Prosecutors Drop All Charges Against Websprix CEO Dawit Birhanu

After more than seven months in detention, Dawit Birhanu, the chief executive officer and co-founder of WebSprix IT Solutions, walked free last week from Aba Samuel Prison after judges at the Lideta Federal High Court ordered his release. 

The court moved to order his release after prosecutors dropped all seven charges against Websprix, the CEO, its Board Chairman, Mekdes Aklilu, and Vice President Abraham Meniwelet. The charges alleged facilitating contraband, tax evasion, and presenting money obtained through criminal activity as legitimately gained.

At the heart of the case lies an investigative audit by a team from the Revenues Ministry. While the company had gone through regular audits and paid taxes for the period in question, the auditors referenced a federal police investigation to open an investigative audit. The police investigation suspected the company of committing several crimes, including money laundering, in connection with two salt producers.

In their audit findings, the Revenue Ministry claimed that about 204 million Birr in profit taxes, VAT, and stamp duties tied to foreign software purchases remained unpaid over a five-year period. Following the audit, federal prosecutors also brought charges against the defendants, accusing them of engaging in a series of financial crimes spanning between 2017 and 2023.

Websprix challenged the findings of the audit in October through a formal appeal to the tax complaint review office.

“The case was entirely built on a flawed audit,” Molalegn Abebe, Dawit’s lawyer, told Shega. “Dawit was imprisoned while we were still in the process of appealing the audit findings, which is a violation of due process.” 

The company has been appealing the audit findings and last month received an adjusted assessment, nearly ten times less than the initial ruling. 

Similarly in the court proceeding, a crucial element of the rebuttal by the defense team centered on the auditor's claim that Websprix failed to pay customs duties on imported software licenses. The company argued that under Ethiopian law, software is considered an incorporeal chattel and therefore exempt from customs duty. 

Fortunately, a letter written by Eyob Tekalign (PhD), State Minister for Finance, to the Justice Ministry last month stated that there is no applicable law about customs duties on software. He was responding to a month-old inquiry from the Justice Ministry on clarity over Ethiopia’s contraband law on software imports. 

Dawit Birhanu is a former employee of Cisco, an American multinational digital communications technology conglomerate corporation headquartered in San Jose, California. He moved back to Ethiopia in 2011 to co-found Websprix, which introduced a new model of internet service within Ethiopia’s private sector.  To date, WebSprix had deployed over 3,200 kilometers of fiber and extended fiber-to-the-home (FTTH) service to 420,000 Ethiopian households and has plans to reach 1.2 million by 2026 and up to 7 million by 2030, according to its internal memos. Following his arrest, former colleagues at Cisco had begun an online petition on change.org calling for his release on bail and the unfreezing of Websprix assets.