Ex-Bank Director Narrates How He Wrote Off $2.3m Arik Air Debt
A former Group Executive Director of Union Bank Plc, Mr. Austine Obigwe, on Wednesday testified before a Lagos State Special Offences Court in Ikeja, revealing how he wrote off a $2.3 million debt owed to his private company, Staal, by the troubled airline, Arik Air.
Obigwe, who testified as the second prosecution witness in the trial of former Managing Director of the Asset Management Corporation of Nigeria, AMCON, Mr. Ahmed Kuru, and four others, explained that he took the decision in 2011 after Arik Air began experiencing operational turbulence.
According to him, the debt arose two years after his exit from Union Bank in 2009, and he forgave it as a commercial decision.
“I am not interested in collecting it. I wrote it off when I discovered that Arik Air started having challenges,” he said during cross-examination.
Obigwe, led in evidence by Dr. Wahab Shittu (SAN), further revealed that after leaving Union Bank, he became a consultant to Arik Air and other organisations. He also admitted having a personal relationship with Arik Air founder, Sir Johnson Arumemi-Ikhide, though he currently has no formal business ties with the airline.
Kuru and co-defendants — former Arik Air Receiver Manager, Mr. Kamilu Omokide; Arik CEO, Capt. Roy Ilegbodu; Union Bank of Nigeria Plc; and Super Bravo Ltd — are being prosecuted by the Economic and Financial Crimes Commission (EFCC) on a six-count charge bordering on conspiracy, stealing, and abuse of office involving over N76 billion and $31.5 million.
All defendants pleaded not guilty. Justice Mojisola Dada granted them bail in the sum of N20 million each with one surety in like sum.
Obigwe also offered insight into Arik Air’s financial relations with Union Bank during his tenure. He stated that while in office, Arik Air met its loan obligations and that the facilities extended to it were performing.
“Until I left the bank in 2009, all facilities extended to Arik were performing. There was no default,” he told the court.
He disclosed that Union Bank provided guarantees to Arik Air for the purchase of five aircraft — three Boeing 737-800 for domestic use, and two wide-body Airbus A340-500 aircraft used on international routes to New York and London. These transactions, he said, were backed by export credit agencies including Coface of Germany, ECGD of the UK, and the US EXIM Bank.
“The three of them are also shareholders. The two Boeing aircraft were financed by the Export Credit Agencies. Union Bank did not commit any money for the guarantee of the 85 per cent,” Obigwe explained.
He added: “We also had a second transaction for two wide-body aircraft — A340-500 — with Coface of Germany and ECGD of UK. Union Bank stood in as guarantor, but there was no direct financial commitment from the bank.”
During cross-examination by defence counsel — including Mr. Olasupo Shasore, SAN; Mr. Olalekan Ojo, SAN; and Mr. Tayo Oyedepo, SAN — Obigwe stated that he participated in an inspection of 26 Arik aircraft in 2009, which were certified airworthy by Lufthansa.
“I had no reason to doubt Lufthansa’s evaluation,” he said, noting that the inspection aimed to confirm the operational strength of the airline’s fleet.
When asked whether other financial institutions raised concerns about Arik’s loan repayment, he said no such issues were brought to his attention during his tenure.
Responding to questions about a letter dated April 23, 2009, allegedly written by AMCON to Union Bank regarding a N46.11 billion debt, Obigwe said he was unaware of it and that the correspondence never reached him before his departure from the bank.
Speaking on remedies available to financial institutions when a borrower defaults, the former bank executive noted that the lender may assign or transfer the debt to another bank, or enforce the security backing the facility.
He affirmed that banks are legally empowered to dispose of collateral in the event of a borrower’s default.
“I can only speak for the period I was there. When I was in Union Bank, Arik Air was one of the best companies,” Obigwe added when asked to appraise Arik’s character and corporate management.
Justice Dada adjourned further hearing to June 4, for continuation of trial.
