“It was in that London meeting that we first knew what Union Bank sold to us was not a loan, but a guarantee. The guarantee was given to some foreign lenders. In the event Arik defaulted, Union Bank would be responsible for repayments,” he told the court.
Former Executive Director, Asset Management Corporation of Nigeria (AMCON), Mr Abbas Muhammed Jega, testified Wednesday before the Special Offences Court, Ikeja, Lagos, that Union Bank misrepresented Arik by disguising a financial guarantee as a loan in a ₦76 billion transaction.
He appeared as the third prosecution witness in the ongoing trial involving former Managing Director/Chief Executive Officer AMCON, Mr Ahmed Kuru. Also standing trial are former Arik Air Receiver Manager, Mr Kamilu Omokide, former Arik CEO, Captain Roy Ilegbodu, Union Bank of Nigeria Plc, and Super Bravo Ltd.
The case, before Justice Mojisola Dada, focuses on allegations of financial misappropriation totalling ₦76 billion and \$31.5 million, largely tied to Arik Air transactions.
According to Mr Jega, Union Bank sold a financial guarantee to AMCON as though it were a non-performing loan. This misrepresentation, he revealed, became clear during a meeting in London with foreign lenders.
“It was in that London meeting that we first knew what Union Bank sold to us was not a loan, but a guarantee. The guarantee was given to some foreign lenders. In the event Arik defaulted, Union Bank would be responsible for repayments,” he told the court.
Jega stated the bank justified the sale by claiming the Central Bank of Nigeria had directed it to collapse the guarantee into a loan. This, Union Bank claimed, was due to exceeding its single obligor limit.
Returning to Nigeria, AMCON invited Union Bank for clarification and later sought to recover the funds. Jega explained that the agency demanded a refund once it was clear the deal was outside AMCON’s mandate to buy only bad loans.
Union Bank misrepresented Arik by presenting a guarantee as a qualifying asset, he said. AMCON could not legally assume foreign loan obligations for an airline without formal arrangements.
On Arik’s situation, Jega disclosed that the airline’s total debt to AMCON exceeded ₦100 billion by the time he exited in 2015. He said Arik had failed to meet repayment schedules, even after debt restructuring and additional working capital.
“Arik stretched beyond its capacity, leading to an inability to meet its repayment obligations. We provided more funds, but nothing changed,” he said.
He added that AMCON offered two solutions: a debt-equity swap and managerial control through appointment of a Managing Director and Chief Financial Officer. Arik initially agreed but failed to cooperate.
“Initially, Arik agreed. But they dragged in the implementation. This was the stage at which the matter was when I left AMCON,” he said.
AMCON insiders, however, disputed Jega’s assertion about assuming Arik’s foreign loan payments. They noted AMCON never entered any agreement to act as guarantor or pay on Arik’s behalf.
According to them, AMCON is only empowered to recover bad loans and could not lawfully take over third-party financial obligations without documented terms.
Under cross-examination, Jega confirmed neither Mr Omokide nor Captain Ilegbodu were involved in the loan acquisition or London meeting. He emphasised the deal was strictly between AMCON and Union Bank.
“The transaction was between AMCON and the banks. Arik was not a party to the loan sale,” he reiterated.
He further noted that the nature of the deal changed when AMCON took over. Arik lost access to funding markets and could not maintain performance of the originally structured guarantee.
“The burden in AMCON’s books cannot be sustained by the airline. That worsened the relationship and the financial standing,” he added.
Justice Mojisola Dada adjourned proceedings to June 30, July 1, and July 2, 2025, for continued cross-examination of Mr Jega.
