Ex-Union Bank director defends Arik Air’s $2.3m debt write-off

A former Group Executive Director of Union Bank Plc, Mr Austine Obigwe, has explained how he wrote off a $2.3 million debt owed to his private firm, Staal, by airline operator Arik Air, citing the airline’s financial difficulties at the time.

The case, prosecuted by the Economic and Financial Crimes Commission (EFCC), also involves Kamilu Omokide, former receiver manager of Arik Air Limited; the airline’s CEO, Captain Roy Ilegbodu; Union Bank of Nigeria Plc; and Super Bravo Limited.

The defendants are standing trial before the State Special Offences Court, Ikeja, Lagos, on a six-count charge bordering on conspiracy, stealing, and abuse of office.

Having pleaded not guilty to the charges, each of the defendants has been granted bail in the sum of N20 million with one surety in like sum.

Obigwe, now a key prosecution witness and the second witness in the ongoing trial of the former Managing Director of the Asset Management Corporation of Nigeria (AMCON), Mr Ahmed Kuru, and four others over allegations of misappropriating a combined N76 billion and $31.5 million, told the court under cross-examination by several defence lawyers, including Senior Advocates of Nigeria (SANs) Olasupo Shasore, Olalekan Ojo, and Tayo Oyedepo, that the $2.3 million owed by Arik to his company was written off around 2011, two years after he left Union Bank, due to the airline’s operational struggles.

“I am not interested in collecting it. I wrote it off when I discovered that Arik Air started having challenges,” Obigwe told the court.

Pressed further, he admitted to having a cordial relationship with Arik Air’s founder, Sir Johnson Arumemi-Ikhide, though he clarified that he held no formal role in the airline at the time of the write-off.

He noted that after leaving Union Bank in 2009, he began consultancy work with Arik and other companies.

Addressing issues around Arik’s fleet, Obigwe confirmed that in 2009 he participated in the inspection of 26 aircraft belonging to the airline, stating that all were in good condition based on evaluations conducted by Lufthansa.

“I had no reason to doubt Lufthansa’s evaluation,” he said, adding that the inspection was aimed at confirming that the airline’s fleet had not been depleted.

He also asserted that during his time at Union Bank, Arik Air met its loan obligations and that there were no reports of defaults from other banks.

“To the best of my knowledge, Arik Air was servicing its loan with Union Bank during my tenure,” he added.

When asked about a letter dated 23rd April 2009, allegedly sent by AMCON to Union Bank regarding a N46.11 billion debt owed by Arik, Obigwe claimed the correspondence never came to his attention before he left the bank.

Obigwe, who had served as Executive Director for Corporate and International Banking, also shared technical details of Union Bank’s financial dealings with Arik Air.

He told the court that the bank acted as guarantor in a multi-party aircraft financing arrangement involving the US EXIM Bank, Germany’s Coface, and the UK’s ECGB, all export credit agencies.

“There was no payment. Union Bank did not commit any money for the guarantee of the 85 per cent,” he said, referring to the financial structure that enabled Arik to acquire five aircraft—three Boeing 737-800 for local operations and two Airbus 340-500 for international routes, specifically New York and London.

Obigwe lamented that since Arik ceased its New York route, no Nigerian airline has resumed direct flights to that destination.

He said the performance of Arik’s loan facilities remained solid throughout his time at the bank. “Until I left the bank in 2009, all facilities extended to Arik were performing; there was no default,” he testified.

Regarding loan recovery mechanisms, the witness acknowledged that lenders had legal options in the event of default, including transferring the loan, reassigning it, or enforcing the security backing the loan.

“The lender is legally empowered to dispose of the security in the event of a default,” he said.

Earlier in the trial, Obigwe had revealed that Union Bank’s international banking arm coordinated major aircraft acquisition deals for Arik, and the bank served on the board in transactions that spanned multiple jurisdictions.

The court has adjourned the matter until 4th June for the continuation of the trial.

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