Money & Banking

IL&FS urges Exim Bank to release funds to end Ethiopian hostage crisis

Nandana James Mumbai | Updated on January 11, 2019 Published on January 10, 2019

IL&FS Group has a debt obligation of Rs. 91,000 crore

IL&FS has urged the Export-Import Bank of India (Exim Bank) to release funds to secure the release of four employees still held hostage in Ethiopia by local staff.

In a letter to the Exim Bank, Dilip Bhatia, CEO of IL&FS Transportation Networks Ltd (ITNL), said the company has sought 4.89 million Ethiopian birr (ETB) from the bank. The local employees of IL&FS’ joint venture in Ethiopia, ITNL-Elsamex JV Bure, have demanded an additional four months’ net salary for the release of the four Indian employees who have been held hostage since November 24. “This is a crisis our employees are facing in Ethiopia and it’s our humble request to kindly let these funds be unblocked to help our employees,” the ITNL letter dated January 8, 2019, seen by BusinessLine, states, adding that the bank should take a view on “humanitarian grounds”.

It also requests an additional 500,000 ETB to be “unblocked as emergency fund” to pay the stranded Indian employees, who reportedly do not have money for day-to-day expenses. These employees, as well as the three who have been released, haven’t been paid their salaries since July.

When contacted, Exim Bank said: “We have maintained our stand that unless IL&FS has enough funds in its accounts to service the payment ... being asked by the Ethiopian authorities, Exim Bank by itself is helpless to do anything.”

In a statement on Friday, Exim Bank said it had, through various communications with ITNL-Elsamex JV (IEJV), repeatedly conveyed its agreeability to consider permitting remittance from the project accounts, subject to adequate funds being made available in the accounts to meet payment of salaries, besides statutory and local dues in Ethiopia (including the bank guarantee commission due to Exim Bank). Exim Bank swung into action on receipt of the latest request from IEJV on Tuesday (January 8, 2019) evening.

Bank officials were in continuous contact with the company throughout Wednesday and Thursday, to address all concerns of the company and Exim Bank. This was aimed at clearing the path for release of funds from the project account.

In response to the request, Exim Bank asked the company to submit a concrete plan for payment of all its liabilities, along with an undertaking to utilise funds drawn from the account only for the purpose specified.

The company furnished all the necessary information to the satisfaction of Exim Bank by Thursday evening. Given the gravity of the situation, the competent authorities at Exim Bank met at a late-night sitting on Thursday, to discuss the matter; and approved the request of the company. The Bank’s decision is being formally communicated to the Commercial Bank of Ethiopia and the IEJVtoday.

The company’s letter further states that the local staff have agreed to release the captive employees only after receiving an additional 4.89 million Ethiopian Birr (ETB), as reported by BusinessLine on January 4, 2019.

They had initially demanded 12.5 million ETB but later scaled it down to 4.89 million ETB.

Published on January 10, 2019
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