buy dam bonds;

Systematically extracting foreign remittances sent by Diaspora Ethiopians;

Staging political theatre by a toothless anti-corruption agency to hoodwink complicit Western donors and loaners.

Etc., etc.

The Economics of Corruption

The Economist Magazine in its November 7, 2006 editorial described “the Ethiopian government as one of the most economically illiterate in the modern world.” In 2009 at a high level meeting of Western donor policy makers in Berlin where, a German diplomat suggested that Ethiopia’s economic woes could be traced to “Meles’ poor understanding of economics”. They are all wrong!

No one knows corruption, the economics of kleptocracy, better than Zenawi. The facts of Zenawi’s corruptonomics are plain for all to see: The economy is in the stranglehold of businesses owned or dominated by Zenawi family members, cronies, supporters or hangers-on. According to the World Bank, business enterprises affiliated with Zenawi’s regime control “freight transport, construction, pharmaceutical, and cement firms receive lucrative foreign aid contracts and highly favorable terms on loans from government banks.” Data provided by Zenawi’s regime showed that by the end of the 2009 fiscal year, Ethiopia’s outstanding debt stock was pegged at a crushing USD$5.2 billion. The USD$11.7 billion stolen over the past decade could easily retire that debt. Ethiopia is Africa’s largest recipient of foreign aid at nearly $USD4 billion in 2009, and the second largest foreign aid recipient in the world after Afghanistan.

Is There a Way to Stop Ethiopia from Bleeding?

The international community “naively” believes that corruption in Ethiopia and the rest of Africa could be controlled and significantly reduced by anti-corruption programs. The U.N. Convention Against Corruption (2003) requires signatories to “develop and implement or maintain effective, coordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability.” Ethiopia signed the U.N. Convention in 2003. The Africa Union Convention on Preventing and Combatting Corruption (2003) established a regime to empower African countries to “prevent, detect, punish and eradicate corruption and related offences in the public and private sectors.” The Convention prescribes that “in order to combat corruption and related offences in the public service, State Parties” shall “require public officials to declare their assets at the time of assumption of office during and after their term of office in the public service.” Ethiopia signed the AU Convention in 2004. Neither of these Conventions has even made a dent in controlling the metastasizing corruption in Ethiopia.

Zenawi knows the power of corruption. He has effectively used corruption allegations to neutralize and eliminate his political opponents. He used his “Federal Ethics and Anticorruption Commission” to railroad his comrade-in-arms and former defense minister, Seeye Abraha, to jail for six years on unsubstantiated allegations of corruption. When then-Judge Birtukan Midekssa, and later Ethiopia’s first female political party leader and long suffering political prisoner, released Seeye for lack of evidence, Zenawi rammed legislation through his rubberstamp parliament to deny Seeye bail and keep him in pretrial detention. He later fired Judge Birtukan. In 2008, Zenawi’s anticorruption commission reported that “USD$16 million dollars” worth of gold bars simply walked out of the bank in broad daylight. A number of culprits were fingered for the inside bank job, but no one was ever prosecuted. In February 2011, Zenawi publicly stated that 10,000 tons of coffee earmarked for exports had simply vanished from the warehouses. He called a meeting of commodities traders and in a videotaped statement told them he will forgive them because “we all have our hands in the disappearance of the coffee”. He warned them that if anyone should steal coffee in the future, he will “cut off their hands”.

For years, I have documented and railed against corruption in Ethiopia. In December 2008, three years to the month, in a weekly commentary entitled, “The Bleeping Business of Corruption in Ethiopia”, I wrote:

The fact of the matter is that the culture of corruption is the modus operandi in the Ethiopian body politics. Former president Dr. Negasso Gidada clearly understood that when he declared in 2001 that ‘corruption has riddled state enterprises to the core,’ adding that the government would show ‘an iron fist against corruption and graft as the illicit practices had now become endemic’. In 2007 when Ethiopia’s auditor general, Lema Aregaw, reported that Birr 600 million of state funds were missing from the regional coffers, Zenawi fired Lema and publicly defended the regional administrations’ ‘right to burn money.’…. Ironically, in 2003, Ethiopia signed the U.N. Convention Against Corruption; and a couple of months ago, a conference on institutions, culture, and corruption was hosted jointly in Addis Ababa by the United Nations Economic Commission for Africa and the Council for the Development of Social Science Research in Africa.

