Ethiopia Ratifies Bill Allowing Expropriation of Unexplained Wealth Going Back a Decade

A high-octane bill that enables authorities to investigate and seize assets acquired through “unexplained means” was ratified with three objections by Ethiopia’s parliament. The legislation subjected to significant public backlash when it was tabled to the House in June allows authorities to confiscate property based on civil standards of proof even without a criminal conviction.

The asset recovery proclamation consolidates existing criminal, anti-corruption, and anti-money laundering laws into a unified framework. However, in a landmark departure from current laws, the bill transfers the burden of proof in establishing the legitimacy of assets to the accused. This represents a significant shift from the prevailing practice in which prosecutors had to prove the illegitimacy in acquiring assets.

Government institutions, religious organizations, political entities, and international institutions are exempted from investigations under the landmark legislation. Upon receiving credible reports, prosecutors or justice ministry-designated investigators may demand proof of legitimacy in assets accumulated going back a decade and starting from 10 million birrs. Failure to provide adequate information within two months could end up leading to freezes and seizures during the investigation and could ultimately lead to the confiscation of assets.

The law defines an Asset as any movable or immovable property, money, tangible or intangible items, and legal instruments such as cheques, virtual assets, securities, shares, and dividends. These assets could be confiscated, if an individual directly or indirectly in control of them maintains a lifestyle disproportionate to their legitimate income, unless they prove to the court how the assets or lifestyle were obtained.

Perhaps unsurprisingly, several MPs voiced strong criticisms regarding the bill. One MP cited the constitutional right to own property and the potential infringement on the supreme law of the land.

Abebaw Desalew (PhD), an opposition MP from the National Movement of Amhara (NAMA), suggested that the new bill violates the legal principle of non-retroactivity when it goes back a decade in its limits. He further questioned the autonomy of legal institutions like police, investigators, and even the Justice Ministry itself in fairly implementing the new law.

He also expressed fears that the asset recovery bill could bring about unnecessary hardship on vulnerable segments of the population instead of those who accumulated wealth through illegitimate means.

Under the asset recovery bill, regional states are expected to create complementary bureaus that conduct investigations within their administrations. Assets will be managed by institutions that have powers related to the nature of the asset during investigations.

Some MPs suggested that the implementation of the bill under the prevailing status of the legal framework could lead to plunder. One of these MPs was Abraham Moshe, who insinuated that the entire inception of the bill had to do with targeting certain entities. He also questioned the ability of courts, police, and other legal actors to operate on an impartial basis when applying the new law.

“Police occasionally restrain people freed by courts,” Abraham said. ”This is the state of our legal system.”

A spirited response to the protracted inquiries of the House was provided by Etsegenet Mengistu, Chair of the Law & Justice Committee, before the bill went into voting. She argued that the asset recovery bill does not infringe on the constitutional right to own property.

The Chairwoman explained that the 10-year retroactive implementation had to do with acceptable documents for court procedures, while the 10-million-birr valuation stemmed from estimations of taxable income.

“The bill furthers our anti-corruption aspirations,” she stated.

Etsegenet also noted the need to subscribe to international conventions regarding asset recovery. Asset recovery laws have become ubiquitous worldwide in recent years, partly guided by institutions like the World Bank through the Stolen Asset Recovery Initiative (StAR). Non-conviction-based asset forfeiture laws have also been explored by the Basel Institute’s International Centre for Asset Recovery, which led a 24-month program entitled “Supporting Stakeholders in Adopting Non-Conviction Based Forfeiture as a Tool for Asset Recovery two years ago.

Nearly 17 billion dollars of assets have been returned, frozen, or confiscated in 563 international asset recovery cases, according to the StAR’s database.