Italian Bank’s Secret Deals with Eritrean Elite Exposed

Asmara, Eritrea - Documents have surfaced revealing the Italian bank, Banco di Roma’s, secret dealings with the Eritrean elite in the 1950s. The bank, which had been operating in Eritrea since 1880, allegedly provided mortgage loans to prominent members of the Eritrean administration and their relatives.

Bribes or Political Protection?

According to sources, these transactions were nothing less than bribes in return for political protection. The bank’s management believed that these facilities were crucial to secure the support of the local ruling class, even though inspectors dispatched from Rome described the operations as irrational from an economic point of view.

Loan Transactions

The nature of the loans also highlights how borrowing was aimed at speculation in property to generate rent, rather than fostering long-term productive investments. For example, Asfaha Woldemichael, the Chief Executive of the Eritrean government, obtained Eth $50,000 to purchase seventy-one shares of the Barattolo share company, a large Italian firm that offered generous dividends to shareholders.

Local Petty Entrepreneurship

But the bank’s dealings didn’t stop there. It also granted small loans to Eritrean clients working in wholesale trade, retail, livestock and artisanal textile production, contributing to the emergence of local petty entrepreneurship. This move allowed the bank to obtain recognition from the Eritrean administration for its role in the development of the former colony, demonstrating the importance of maintaining an alternative financial outlet to the State Bank of Ethiopia.

Fear of Hostile Government Circles

The desire to cultivate a preferential relationship with the Eritrean elite stemmed from fears that the protection of the UN resolution was not enough, and that hostile government circles in Addis Ababa would exploit every means at their disposal to close down the bank’s offices. The most vocal representative of Ethiopia’s economic nationalism, Minister of Finance Mekonnen Habte Wolde, had been aggressive towards foreign firms, accusing them of exploiting the country’s economic wealth.

Material Factors

However, documents reveal that Mekonnen Habte Wolde’s hostility towards Banco di Roma was driven by material factors related to the impossibility of extracting rents from the bank, rather than ideological opposition to Italian capital in itself. The bank’s management had been trying to negotiate with him about the possibility of opening a liaison office in Addis Ababa, but the talks failed to yield any concrete results.

Calls for Transparency and Accountability

The revelations have sparked widespread outrage and calls for greater transparency and accountability in the banking sector. “These secret dealings undermine trust in the banking system and highlight the need for stricter regulations,” said local businessman, Hagos Ghebrat Ghebretinsae. “It’s time for a thorough investigation into these allegations and for those responsible to be held accountable.”

Investigations Underway

The Italian government has yet to comment on the allegations, but sources close to the bank have confirmed that an internal investigation is underway. The Eritrean government has also announced plans to launch its own probe into the matter.

Stay tuned for further updates on this developing story.