During the occupation, Hailu was treated with respect and given honors few other Ethiopian nobles received from the Italians. He retained his pre-occupation titles of "Leul" and "Ras", and the Italian government awarded him the Star of Italy and the Order of Saints Maurice and Lazarus, and restored his lands which had been confiscated from him in 1935. Graziani himself exempted him and his family from the repercussions of Yekatit 12. which led to the deaths or imprisonment of many respectable Ethiopians. The Italians dangled the title of "Negus" in front of Hailu but never actually granted it to him. The Italian Intelligence Service reported in 1939 that once he was granted that title, Hailu planned to provoke an uprising, drive out the Italians, and assume control of Ethiopia for himself.