Ethiopian News & Opinion
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BGI Ethiopia has voided an agreement for the sale of its sizable headquarters near Mexico Square as Purpose Black Ethiopia fails to conclude the sale transaction on a deal reached between the two companies last year.
BGI Ethiopia blames “the lack of genuine commitment from Purpose Black” for the deal’s termination, which it announced in a statement today.
Revelations wrote: ↑08 Mar 2024, 23:45We called it by its name, a pyramid scheme! If you have seen one, you have seen'em all!
BGI Ethiopia has voided an agreement for the sale of its sizable headquarters near Mexico Square as Purpose Black Ethiopia fails to conclude the sale transaction on a deal reached between the two companies last year.
BGI Ethiopia blames “the lack of genuine commitment from Purpose Black” for the deal’s termination, which it announced in a statement today.
The vacated BGI property has not been left wanting for suitors. A nascent two-year-old company, Purpose Black Ethiopia, appears poised to acquire the property established by Emperor Hailesellasie, estimated to be worth five billion Birr. BGI-Ethiopia acquired the property through privatisation in the late 1990s, paying 10 million dollars to the state.
Purpose Black has only recently surged into public consciousness due to an unconventional, if not controversial, marketing scheme. Incorporated by Fisseha Eshetu (MD), the company has laid out an audacious blueprint for a 115-storey building dubbed "Ke'Geberew Tower".
The scheme to finance this mammoth project involves offering shares to the public, with each share worth 1.5 million Br and carrying a "gift" clause, which affords the ownership of a three-bedroom apartment of 100sqm each.
As the plan progresses, the company has slated the price of the remaining 4,000 shares to increase for late buyers, possibly reaching up to 55 million Br. The company's promoters hope these late shares will provide the remaining funds needed for the ambitious project. According to a sales representative, the third round of shares will skyrocket to a staggering 10 million Br, creating an urgency amongst prospective investors to seize the opportunity before prices escalate further.
Purpose Black's business plan claims an impressive initial success, allegedly selling 1,000 shares within the first week, mobilizing 1.5 billion Br. The company proceeded to double the price of shares for the second round to 3.5 million Br each, which its executives purport to have opened exclusively to a pool of 750 individuals.
Purpose Black was initially reluctant to disclose the tower's location. The revelation only arrived last week after a separate press release issued by BGI Ethiopia and Purpose Black. A non-disclosure agreement between both companies had previously precluded the announcement of the exact nature of the transaction, claiming a non-disclosure agreement.
"Despite accusations that we did not have the property, we just could not have disclosed the location," Fisseha, the company's public face, told Fortune.
Federal authorities recently froze the company’s bank accounts for two and a half weeks over concerns about the legitimacy of the company’s ambitious funding scheme. However, Zelalem Fekadu, a prosecutor and deputy director of corruption crimes at the Ministry of Justice, confirmed that the accounts are temporarily unblocked.
Fisseha says he has grand aspirations for Purpose Black, including constructing a corn plant-inspired, mixed-use building, which he claims would rank as the eighth tallest in the world. This 5,000sqm property will also accommodate five additional structures, each standing up to 60 storeys tall.
The contracts Purpose Black offers prospective shareholders promise a four-year construction period for the real estate project, with dividends expected to follow the subsequent year.
However, a pending public offering bill by the Ethiopian Capital Market Authority (ECMA) threatens to complicate this timeline. The bill stipulates that any public issuance of shares without a prospectus, a document confirming feasibility, could lead to a 15-year prison sentence for misleading promotion.
While Gebeyaw Semachew, a legal expert and lawyer, acknowledges that offering incentives to shareholders is permissible, he expressed reservations about the lack of detailed information in Purpose Black's contracts. He was a committee member that drafted the revised commercial code ratified two years ago. He has also consulted share companies for the past 15 years.
The subtle disparities between the contract and the final agreement offered by the company require clarification, according to Semachew, who believes closer scrutiny of the company’s performance in previous projects is warranted.
Fisseha, the lead promoter and also known for founding the country's first private university, Unity University, believes that the Ke'Geberew Tower and the accompanying real estate are symbols of the company's roots in agriculture.
Purpose Black Ethiopia was founded in 2021 by 135 shareholders as a "pro-black community" enterprise. Despite reporting losses of 63 million Br in its first year, Fisseha maintains that high expenses and losses are expected during the founding years, with significant finances allocated to acquiring assets.
Yimer wrote: ↑09 Mar 2024, 05:31Purpose Black is worse than a pyramid scam. It is similar to the Bernie Madoff scheme, but Madoff at least paid earlier investors using the money he received from new ones.
My prediction is that PB will become illiquid and the executives will go to jail in a few years.
I suspect Horus is one of the crooks.
Wedi wrote: ↑09 Mar 2024, 05:35Yimer wrote: ↑09 Mar 2024, 05:31Purpose Black is worse than a pyramid scam. It is similar to the Bernie Madoff scheme, but Madoff at least paid earlier investors using the money he received from new ones.
My prediction is that PB will become illiquid and the executives will go to jail in a few years.
I suspect Horus is one of the crooks.