The fact of the matter is that absolute power corrupts absolutely. Zenawi has absolute power in Ethiopia. Pleading for transparency and issuing moral exhortations against corruption will have no effect on the behavior of Zenawi or any of the other African dictators. Indeed, to plead the virtues of accountability, transparency and good governance with Zenawi and Co., is like preaching Scripture to a gathering of heathens. It means nothing to them. They are unfazed by moral hectoring or appeals to conscience. They sneer and jeer at those who rail and vociferate against corruption. Preaching to the corrupt, to put it simply, is an exercise in total futility!

In my November 7 commentary “To Catch Africa’s Biggest Thieves Hiding in America!”, I discussed the importance of initiating and cooperating with the U.S. Justice Department (DOJ) in civil forfeiture actions to seize corruptly obtained cash, personal or real property of any person or entity that can be traced to “specified unlawful activity”. These civil court actions extend to foreign offenses involving extortion, money laundering, or the misappropriation, theft or embezzlement of public funds by or for the benefit of a public official of a foreign government. (18 U.S. C. sections 981 (a) (1) (c); 1956; 1957.) The U.S. has recently filed action to seize personal and real property of Teodoro Nguema Obiang Mangue, the 43-year old son of President Teodoro Obiang Nguema Mbasogo of Equatorial Guinea.

Carefully review and analysis of GFI and TI data sources reveals that public assets and funds stolen from many African countries, including Ethiopia, are often hidden in banks located in the U.S. and Europe, although the clever African dictators are now diversifying by taking advantage of financial havens in countries experiencing rapid growth and industrialization. Much of the corruption activity centers around money laundering (that is, illegal or dirty money is put through a complex cycle of financial transactions or washed and is transformed into legitimate or clean money).

The basic idea in money laundering is to minimize the chances of detection of stolen public assets and funds by breaking the direct link between the kleptocrats or “corruptocrats” and their collaborators by disguising the true ownership. Using financial consultants, shell companies (bogus companies that exist to simply create the appearance of legitimate transactions through fake invoices and balance sheets), fraudulent official documentation, wire transactions, and “smurfing” techniques (breaking up large amounts of money into smaller, less-suspicious amounts in the names of multiple persons) etc., those who have stolen public assets and funds try to sever or camouflage their loot from its illegal source by placing it in international financial institutions. The aim in money laundering is at least twofold: 1) gain anonymity and hide the audit trail in case of a criminal investigation, and 2) plough the “clean money” into the legitimate economy by buying homes, investing in legitimate businesses, starting businesses and so on.

If the problem of corruption is to be addressed effectively in Ethiopia and the rest of Africa, it is not going to be at the fountainhead of the corruption itself but in the ocean where the river of corruption terminally flows. As one cannot expect the fox to safeguard the henhouse, one cannot similarly expect Africa’s dictators and corruptocrats and their collaborators to safeguard public assets and funds. A big part of the answer to the question of corruption lies in the Laundromats of financial institutions where the dirty money is washed. That’s why I believe it is the civic and moral duty of every Ethiopian and African to help the U.S. Justice Department catch Africa’s biggest thieves hiding in America. It is very easy to do, and do it anonymously. Individuals with information about possible proceeds of foreign corruption in the United States, or funds laundered through institutions in the United States, should contact Immigration and Customs Enforcement, Homeland Security Investigations (ICE HIS) toll free at 866-347-2423 or send email to: If calling from outside of the U.S., the number is: 802-872-6199


  1. Dawi
    | #1

    It is documented that Multinational Corporations are responsible for 65% of the Illicit financial flows; This fact is completely absent from Prof. Al’s write up.

