Is European Investment Bank backing Investors or Invaders in Ethiopia ( By Teshome Debalke )

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December 29, 2017

The European Investment Bank 12 October 2017 Press Release it would back investment in Ethiopia with 100 million USD through a private equity fund management firm Cepheus Growth Capital Fund established  a year ago by two Ethiopian expats is a concerting if not a jock to the say the least.  Unfortunately, like many important issues the donor community engage with illegitimate regime in Addis Ababa, little attention is given by concerned institutions to find out how such draconian decision was made by the Bank and where the two expats with undisclosed background managed to convince the Bank to back private investment of unknown parties.

The rather startling announcement for a Bank of that size and prestige representing The European Union, what could possibly have gone wrong unless it is purely a political decision to prop up the regime disguised as a ‘commitment to economic growth’. There is no explanation how Cepheus could qualify for recognition on its merits let alone reward of 100 million USD backing as we will see later.

But, the bigger question is; could there ever be legitimate investors worth backing under illegitimate regime with high-level corruption, nepotism and atrocities of the Ethiopian regime? If the answer is no as it always should, why do many investors involved in Ethiopia believe otherwise and international institutions and foundation like EIB, IMF and Gates Foundations insist there is investment worth their time and money beyond empowering corruption, cronyism and atrocities at enormous cost to the people they claim to help?

Quite honestly, extensive inquiry by independent scholars and journalists to ‘the cost of institutional dishonesty on poor nations’ like Ethiopia is way past due for.   The last time we can remember a scholar addresses the root cause of institutional dishonesty was Professor Morten Jervens in his 2013 book titled ‘Poor Numbers: How we are misled by African Development Statistic and what to do about it’.

Unfortunately, his finding at the international development conference at the UN Economic Commission for Africa (ECA) headquarter in Addis Ababa the same year was canceled at the last hour due to many African depots threaten to boycott the event after they found out the book’s findings expose them cooking the numbers.  But, what was even more reviling was Bill Gates, the de facto spokesperson for African development skillful response to pivot the reality Jervens book pointed out with a note of his own titled “If we can get the number right, we can help more people”  — showed his affinity for African depots than getting ‘the number right’ his ‘innovative solution’ supposedly address. What kind of data guru question ‘if we can get the number right’ as if it is an option than priority # 1 finding the solution says more the complicity of the donor community dishonesty on the expenses of the people? The ‘impatient optimist’ in words than deeds would do the poor he claims to help a favor if he abandons his favorite depots than give them credence to do more of the same.

Regardless, back in the ‘good-old-days’, dictatorships were honest enough to admit to their illegitimacy and say outright; the people under their captivity live-or-die at their pleasure. Of course, they are forced to adapt one ideology or another and, in some cases make up their own to justify their crime sprees on millions of their captive for the benefit of their international sponsors and apologists to help them stay in power.

But, modern illegitimate regimes are savvy enough to understand; the ‘old honest’ dictatorship won’t last long in the new world.  Therefore, reinventing dictatorship to justify their carnage and extortion is a necessary evil they can’t do without as much to their foreign sponsors and partners’ delight.

Therefore, since the only known option for legitimacy is ‘election’, the first thing they do is set up make-believe Election Board or Commission and hold mock election to establish themselves legitimate.  Ever since, modern dictatorship and their foreign sponsors’ justification to pick-and-choose one dictatorship from another has never been the same when the Cold-War ended, and a new uncharted world order emerged.

Once modern dictatorship is ordained ‘legitimate’ by mock election, the next step that comes naturally for dictatorship is legitimizing the good-old economics of extortion.  Unlike election, it has been difficult undertaking since economic transaction take place between various domestic and foreign government agencies, nongovernment organizations and private parties.  Therefore, the only way out for illegitimate regimes to stay put was the economics of Developmental State translated; illegitimate regimes’ hand on policy is necessary evil to guide the economy in ‘the right direction’ with no questions asked which direction.

The Brits say, ‘there is nine ways to skin a cat’ – so illegitimate regimes and their sponsors legitimizing the economics of extortion as investment in Developmental State. Therefore, the best they came up with so far is Public-Private Partnership (PPP). The loaded words have nothing to do with the public or private nor partnership since one is as rotten as the other under the same illegitimate regime. It simply means; rebranding dictatorship as public and extortion as private as good partners as any to legitimize the same old extortion under a banner of Developmental State.

