A prosecution witness and former group executive director of Union Bank PLC, Austine Obigwe, has explained how he wrote off a $2.3 million debt owed by Arik Air to his private company, Staal.
He testified before the Lagos State Special Offences Court sitting in Ikeja, yesterday, in the ongoing trial of the former managing director of the Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru and four others, who are standing trial over alleged financial misappropriation amounting to N76 billion and $31.5 million.
The defendants include Kuru, the former receiver manager of Arik Air Limited, Kamilu Omokide; Arik Air’s chief executive officer, Captain Roy Ilegbodu; Union Bank of Nigeria PLC, and Super Bravo Limited.
The defendants are being prosecuted by the Economic and Financial Crimes Commission (EFCC) on a six-count charge bordering on conspiracy, stealing, and abuse of office.
They all pleaded not guilty to the charges, and Justice Mojisola Dada subsequently granted them bail in the sum of N20m each, with one surety in like sum.
Under cross-examination, Obigwe informed the court that in 2011, two years after he exited Union Bank, Arik Air was indebted to his company, Staal, in the sum of $2.3 million.
He stated that the amount was never repaid but that he had written it off due to the operational difficulties faced by the airline at the time.
“I’m not interested in collecting it. I wrote it off when I discovered that Arik Air started having challenges.”
Obigwe also confirmed that following his exit from Union Bank, he began consultancy engagements with Arik Air and other companies.
When asked whether the founder of Arik Air, Sir Johnson Arumemi-Ikhide, was a personal acquaintance, he responded in the affirmative, noting that although he currently has no formal relationship with the airline, he maintains a relationship with Arumemi-Ikhide.
During cross-examination by defence counsel, including Olasupo Shasore (for the second defendant); Olalekan Ojo (for the fourth defendant) and Tayo Oyedepo (for the fifth defendant), Mr. Obigwe stated that in 2009, he participated in an inspection of 26 aircraft belonging to Arik Air.
According to him, the aircraft were found to be airworthy and in good condition, based on assessments provided by Lufthansa.
“I had no reason to doubt Lufthansa’s evaluation,” he said, adding that the purpose of the inspection was to ensure that the airline’s fleet had not been depleted.
When asked about the airline’s compliance with its loan obligations, Obigwe testified that during his tenure at Union Bank, there were no complaints from other financial institutions suggesting that Arik Air was defaulting on its loan obligations.
He also confirmed that, to the best of his knowledge, Arik Air was servicing its loan with Union Bank during his tenure.
Responding to a letter dated April 23, 2009, allegedly written by AMCON to Union Bank concerning a N46.11 billion debt owed by Arik Air, the witness stated that the letter was not brought to his attention while he was still with the bank.
On the character and management of Arik Air, the witness said: “I can only speak for the period I was there. When I was in Union Bank, Arik Air was one of the best companies.”
When questioned on the options available to lenders when a loan becomes non-performing, Obigwe responded that the lender may choose to transfer the loan to another bank, reassign it or enforce the security tied to the loan.
He acknowledged that a lender is legally empowered to dispose of the security in the event of default by the borrower.
The matter has been further adjourned for continuation of trial till June 4.
On the last adjourned date, Obigwe, who is the second prosecution witness, told the court that he was a group executive director in Corporate and International Banking, Union Bank.
He told the court that he was a board member and handled transactions with the US EXIM bank, for which Union Bank provided a guarantee in the six years he spent with the bank.
“We also had a second transaction for the two wide-body Aircraft long hubs. A 340500 and Chemist of Germany Coface of ECGB of UK. The three of them are also shareholders.
“The two Boeing were financed by the Export Credit agencies. There was no payment, Union Bank did not commit any money for the guarantee of the 85 per cent.”
The witness also told the court that the two wide-body aircraft, one flying from Nigeria to New York. “Unfortunately, since Arik stopped flying to New York, no other Nigeria airline goes directly. Until I left the bank in 2009, all facilities extended to Arik were performing, there was no default.”
Obigwe said the bank stood in as a guarantor to Arik Air to procure five aircraft, three Boeing 737-800 and two Airbus 340-500 aircraft.
He further stated that the three B737-800 were used for local operations, while the wide-body aircraft were deployed to New York in the United States and London in the United Kingdom.
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