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Abbas Jega, the former executive director of credit at the Asset management Corporation of Nigeria (AMCON) testified against Union bank plc at the Lagos state special offences court in Ikoyi, stating that they fraudulently sold performing loans to AMCON.
Jega, the third prosecution witness (PW3), made before Justice Mojisola Dada on Wednesday, June 4.
He stated that Union bank presented a foreign loan guarantee as a defaulted loan during its transaction with AMCON.
Jega noted that the fraud was uncovered during a tripartite meeting in London that included officials from Union Bank, AMCON, and international lenders.
He explained that AMCON paid Union Bank on behalf of Arik Air, believing it was acquiring a defaulted loan.
Upon further review, AMCON discovered the loan was actually performing and subsequently demanded a refund.
Jega also noted that AMCON tried to salvage Arik Air by appointing a new managing director and financial controller, but the airline delayed the implementation.
He clarified that AMCON, under regulations from the Central Bank of Nigeria (CBN) regulations, is only authorized to acquire non-performing loans.
Jega noted that in the aviation sector, direct bank loans are uncommon for aircraft purchases.
Instead, banks provide guarantees like the one Union bank gave for Arik.
He said after the loan transfer, Arik’s chairman became uncooperative, insisting he had no obligations to AMCON since the loan was not truly in default.
This testimony is part of the ongoing trial of former AMCON Managing Director (MD) Ahmed Kuru, Arik’s former receiver manager, Kamilu Omokide, Chief Executive Officer (CEO) of Union bank Roy Ilegbodu.
They face a six-count charge including conspiracy, abuse of office, and theft involving N76 billion and $31.5 million.
The Economic and Financial Crimes Commission (EFCC) stated that in the year 2011, the defendants fraudulently claimed Arik’s loan was non-performing, leading AMCON to acquire it for ₦71 billion.
The EFCC also accused Kuru, Omokide, and Ilegbodu of diverting N4.9 billion from Arik in 2022 to another entity, NG Eagle Limited.
One charge involves authorizing the dismantling of an aircraft (5N-JEA, Serial No. 15058), worth $31.5 million, allegedly damaging Arik and Nigeria’s economic interests.
These offenses fall under Sections 73, 96, 278(1), and 278(6) of the Lagos State Criminal Law of 2015.
However, all defendants have pleaded not guilty.
Austine Obigwe, a former Group Executive Director of Union Bank and the second prosecution witness, had earlier testified last year that he inspected 26 Arik aircraft in 2009 and found them airworthy based on Lufthansa’s assessment.
Obigwe who is currently a consultant to Arik and other firms, stated that the airline was not in default during his time at Union bank, and no lenders had raised any issues.
He confirmed that Union bank provided guarantees, not direct loans for Arik to access financing from Hong Kong and Shanghai Banking Corporation (HSBC) and the United States (US) Export-Import bank (EXIM) for aircraft acquisitions.
However, under cross-examination, Obigwe admitted he had a prior relationship with Arik founder Joseph Arumemi-Ikhide and disclosed that Arik owed his consulting firm, Staal, $2.3 million as of 2011, a debt he later wrote off due to Arik’s financial troubles.
The first prosecution witness, Peter Omokaro, a former Assistant General Manager at Union Bank, earlier told the court that Union Bank had guaranteed Arik’s aircraft purchases from Airbus and Boeing.
He said those guarantees were sold to AMCON in 2010 and 2011 without Arik’s involvement in key negotiations.
Omokaro confirmed the loan arrangement occurred before Kuru became AMCON’s MD and noted that Union Bank later tried to legalize the transaction after realizing it was irregular.
Justice Dada then adjourned the case to Monday, June 30 for further hearing.
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