Ex-AMCON director testifies in court against Union Bank in alleged N76bn, $31.5m fraud

A former Executive Director of Credit at the Asset Management Corporation of Nigeria (AMCON), Abbas Jega, has told a Lagos court that Union Bank Plc fraudulently sold performing loans to the corporation.

Mr Jega, testifying as the third prosecution witness (PW3), made the disclosure on Wednesday while testifying before the Lagos State Special Offences Court presided over by Mojisola Dada, a judge.

He said the bank sold the loans to AMCON as if they were non-performinng.

He said the bank misrepresented a foreign loan guarantee as a defaulted facility during a transaction with AMCON.

Led in evidence by prosecution counsel Wahab Shittu, who is a Senior Advocate of Nigeria (SAN), Mr Jega said the deception came to light during a tripartite meeting in London involving Union Bank officials, AMCON representatives, and international lenders.

The revelation emerged during the ongoing trial of former AMCON Managing Director Ahmed Kuru, who is standing trial alongside four others over allegations of N76 billion and $31.5 million fraud.

“Following the London meeting, it became clear that what Union Bank transferred to AMCON as a loan was actually a guarantee extended to foreign lenders. The nature of the facility had changed—it was not a non-performing loan,” he said.

Mr Jega said AMCON paid Union Bank on behalf of Arik Air based on the understanding that it was purchasing a defaulted loan.

However, upon review, he stated that AMCON discovered the debt was not in default and demanded a refund.

“AMCON did not disburse funds to Arik directly. The money paid to Union Bank was meant to acquire a non-performing loan. But it turned out Arik’s obligation was tied to a foreign guarantee, not a loan default,” Mr Jega added.

He also testified that AMCON attempted to rescue the struggling airline by appointing a managing director and financial controller, but Arik delayed implementing the arrangement.

Mr Jega further explained that under the Central Bank of Nigeria’s regulations, AMCON is only permitted to purchase non-performing loans from financial institutions.

He said the aviation sector rarely uses direct bank loans for aircraft acquisition, instead relying on guarantees structured by banks—such as the one Union Bank provided for Arik.

He also noted that Arik’s chairman became uncooperative after the transfer, arguing he had no obligations toward AMCON since the facility was not technically in default.

Background

The Economic and Financial Crimes Commission (EFCC) had on 20 January arraigned Mr Kuru, former receiver manager of Arik Air Kamilu Omokide, Arik CEO Captain Roy Ilegbodu, Union Bank, and Super Bravo Limited on a six-count charge of stealing, abuse of office, and conspiracy.

The EFCC said the defendants fraudulently misrepresented Arik Air’s loan status as non-performing in 2011, leading AMCON to acquire the airline’s debt for N71 billion.

The Commission also accused Messrs Kuru, Omokide, and Ilegbodu of diverting N4.9 billion of Arik’s funds in 2022 to another entity, NG Eagle Limited.

Another count said the defendants authorised the teardown of a valuable aircraft—5N-JEA (Serial No. 15058)—valued at $31.5 million, allegedly harming Arik and Nigeria’s economic interests.

The charges fall under Sections 73, 96, 278(1), and 278(6) of the Lagos State Criminal Law, 2015. All the defendants have pleaded not guilty.

Previous witnesses

PREMIUM TIMES reported earlier that Austine Obigwe, a former Group Executive Director of Union Bank and the second prosecution witness, told the court he had participated in the 2009 inspection of 26 Arik aircraft and found them airworthy based on Lufthansa’s evaluations.

Mr Obigwe, now a consultant to Arik and other firms, said the airline was not in default on its obligations during his tenure, and no financial institution had raised concerns with Union Bank at the time.

He confirmed that Union Bank had issued guarantees for Arik to access facilities from HSBC and the US EXIM Bank for aircraft purchases, but had not disbursed cash directly.

Under cross-examination, Mr Obigwe admitted to a past relationship with Arik’s founder, Joseph Arumemi-Ikhide, and disclosed that airline owed his consulting firm, Staal, $2.3 million as of 2011, a debt he eventually wrote off after the airline’s financial difficulties emerged.

READ ALSO: Alleged N76bn, $31.5m Fraud: EFCC arraigns ex-AMCON boss, others

Meanwhile, the trial’s first witness, Peter Omokaro, a former Assistant General Manager at Union Bank, had earlier testified that the bank guaranteed facilities for Arik to acquire aircraft from Airbus and Boeing. 

He said the guarantees were later sold to AMCON around 2010 and 2011, without Arik’s participation in critical negotiations.

Mr Omokaro noted that the loan arrangement predated Mr Kuru’s tenure as AMCON MD and that Union Bank had attempted to “legalise” the sale of the guarantees to AMCON after realising the transaction’s irregularity.

Kuru’s other legal troubles

Separately, the EFCC has charged Mr Kuru in another case involving the alleged diversion of N20 billion in AMCON funds through Heritage Bank to finance Sigma Golf Nigeria Ltd’s acquisition of Keystone Bank. 

While Mr Kuru pleaded not guilty in that case, Sigma Golf accepted a plea deal and was convicted.

Mr Dada adjourned further proceedings in the current trial to 30 June.