Austine Obigwe, a former Group Executive Director of Union Bank Plc, has testified at the Lagos State Special Offences Court in Ikeja in a trial of the bank and other defendants charged with defrauding Arik Air, a major Nigerian airline, N76 billion and $31.5 million.
Union Bank and a former Managing Director of Assets Management Corporation of Nigeria (AMCON), Ahmed Kuru, alongside four others are facing six charges of defrauding Arik Air through alleged misrepresentation of the airline’s financial standing, among other assets stripping schemes.
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The other four defendants are Roy Ilegbodu, Managing Director of Arik Air; Kamilu Omokide, Receiver Manager of Arik Air, and Super Bravo Limited.
A statement from the Economic and Financial Crimes Commission (EFCC), on Thursday, said Mr Obigwe appeared as the second prosecution witness on Wednesday.
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He fielded questions under cross-examination by defence lawyers.
The defence lawyers comprised Olasupo Shasore, a Senior Advocate of Nigeria (SAN) (for the second defendant); Olalekan Ojo, also a SAN (for the fourth defendant); and Tayo Oyetibo, another SAN (for the fifth defendant). The witness was earlier led in evidence by prosecution lawyer Wahab Shittu, also a SAN.
Mr Obigwe informed the court that he participated in an inspection of 26 aircraft belonging to Arik Air in 2009.
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He said he found the aircraft 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, Mr 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.
When asked to react to a letter dated 23 April 2009 AMCON sent to Union Bank concerning a N46.11 billion debt owed by Arik Air, Mr Obigwe told the court the letter was not brought to his attention while he was still with the bank.
Mr Obigwe’s claims regarding the loans go to the heart of the principal charges in the case, which alleges that Union Bank fraudulently misrepresented Arik Air’s loan value as N71 billion in 2011 to mislead AMCON and prompt an unwarranted loan sale.
In another count, EFCC alleged that, in 2022, Mr Kuru (the former managing director of AMCON), Mr Omokide as Receiver Manager of Arik Air, and Mr Ilegbodu, Chief Executive Officer of Arik Air Limited in Receivership, fraudulently diverting N4.9 billion of Arik Air’s funds to another company, NG Eagle Limited.
Additionally, EFCC charged the same set of persons with abusing their official positions by authorising the tearing down and destruction of a valuable aircraft, an act said to harm both Arik Air and Nigeria’s economic interests.
The commission alleged that the defendants intentionally authorised the destruction of 5N-JEA aircraft with Serial No. 15058 valued at $31.5million “with the intention of obtaining undue advantage” for themselves and cronies.
Origin of controversial loan
Earlier in March, the first prosecution witness, Peter Omokaro, who is a former Assistant General Manager with Union Bank, shared insights in testimony into the origin of the controversial loans that led to the charges.
Arik Air is a major Nigerian airline founded in 2002 by Joseph Arumemi-Ikhide, operating domestic, regional, and international flights.
Mr Omokaro recalled that Union Bank guaranteed facilities secured by Arik Air from two foreign banks, HSBC Bank and US EXIM Bank, to facilitate the acquisition of aircraft from Airbus and Boeing.
“Union Bank in turn collected indemnity from Arik Air and the aircraft were delivered,” the first prosecution witness said while being led in evidence by prosecution lawyer, Mr Shittu.
He added that at no point did Union Bank disburse cash for the acquisition of the aircraft.
He said, in August 2009, the Central Bank of Nigeria (CBN) sent a team to take over Union Bank and “for AMCON to buy non-performing loans and commercial papers.”
“Thereafter the executive management of Union Bank went ahead to sell the guarantee to AMCON. This happened before the end of December 2010 and in early 2011,” he said., adding, “When Union Bank discovered the error and tried to see how to legalise the wrong, a meeting took place in London between AMCON, Union Bank, HSBC Bank, and US EXIM Bank with the exclusion of the main obligor, which was Arik Air.”
He said he was not at the London meeting.
But he told the court that it was from the minutes of the meeting he got to know that Union Bank wanted to step in as obligor to take over the responsibility of Arik Air.
Mr Omokaro also testified that Arik’s debt issues with Union Bank predated Mr Kuru’s tenure as MD/CEO of AMCON.
Other issues
Testifying further on Wednesday, Mr Obigwe, the former Group Executive Director of Union Bank, told the court 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, Mr Arumemi-Ikhide, was a personal acquaintance, he responded in the affirmative.
He, however, added that while he no longer has a formal relationship with the airline, he still maintains a relationship with Arumemi-Ikhide.
When asked to speak about 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.”
Also, when asked about the options available to lenders when a loan becomes non-performing, Mr Obigwe said that the lender might choose to transfer the loan to another bank, reassign it, or enforce the security tied to the loan.
“A lender is legally empowered to dispose of the security in the event of default by the borrower,” he added.
He also stated that in 2011, two years after he exited Union Bank, Arik Air was indebted to his company, Staal, to the tune of $2.3 million.
But he said he was interested in recovering the debt. “I wrote it off when I discovered that Arik Air started having challenges.”
Trial judge Mojisola Dada adjourned further hearing till 4 June.
Background
The EFCC arraigned Mr Kuru and four others before the court on 20 January, on a six counts of stealing, abuse of office, and conspiracy.
According to the EFCC, Union Bank allegedly misrepresented the status of Arik Air’s loans in 2011, inducing AMCON to purchase non-performing loans for N71 billion.
READ ALSO:: AMCON Vs Arik case: Lest we forget the facts of the matter, By Godwin Aideloje
It accused Messrs Kuru, Omokide, and Ilegbodu of fraudulently diverting N4.9 billion belonging to Arik Air to NG Eagle Ltd in 2022.
Another charge accuses the trio of authorising the teardown of an aircraft—5N-JEA (Serial No. 15058)—valued at $31.5 million, allegedly causing economic harm to Nigeria and Arik Air.
The offences are said to violate Sections 73, 96, 278(1), and 278(6) of the Lagos State Criminal Law, 2015.
All defendants denied the charges during their arraignment.
Mr Karu faces other charges in a different court where EFCC alleged that N20 billion in AMCON funds was illicitly channelled through Heritage Bank to finance Sigma Golf Nigeria Ltd’s acquisition of Keystone Bank.
While Mr Kuru pleaded not guilty, Sigma Golf Nigeria Ltd admitted guilt, leading to the company’s conviction and liquidation.
Following the guilty plea, EFCC’s lead prosecutor, Rotimi Oyedepo, a SAN, urged the court to adopt the plea bargain terms as judgement.
The court was satisfied that the agreement was voluntary and served justice, upheld it.
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