Four top executives of Purpose Black S.C., an Ethiopian real estate and grocery store investment company, were detained by police in the capital Addis Ababa on Friday over allegations of involvement in a controversial financial scheme.
The arrests come after an investigation by Ethiopia's Ministry of Justice and the Addis Ababa Police Commission into Purpose Black's business operations and marketing strategy.
The company had promised shareholders ownership stakes in apartment buildings and other real estate projects in exchange for their investments. But authorities allege the executives misled many investors by claiming the projects were further along than they actually were.
Employees at various levels, including senior management, are also accused of receiving improper commissions for registering new shareholders, some of whom may have been deceived about the nature of their investments, sources close to the probe said.
Purpose Black was founded by CEO Fisseha Eshetu and had ambitious expansion plans, including acquiring a large property for five billion dollars. But a key deal fell through, leaving nearly 1,750 shareholders in limbo without the homes they thought they had purchased shares in.
The detained executives - CEO Ermias Birhanu, and three others - are being held for questioning and are expected to appear in court on Monday to face charges including "fraudulent marketing practices" and corruption.
The arrests strike another blow to Purpose Black, which has seen its fortunes decline amid the investigation. Its bank accounts were frozen for weeks before briefly being unfrozen, only to be suspended again as the probe advanced. Most of the company's 1,600 employees have gone unpaid.
Founder Fisseha recently left the country citing threats, though his departure has only angered disgruntled shareholders eager to recoup their investments.
The situation represents a major setback for the once high-flying company and its many stakeholders.