Here is where modern dictatorships, partners and sponsors went off the grid in rebranding the same thing. By endorsing the ‘old good’ dictatorship as ‘democratic and economic of extortion as investment; the international community essentially reinvented the 19-century colonialism in the 21st century by proxy. In other words, modern illegitimate regimes are reinvented in name of Public-Private Partnership for the sole purpose of legitimizing the old economics of extortion never seen since 1884 Berlin Conference that began a dozen of European nations’ rampage of Africa for resources.

Among the financial instrument that made modern extortion as legitimate investment as possible is the unregulated Private Equity Fund that swept the world in the last decade. Unlike the traditional instrument with identifiable ‘investors’ and institutions, the new instrument that conceal the identity of the investors and the source of the fund bypassing any regulatory regimes from the origin to the destiny of the fund from public scrutiny.

Private Equity Investment Fund gained popularity in US and UK in the early 80s primarily to pool capital from private parties to avoid the regulatory burdens to finance merger and acquisition of large companies from the public. Later, it become popular instrument for money laundering scheme that followed by the explosions of offshore accounts as the recently leaked Paradise Paper and the Panama Paper reviled last year.

But, what made it popular in the last decade among modern dictatorships was the lucrative opportunity it provided to buy-and-sell the public asset under their control for themselves and their cronies without being dictated. Therefore, it opened countless opportunities for regimes and partners to engage in hostile takeover of resource-rich nations with poor population as if nations under dictatorship are unprofitable enterprises on the chopping block for hostile takeover in the name helping the people.

The November 14, 2017 article titled Paradise Paper expose of the king of poverty Bono’s offshore investment is the tip of iceberg” reviled how the world dictators, partners and sponsors are in gold rush to reap off nations under dictatorship with the new private equity fund instrument in the name of Public-Private Partnerships. 

Among half a dozen expat run equity fund firms that set up shop in Ethiopia since 2008 was Cepheus Growth Capital Fund established in 2016 in the middle of a State of Emergency the regime declared during the grassroots revolution to end its rule.  

On 12 October 2017 when European Investment Bank announce  in a  Press Release “Ethiopian companies to benefit from EIB backing for USD 100m private equity fund” through  Cepheus Growth Capital Fund by investing on ‘leading Ethiopian companies’ it appears it was a political decision to prop up the ruling party owned ‘private’ companies and its foreign partners.  

Again, EIB’s Press Release stated;

“Private equity investment will strengthen the growth of leading companies in Ethiopia and create new jobs across the country. This new cooperation with Cepheus demonstrates the European Investment Bank’s commitment to Ethiopia and support for economic growth across the country in the years ahead.” said Ambassador-Designate Johan Borgstam, Head of the European Union Delegation to Ethiopia.”

The Irony European Union development wing EIB redefining ‘private’ and stating there are ‘leading companies’ in Ethiopia knowing the ruling party run private companies dominate the private, the government and non-profit sector indicates; how deep the Bank is entangled with the corrupt regimes – financing the 19 century venture capitalists of the Wild West running amok in Africa than a “commitment to Ethiopia and support for economic growth across the country” as it wanted the world to believe.

Regardless, how two Managing Partners by the name Kasahun (kasaye) Kebde (Pictured left) and Berhane Demissie (pictured right) that set up the new Cepheus Growth Capital Fund in Ethiopia in 2016 attracted EIB’s 100 million dollar backing remain the 64k question awaiting answer.  After all, the buck stops with the two partners and the supposedly investors they are supposedly managing their fuds hidden from the people of Ethiopia and the responsible parties in government agencies that facilities their venture as much as EIB that afforded them legitimacy.

berhane-demiseInterstingly, the same year Cepheus was established, it become member of the London based African Private Equity and Venture Capital Association. Looking at Cepheus managing partners’ background, it appears there is no much requirement to be a member of the Association besides showing up with lots of ‘private’ funds of unidentified investors.

In April of 2016 the Association’s Newsletter interviewed the two partners but, reviled little information on their background and about their new firm’s venture in nation under a State of Emergency.

Besides Kassahun’s “I have lived in New York, London and Hong Kong during my professional life” and Demissie’s “I have worked in Ethiopia for many years, both on private equity projects and financial sector reform, on behalf of the government”, the two didn’t say anything worthy to tell who they are and who may be behind them. Nor they revile where and from whom and how a-less-than-a-year old firm plan to raise what Kassahun referred as “the first Ethiopia focused fund, targeting US$100mn with a first close planned at circa US$45mn”. https://www.avca-africa.org/media/1436/avca-member-interview-cepheus-growth-capital-partners.pdf. Nor they disclosed the ‘leading Ethiopian companies’ EIB was referring to back them up with 100 million USD.

