Ethiopia has seized cash from the account of Nairobi Securities Exchange (NSE) cross-listed Atlas Ltd over a tax dispute.
The firm, originally listed at the London Stock Exchange, has lost $2.4 million deposited by its subsidiary TEAP Glass PLC.
Atlas said the tax bill by the Ethiopian Revenue and Customs Authority (ERCA) is from a claim against Ardan Risk & Support Services which it acquired three years ago.
In an update sent to the NSE Atlas said it had been advised in Addis Ababa that neither it nor TEAP has any tax liability under the Ethiopian law.
“The company has been advised by its local team in Addis Ababa that on May 10, 2016 ERCA summarily removed approximately $2.4 million from TEAP’s bank account with the Development Bank of Ethiopia,” the statement read.
Atlas, which only recently announced it was investing in the Ethiopian glass-making factory, says it will ensure the funds are returned since the unilateral removal of the funds was unlawful and in breach of an agreement reached with ERCA.
It has promised to exert diplomatic and political pressure on Ethiopia to return the cash.
“The board assures shareholders that it will take all available steps to ensure that the company’s funds are returned and the board is currently exploring legal, diplomatic and political routes in order to seek redress,” the statement read.
The logistics firm took up stake in Ardan Risk & Support Services (ARSS) in 2013, which it used to acquire Ardan Logistics Kenya (ALK), a separate holding company to run the business.
However late last year, Atlas discontinued operations of its Kenyan subsidiaries (ALK, Ardan (Civil Engineering) Ltd and Ardan (Medical Services) due to a tough operating environment.
“The downturn in the oil and gas industry, market adjustments and the failure of certain key clients to settle debts, together with increasing creditor pressure has led to the decision to close its Kenyan operations,” the firm says in its financial statement.
The company suffered a $9.9 million loss in June due to reduced contracts from oil and gas exploration companies especially around Turkana and made a decision to divert its resources from Kenya to Tanzania and Ethiopia.