Arik loan was non-performing since inception, ex-AMCON ED tells court in ‘N76bn fraud’ trial

Abbas Jega, former executive director of credits at the Asset Management Corporation of Nigeria (AMCON), has admitted that the Arik Air debt onboarded during his tenure fell into the category of non-performing loans as defined by regulatory agencies.

A non-performing loan is a credit facility in which the borrower has ceased making payments or is unlikely to repay the loan.

Jega testified on Monday at the special offences court in Ikeja, Lagos, presided over by Mojisola Dada, the judge.

In his previous testimony on June 4, Jega said Arik’s loan — acquired by AMCON during the first phase of the eligible bank asset (EBA) purchase — was classified as performing.

He had stressed that the “guarantee was performing”.

But contrary to his earlier testimony, the witness retracted his previous claim that the loan was performing when purchased.

On January 20, Ahmed Kuru, former managing director of AMCON (second defendant), was arraigned alongside Roy Ilegbodu, managing director of Arik Air, (third defendant); Kamilu Omokide, receiver manager of Arik Air, (first defendant); Union Bank Plc (fourth defendant) and Super Bravo Limited (fifth defendant), before the Lagos court.

The defendants were accused of defrauding Arik Air (currently in receivership) of N76 billion and $31.5 million by the Economic and Financial Crimes Commission (EFCC).

In February 2017, the airline was taken over by the federal government via AMCON due to the company’s huge debt profile, estimated at over N300 billion.

Consequently, the government immediately dissolved the airline’s management team and appointed a receiver manager.

JEGA’S TESTIMONY

Under cross-examination on Monday, Jega told the court that AMCON acquired the N85 billion Arik debt from Union Bank and Bank PHB (now known as Keystone Bank Limited) and subsequently extended an additional N11 billion as working capital.

Despite the interventions, he said Arik failed to service its obligations.

Jega said Arik’s financial obligations remained unpaid when he left AMCON in 2015, confirming the loan was non-performing.

He alleged that Union Bank misled AMCON, but conceded that he, as executive director of credits, had not reviewed the loan purchase agreement detailing the credit structure.

Under cross-examination, Jega admitted that he had not escalated discrepancies in the loan acquisition to the AMCON board or the Central Bank of Nigeria (CBN).

Instead, he said the loans were restructured but remained unpaid.

Jega also confirmed that Arik and its promoters had additional loans and guarantees with AMCON, reading aloud a letter he had signed reminding Arik’s chairman of the outstanding obligations.

Jega clarified that apart from Union Bank, none of the defendants in the criminal trial were involved in the loan’s acquisition or restructuring.

He also referenced a letter addressed to him by Union Bank during his tenure, which further illustrated the challenges surrounding the transaction.

The matter was adjourned to July 1, 2025, (today) for continuation.