    If we take the 65% out of the $11.7 billion we will have about $4.1 billion left.

    Meles recently revealed what is known all along that about $2 billion dollars of rent money is deposited by land lords in foreign accounts from renting to freign tenants and collecting the money abroad. Some has built mansions as reported by ER with evidence of deeds and photos recently.

    So Prof. Al’s paper only applies for the remainging amount which is a lot but much less than $11.7 billion.

    Having said that, there was no reason for Prof. Al to exaggerate the figures knowngly. It is absolutely unnecessary.

    | #2

    Dear writer,mainly thee all events locally or globally are related to the inherent nature of global Capitalist System.
    It is the capitalism that is inherently stupid not the ordinary individuals who plays the game in the system. The entire Capitalist system is inherently some how corrupt from its feet to its head.
    For the Capitalist system to work efficiently in favor of the minority 1% highest wealthy elitist class, the rest of the majority populace has to be systematically cheated, looted and impoverished and capital accumulation has to be carried out to sustain the system. The food-chain of the capitalist system is like this. The same type of systematic cheating looting and impoverishing act is carried out not only locally here in Ethiopia but also globally. And that is why such global mass uprisings are taking place in USA,UK Europe and all over the world. Bank bail out and severe austerity measure(slashing expenditure on public service sectors) and means systematic cheating and looting of the populace by the higher less than 1% upper wealthy elitist class. The entire scenario is some sort of class struggle.
    Here locally in Ethiopia an Ethnically organized TPLF thug and its affiliates have created an Economic Empire called EFFORT to cheat and plunder the wealth and resources of our nation. And hence through EFFORT here locally a new breed of minority Capitalist Class is being created that is coherent and working with the global capitalist system. Therefore all what the writer is explaining is due the inherent nature of Global Capitalist system combined with systematically inculcated and devised ethnicity in a way that paves the way and favors minority Capitalist class. The ethnically driven TPLF thug is becoming such a good stooge servant and tool for the global capitalist system. One of the very reasons why minority ethnicity is very inculcated and hyped in 3rd world countries is due to the inherent nature of global capitalist system. For Capitalism to work efficiently for minority elitist class, then it has to insidiously create its own class structure and social fabric that favors its food-chain.
    Dear writer what is now globally taking place is globalization of poverty against the general interest and well being of the populace at unprecedented massive scale so that the capitalist system is consolidating its power so that it is able to sustain itself as a functioning system. Look in Ethiopia, the mass is getting poorer and poorer while to the opposite minority emerging capitalist classes are becoming richer and richer. The other thing that the TPLF thug has such insidious agenda and interest as is written in one book titled as “የትግራይ ህዝብና የትምክህተኞች ሴራ”.In this book you can understand the other vital and meaningful governing ideology of TPLF thug and how it is thinking and how it is well prepared in advance to make such huge revenge, destruction, plundering and destabilization to the ret of the society out side of its close affiliates and collection. And hence the current tragic unprecedented massive, plundering, impoverishment, destruction and chaos in Ethiopia is the result of this diabolical thought as is expressed in “የትግራይ ህዝብና የትምክህተኞች ሴራ” in combination with the inherent nature of global capitalist system. And that is how a new blood sucking parasitic and greedy racist and plundering new emerging wealthy upper social class is being created in Ethiopian society. Therefore, it is not as such surprise that all such things happen as long as such racist, irresponsible corrupt TPLF thug clings to power.
    Therefore the political struggle in Ethiopia is based on both Ethnicity and class combined together. And it is this that is becoming very challenging and confusing for many Ethiopians. Many corrupt, irresponsible and opportunist Ethiopians have been spoiled by the incumbent TPLF regime by being tempted by economic advantages provided to them by TPLF. Not few have changed their life and social class and status in a corrupt way, at the agony and expense of the majority mass and the nation. Therefore they have lost confidence and wisdom to defend the general well being and integrity of the nation. Therefore unless we think like “How is Global Capitalism doing In Ethiopia?” then entirely focusing only on Ato Meles and TPLF and its associated corruption is not that much vital. Most current writers and Ethiopian politicians and intellectuals have failed or are afraid to confront this global monster called Capitalism. And hence every time they write and criticize they want to sideline this global monster and focus and blame the incumbent entirely for the whole chaotic situation. And I tell you such stereotypical approach does not work for benefit of the populace. It is like “አህያውን ፈርቶ ዳውላውን”.May be one of the reasons can be most of such writers, intellectuals and politicians are educated in Western countries and are making their living there and hence are psychologically brainwashed and trapped in such sort of reservation and fear to expose all the wrongs of all things happening there. Therefore the art of bleeding a country is also inherently attributed to the art of global capitalist system whose main origin and epicenter is that of the West.
    God Bless Ethiopia!!!

