Purpose Black S.C. an aspirant real estate and grocery store chain investor, is facing a serious crisis as its newly appointed Chief Executive Officer (CEO), Ermias Birhanu (PhD), and three other top executives, were detained by the Addis Abeba Police, August 30, 2024. The arrests were made on allegations of involvement in a controversial financial scheme.

The company's marketing strategy has recently garnered attention for its unconventional and controversial approach. Purpose Black offered shares with an enticing twist. Each share purportedly came with ownership of a three-bedroom apartment in a project that was to be unrealised, a deal that has now come under intense scrutiny. The detentions followed investigations by the Ministry of Justice, together with the Addis Abeba Police Commission. The executives are held at the Commission's headquarters in the Arada District and are expected to appear before judges on Monday, September 2, sources disclosed.

According to sources close to the investigation, the allegations against the executives include "fraudulent marketing practices", corruption, and the misuse of funds. Employees at various levels, including senior management, are alleged to have received commissions for registering shareholders, many of whom were reportedly misled into believing they were buying homes rather than shares in the company. The alleged misleading practice has drawn the ire of authorities and sparked widespread public concern.

Purpose Black, founded by Fisseha Eshetu (MD), had ambitious plans, including the acquisition of property owned by BGI-Ethiopia in the Mexico area of Addis Abeba for five billion Birr. One of its most audacious strategies involved the proposed construction of a 115-storey tower, dubbed "Ke'Geberew Tower," with each share priced at 1.5 million Br. Initially, the company’s business plan seemed to gain traction, with Purpose Black claiming to have sold 1,000 shares in the first week, raising 1.5 billion Br. In a second round of equity raising, the share price was doubled to 3.5 million Br, with the offering supposedly limited to a select pool of 750 individuals.

The company's promoters promised prospective shareholders a four-year construction period for the real estate project, followed by dividend payments in the subsequent year. However, a crucial deal between BGI-Ethiopia and Purpose Black fell apart, leaving nearly 1,750 shareholders in limbo. These individuals, who had invested with the hope of becoming homeowners, now find themselves without recourse. BGI executives have stated that Purpose Black failed to provide the required payment upfront, while its executives accused BGI-Ethiopia of refusing to pay capital gains taxes.

The dispute was eventually taken to court. Under the terms of the court ruling, BGI-Ethiopia refunded the earnest one billion Birr payment to Purpose Black. The latter has agreed to leave the property, dropping its plan to finance the construction of a residential apartment on the site.