Unfortunately, what Kassahun  failed to disclose for the unnamed interviewer of AVCA Newsletter thus, to the public at large and possibly even for European Investment Bank itself was; he is the Founder, Principal, and Managing Partner of PANTON Capital Group, LLC, a Foreign Limited Liability Company registered in Delaware and established in New York in 2004 and the Director of a separate offshore PANTON Alternative Fund, Ltd. firm registered c/o Citco Fund Services in Cayman Islands, according U.S. Security and Exchange Commission (SEC) Notice of Exempt Offering of Securities FORM D application.

The application form reviles; PANTON Alternative Fund, Ltd. c/o Citco Fund Services (Cayman Islands) Director of the Issuer Kassahun Kebede signed 3/11/09) to 110 investors with Total Amount Sold $941,043,750 USD with minimum investment accepted from any outside investor $2,000,000 USD Date of First Sale 2/1/04.

No one knows who the inside or the outside investors may be that require a minimum 2 million dollars and why Kassahun (Kassay) failed to disclose he is the Founder, Principal, and Managing Partner of PANTON Capital Group, LLC, and a Director of an offshore PANTON Alternative Fund, Ltd. Registered c/o Citco Fund Services in Cayman Islands managing millions of dollars of unidentified individuals and entities during the interview. Likewise, no one knows why EIB failed to disclose the background of Cepheus’ managing partners on its Press Release. It appears 110 mysterious ‘investors’ worth almost a billion dollar under Kassahun’s PANTON Alternative Fund management have something to do with it.

Incidentally, since the last report on September 29, 2017, PANTON Capital Group, LLC – ‘Surrender of Authority’ on Oct 10, 2017, according NYS Department of State Division of Corporations, just two days before EIB Press Release announced its backing of Kassahun and partner firm’s with 100 USD, coincidence?

Besides identified as a graduate of Warton business school of University of Pennsylvania and working in the Wall Street as a security broker until he established PANTON Capital Group, LLC in 2004 and known as X husband of the renown international model Liya Kebde, who really is Kassahun (Kassay) Kebede and what could be his relationship with the ruling party of Ethiopia to claim ‘the government attractive investment environment’ motivated him to set up shop in Addis Ababa to invest in “leading companies in Ethiopia” is the million dollar question every credible Media and organization must ask him and his partner as they should every wannabe venture capitalists particularly from the diaspora.

Quite frankly, the dramas contemporary dysfunctional elites play on the people of Ethiopia in general are appalling beyond words. But, what is even nauseating are those that are hell-bent to legitimize TPLF led ethnic apartheid dictatorship and its economics of extortion the best way they knowhow despite knowing the reality. Unfortunately, outsourcing for third foreign party to cover up their tracks are becoming increasingly popular to sustain their unethical if not criminal activities.

At the meantime, no one knows why EIB throw away 100 million dollar of taxpayers’ money to back up private investment under a rogue regime in a verge of collapse. Nor, one can figure out why two expats needed the backing of EIB to invest in their motherland unless they are playing middlepersons for the illegitimate ethnic dictatorship hell-bend to rob the nation.

Johan Borgstam, Head of the European Union Delegation to Ethiopia claim; European Investment Bank’s “new cooperation with Cepheus demonstrates the European Investment Bank’s commitment to Ethiopia and support for economic growth across the country in the years ahead” is a classic case of the low expectation of Africans deserving questionable private parties’ investment coming out in the open from the highest level of EU government. No longer humanitarian ground an excuse for supporting dictatorship of poor nation replaced by cooperation with ‘private’ investors the new and improved instrument to do the same across the sponsors of dictatorship.

We can’t wait to hear Mr. Johan Borgstam explain how the Bank made the decision to cooperate with a one-year-old Cepheus Growth Capital Fund run by two expat out of New York and London without providing their background, the regulatory regime they operate under in EU, England and Ethiopia and without providing the name of ‘the leading companies in Ethiopia” they supposedly invest on.

It time Ethiopians collectively make the responsible parties in EU and its European Investment Bank and its partner Cepheus and the parties in the Ethiopian government agencies accountable as we should every make-believe private investor, partner in the name of PPP and sponsor in the name of supporting economic growth that appears to be a coordinated plan to extort the people of Ethiopia.

fitsum-aregaThere is lots of blame to go around who may be responsible but, no one come close than those expat that flaunt their Ethiopian nationality in collaboration with the Investment Commission led by Director General Fitsume Arega the third TPLF member to hold the same position since 1991 (pictured left) and their accomplices in diaspora.

It’s time for independent Media investigate their activities worldwide to protect the people of Ethiopia from modern day invasion instigated by the illegitimate regime for the last two half decades.