  3. ጉረኞች
    | #3

    Your case is የራሷ እያረረባት የሰው ታማስላለች:: Your story is the same “o” same “o”. You didn’t propose anything tangible how Ethiopians get out of complex problems of mostly government makings, such as get out poverty,get rid off corrupt, dictatorial and anti development and treacherous government. It is an empty talk aimed to distract discussion and cover the charges against the ethnic junta.

  4. ጉረኞች
    | #4

    It is only you who trust and proudly quote what Meles shamelessly spit out from both end of his mouth. That should deserved to be QUOTE OF THE DAY. How pathetic could you be? Since you started quoting ER when you think it is convenient for you, ER reported the combined wealth of Meles and his wife Azeb is $6 billion, in case you missed that report.
    You sound like Meles when you talk about illicit money (የሌባ አይነደረቅ እንደሚባለው አይነት). In this day and age, you cannot deceive anybody. Everybod knows that the illicit money involves only aid and development money that was collected from International agencies on behalf of Ethiopians. It doesn’t include the money an individual made through renting or some other arrangement.

  5. Dawi
    | #5

    ጉረኞች :

    [[.. ER reported the combined wealth of Meles and his wife Azeb is $6 billion, in case you missed that report...]]

    The notion of corrupt public officials held most of the illegal money transfers has been disproved by some UN study. Only 3% of illicit money is conisdered taken by corrupt officials. If we do the math, 3% of 11.7 is not 6 billion. If ER’s reported 6 billion it can’t be credible.

    [[..You sound like Meles when you talk about illicit money.....Everybod knows that the illicit money involves only aid and development money that was collected from International agencies on behalf of Ethiopians..]]

    C’mmon now, you can’t be serious on the above.

    “The most common way illicit money is moved across borders— accounting for some 60 to 65 percent of all illicit flows—is through international trade.”

    Falsified pricing, the rich collecting rent overseas in dollars by renting & selling houses and other money-laundering techniques are included. Bottom line, hard currency lost by the country.

    | #6

    I notice my comments often appear than disappear. I am sure some of my comments are removed by people who disagree with my views for purely political reasons. As someone recently rated you higher among Ethio-Websites for allowing diverse views, I think you can do even more by publishing every comment except profanity and threats of violence.

    I believe the intent of a Readers’ Comment section is to respectfully share differing opinions and encourage constructive debate. I know you allow comments with one condition – all who post comments must first register in advance and use their real name/e-mail. That makes us to think twice about what we post since our comments are traceable back to us.

    I don’t agree with most comments but I would not have removed them because I don’t see them as offensive to any specific person.

    It is short sided to assume Developmental State theory oriented thinking as part & parcel of the present Ethiopian Government. No wonder we don’t see any of the research work of Ethiopian Prof. on the subject on your and other main stream web-sights.

    Same-o same-o “Neo Liberal” views, day in and day out –


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