Oromia Launches Corruption Investigation Into Kenticha Mining Execs

Lithium rush ends behind bars for Alfoz Plaza proprietor

Investigators and prosecutors under the Oromia Attorney General’s Bureau have launched a major corruption probe into the managers of Kenticha Mining Plc and African Mining and Energy Plc (AME) over suspicions of embezzlement and fraud involving a large-scale mining venture in Guji Zone.

Ali Hussein, general manager of Kenticha Mining (KMP) and a major AME shareholder, was taken into police custody on October 19, 2024. He is being held at a detention center in Burayu, according to The Reporter’s sources.

Sammy Million, KMP deputy general manager, has also been detained, according to these sources.

Ali is the proprietor of Alfoz Plaza, a large commercial property in Addis Ababa’s Gerji neighborhood, and is a major shareholder in Oromia Bank and the Bank of Abyssinia. He is reportedly also involved in international trade, including the coffee export business.

– Advertisement –

Prosecutors at the Oromia Attorney General’s Bureau are looking into possible fraud in Kenticha Mining’s licensing process amid allegations the company acquired concessions for lithium and tantalum extraction without fulfilling qualification requirements or undergoing the necessary due diligence.

The investigation also includes a probe into allegations of embezzlement involving USD 38 million the managers received from foreign investors, according to a source close to the matter.

KMP, a joint venture between the Oromia Mining Share Company (OMSC) and Abyssinian Metals Limited (AML), first gained a concession to mine in southern Oromia in December 2021. AML is itself a subsidiary of AME, which has more than 185 shareholders from the US, UK, and Australia, among others.

Sources told The Reporter the funds received from these shareholders and investors were never injected into the mining venture. KMP’s managers also failed to settle the terms of their contract with Oromia Mining SC, which is owned by the Oromia regional administration through the Tumsa Development Group.

The latter owns 49 percent of the Kenticha Mining joint venture, while AME owns the remaining 51 percent, according to an agreement signed in June 2021.

“Taking into consideration the possession rights for mining resources in Oromia by Oromia Mining SC on behalf of the regional government of Oromia, and the goodwill of Oromia Mining SC in Oromia, from the USD 38.1 million to be availed by AME, 49 percent will be registered as the capital of Oromia Mining SC,” reads the agreement.

Nonetheless, sources say AME failed to transfer the funds to Oromia Mining’s accounts.

Instead, AME’s managers allegedly misused the funds they raised from foreign investors as well as resources they mobilized from other sources in the name of Kenticha Mining. This includes investors in Addis Ababa, who were allegedly promised returns when KMP began exporting lithium, according to sources close to the case.

October’s arrests are the culmination of a three-year saga of controversy that has involved the Ministry of Mines and the Oromia regional government. KMP has been mired with hiccups from its inception. The underlying issues emanate from the lack of experience, technical capacity and financial resources to take on such a large venture.

In December 2022, Shimelis Abdissa, Oromia Regional President and Chairperson of Oromia Mining SC, laid out three objectives for the managers of AME, according to a letter.

These included depositing USD 30 million into an account at Siinqee Bank, commencing mining activities, and opening an office near the Kenticha mining site in Shakiso, Guji Zone, according to a letter. However, AME was unable to fulfill these terms.

The issues led the Oromia regional administration and OMSC to move to terminate the partnership with AME in October 2023, claiming the latter had failed to fulfill financial obligations and meet project progress expectations.

In May this year, the Ministry of Mines wrote a ‘Notice of License Surrender’ to KMP, instructing the firm it had five days to surrender its lithium and tantalum mining project. However, in a bizarre turn of events, that notice was accompanied by another (also from the Ministry) on the same day, granting KMP permission to enter into exploration activities for the same minerals in the same place.

The foreign investors holding stakes in AME and Abyssinia Metals have also initiated a lawsuit against KMP and its managers in a bid to get their money back.

In the midst of all these developments, the managers of KMP accused officials at the Ministry of Mines and in the Oromia regional administration of ‘illegally’ revoking the company’s license. In turn, the Ministry and administration launched the legal probe into the beleaguered mining venture.