Arik Air has never collaborated with debt recovery efforts, former Amcon executive told the court

Former Executive Director of Corporation Asset Management Nigeria (AMCON), Abbas Jega, has told the Lagos State High Court that Arik Air consistently failed to cooperate with Amcon’s efforts to restore debts owed to the company.

Testifying on Wednesday before Judge Mojisola Dada in the Court of Special Violations in Ikeja, Jega painted a picture of resistance and prolonged avoidance by the airline, who has been under the federal recipient since 2017 due to increased debt that exceeds ₦ 300 billion.

Emerged as a witness to the third prosecution in the ongoing trial initiated by the Economic and Financial Crime Commission (EFCC), Jega gave insight into complex relationships between Arik Air, Union Bank, and Amcon. EFCC accused that Ahmed Kuru, a former Director of AMCON, along with another main defendant, Roy Ileegbodu (Arik Air Organizing Director), Kamilu Omokide (Recipient Manager), Union Bank PLC, and Super Bravo Limited, deceived Arik Air from ₦ 76 billion and $ 31.5 million.

Jega, who once oversees credit transactions in Amcon, explained that the Union Bank initially told Amcon that they had changed the guarantee issued in the name of Arik Air into an unorganized loan, in accordance with the direction of the Nigeria Central Bank (CBN).

“That was during a meeting in London with Arik’s foreign lender, we found what the Union Bank sold to Amcon was not a loan, but a guarantee,” Jega said. “It is intended to cover Arik’s obligations if it fails. Upon we return, we demanded an explanation from the union bank and finally agreed that Amcon would bear the responsibility only if Arik failed.”

Jega added that regardless of several invitations, the Chairman of Arik Air at the time, Johnson Arumemi-Ikhide, repeatedly avoided discussions with Amcon, who seemed under the belief that the airline did not have a default loan with a union bank.

“He did not realize that once Amcon took over the loan, you were blacklisted from loans in the banking industry,” Jega explained. “The pressure took him to the negotiation table, and we signed a restructuring agreement. Amcon even provided additional funds to help Arik remain operational.”

But short -lived cooperation.

According to Jega, Arik continued to default, even after receiving financial life. “Arik cannot adapt to the new structure. They cannot collect working capital from the money market anymore, and their operations are not sustainable.”

He revealed that Amcon explored various rescue strategies, including the proposed-debt swap that would make Amcon shareholders in Arik, which resulted in the owner of the inheritance to lose control. “We are also considering installing a management team, MD and CFO, to provide Amcon’s financial supervision, and although Arik initially agreed, they continued to implement implementation,” Jega said. “That’s the situation when I left Amcon in 2015.”

Under the cross examination, Jega clarified that two defendants, omokide and illegbodes, did not play a role in the acquisition of loans from the Union Bank or in a critical meeting of London involving foreign creditors Arik.

He associated Arik’s financial collapse with excessive trade, the tendency of airlines to excessive operations outside of his financial capacity, which added to his inability to pay obligations.

At the time of Jega’s departure from Amcon in 2015, Arik owed corporate more than ₦ 100 billion, the debt that he said was still not paid.

He also noted that Arik’s exposure to Amcon was included loans obtained from union banks and keystone banks, while additional obligations from Zenith Bank were acquired after leaving the agent.

The court postponed the process until 30 June, July 1, and July 2, for the continuation of Jega’s cross -examination.