Alleged N76bn Fraud Trial: EFCC witness says Arik Air loan was performing, 38% foreign loan paid before AMCON takeover

A prosecution witness in the ongoing trial of former Managing Director of the Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, and others over an alleged N76 billion and $31.5 million fraud, has told the court that Arik Air had already repaid 38 per cent of its foreign loan obligations before the airline was taken over by AMCON.

The witness, Bawa Usman Kaltungo, who appeared as the fourth prosecution witness (PW4), gave the testimony before Justice Mojisola Dada of the Special Offences Court sitting in Ikeja, Lagos.

Kaltungo, an investigator with the Economic and Financial Crimes Commission (EFCC) and Acting Zonal Director of the Lagos Zonal Directorate 2, Ikoyi, continued his examination-in-chief led by prosecution counsel, Wahab Shittu (SAN), at the resumed hearing on Tuesday.

Ahmed Kuru is standing trial alongside Kamilu Alaba Omokide, Captain Roy Ilegbodu, Union Bank of Nigeria Plc and Super Bravo Limited on a six-count charge bordering on conspiracy, stealing and abuse of office.

According to the EFCC, the defendants allegedly orchestrated the fraudulent transfer and conversion of funds linked to Arik Air’s loan obligations.

One of the charges alleged that Union Bank, sometime in 2011, made false representations to AMCON regarding the status of Arik Air’s loans and bank guarantees, leading to the transfer of an alleged bogus N71 billion liability to AMCON.

Another count accused Kuru, Omokide and Ilegbodu of fraudulently converting N4.9 billion belonging to Arik Air for the benefit of NG Eagle Limited in 2022.

During proceedings, Kaltungo referred to Exhibit P52, which he described as a letter recovered during investigations from Union Bank to the Executive Chairman of Arik Air, dated October 4, 2010.

According to him, the document, titled “Advice on Maturing Quarterly Repayment Obligations Second Airbus A340/500/MRM 912,” showed that Arik Air was servicing its foreign loan obligations through quarterly repayments.

“The letter is evidence showing that in the last quarter of 2010, advice was issued for repayment. Investigation revealed that payment was made in December of the same year,” he told the court.

The witness alleged that despite the repayments, Union Bank converted the guarantee into a loan and subsequently sold it to AMCON while classifying it as non-performing.

“Union Bank illegally converted the guarantee into a loan and sold it to AMCON, claiming it was a non-performing loan. This letter shows that the foreign loan was performing optimally,” he said.

Kaltungo further alleged that Union Bank withheld N51 billion belonging to Arik Air instead of using the funds to settle foreign creditors.

According to him, the airline had already paid 38 per cent of the foreign loan before the takeover.

“Arik has paid 38 percent of its loan to foreign creditors. However, when Union Bank converted the Arik guarantee of N51 billion, it did not pay the foreign creditors from the funds,” he said.

He added that investigations revealed that Union Bank, which acted as guarantor for the foreign facility, failed to discharge its obligations to the creditors.