EFCC witness alleges irregularities in Arik Air loan transaction

A crucial testimony emerged in the Lagos Special Offences Court, where an Economic and Financial Crimes Commission (EFCC) official, Bawa Usman Kaltungo, detailed alleged irregularities in a foreign loan transaction involving Arik Air and Union Bank. Kaltungo, an Assistant Director with the EFCC, presented a narrative suggesting that what began as a guarantee for foreign lenders was systematically distorted. The core of his testimony is that Union Bank, rather than being the original lender, merely acted as a guarantor, a role that was allegedly manipulated to convert a performing facility into a non-performing loan.

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The bank was not the original lender to Arik Air. It only participated in the transaction as a guarantor for foreign lenders.

This alleged reclassification is at the heart of the prosecution's case. Kaltungo claims that Arik Air had repaid a substantial portion, about 38%, of the loan before it was declared non-performing. This classification, he argues, did not accurately reflect the facility's status and paved the way for the loan to be sold to the Asset Management Corporation of Nigeria (AMCON) for around N51 billion. The implication is that the bank profited from this conversion, while Arik Air faced severe financial repercussions. The EFCC's stance is that the representation of the airline having defaulted entirely was inaccurate, leading to a significant financial imbalance.

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What started as a guarantee was mischaracterised and the facility was eventually converted into a non-performing loan and transferred to AMCON.

Further compounding the allegations are concerns about the disposal of Arik Air's assets. Kaltungo pointed to discrepancies in the proceeds from the sale of the airline's shares in Zenith Bank and aircraft. While the aircraft sales alone should have generated over N32 billion (converted at N360 to a dollar), only about N9.2 billion was reportedly applied to the airline's loan obligations. This leaves a staggering over N28 billion unaccounted for, raising serious questions about financial accountability and transparency. The EFCC's detailed account, citing poorly documented transactions and missing records, underscores the gravity of the alleged financial malfeasance and its impact on the airline's assets.

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Arik Air had repaid about 38 per cent of the loan before it was classified as non-performing. That classification did not reflect the true state of the facility.