AMCON’s Failure to Render Account on Arik Air Confirms Allegation of Mismanagement

Chinedu Eze

The failure of the Asset Management Corporation of Nigeria (AMCON) to obey the court judgement of March 31, 2023 to render account of its operations in Arik Air since it took over on February 9, 2023 till date, has confirmed  allegation that the agency might have grossly mismanaged the airline.

In December 2021, the Founder of Arik Air,  Johnson  Arumemi-Ikhide and his wife Mary Arumemi-Ikhide  (plaintiffs) filed an originating summons and prayed the court that the duty imposed on the receiver-manager, Kamilu Omokhide (first defendant) by Section 553 of the CAMA 2020 to act in the best interest of Arik Air Limited as a whole, includes the duty to act in the best interest of the plaintiffs (Johnson and Mary Arumemi-Ikhide) as members of Arik Air Limited.

Arumemi-Ikhide in addition to other prayers, prayed the court to direct the 1st and 2nd defendants to render accounts and/or deliver returns to the plaintiffs covering the entire period of the receivership over Arik Air Limited within 14 days of the making of the order.

Justice Ambrose Lewis-Allagoa, in his ruling granted most of the prayers of Arik Air founder, including “unfettered access” to the premises. The court also directed AMCON to render an account of its stewardship in the next 14 days.

But the judgment recognised the power of AMCON to appoint a receiver-manager in line with Section 34 (6) of the AMCON Act. “It is therefore clear that in the exercise of AMCON (2nd defendants) power under Section 48 (1) of the AMCON Act to appoint a receiver-manager 1st defendant, by the provisions of Section 34 (6) of the AMCON Act, the exercise of that power cannot be challenged.”

But 14 days after the court judgment, AMCON has not rendered the account of its operations, as directed by the court, thus fueling the allegation, which is gaining ground that the company under receivership might have been mismanaged and huge revenues unaccounted for.

But the Receiver Manager of the airline, Mr. Kamilu Mokhide Alaba told THISDAY yesterday that it had been giving accounts of the operation of the company in the last six years.

“First of all, it is false to say that we have not been giving account for six years. Unfortunately, the judge did not take any evidence. Our accounts are audited by PWC (Price Waterhouse Coopers), an internationally recognized firm. As the audits are produced, they are filed. We had to start from 2015 audit (two years before we came),” he said.

But THISDAY investigations revealed that the aforementioned auditing firm expressed reservations on the audit it carried out in the company.

A document made available to THISDAY from Ijewere & Co., Chartered Tax Advisers with reference number 000/kvo/aal/adv 1/2022, dated 17th June, 2022 and with the title “Re: Arik Air Limited 2017-2018 Audited Financial Statements referred to “two audited financial statements for years ended 31st December 2017 and 2018 prepared by the Receiver Manager and audited by PWC forwarded to us for review.

“We have reviewed the opinions expressed by the external auditors as signed by them in February 2022 an wish to submit as follows: (a), the external auditors expressed qualified opinions on both audited financial statements based on the exceptions stated in the opinions, which indicate their reservations as to the accuracy of the accounts; (b), the qualification of the audited financial statements by the external auditors will negatively impact on our judgment of the valuation of the company as at 2017 and 2018 reporting dates; (c), non-availability of 2019, 2020 and 2021 audited financial statements of the company will make  an up to date valuation of the company impossible.”

The Chartered Tax Advisers   also stated, “Consequent upon the above, we submit that an objective up to date valuation of the company is not feasible,” the statement, which was signed by the Group Chief Executive Officer, Emmanuel Itoya Ijewere, said.

Among other alleged financial infractions of the management of Arik Air under receivership, include the cutting of two aircraft owned by Arik Air and selling same to buyers overseas. The two aircraft were Boeing 737-700 New Generation aircraft with registration number 5N-NJI, which was cut and sold in a maintenance facility in Malta and another aircraft, Bombardier CRJ 900 with registration number, 5N-JEA, which was also cut and sold from the Arik Air facility in Lagos. As at the time the two aircraft were sold, Delloite Valuation Report put the value to $47.1 million and $31.7 million respectively.

But Mr. Omokhide Alaba told THISDAY that it was not AMCON that cut and sold the aircraft, insisting that it was cut and sold by Arik. However, indications showed that the aircraft was cut and sold during the period Arik Air was under receivership by AMCON.

“The cutting of the aeroplane in Malta was not done by AMCON. It was done by Arik. Do you know how many years that plane was in Malta before it was cut? The plane did not have engine,” he told THISDAY.

THISDAY contacted  the Founder and Chairman of Arik Air,  Arumemi-Ikhide, who spoke about the seeming unwillingness of the receiver manager of Arik Air to render account of the operations of AMCON since 2017.

“It is surprising that the Court that gave AMCON the go-ahead to take over the management of Arik Air is now being disparaged by the agency when it gave directive that the Receiver Manager should render account of AMCON’s operations of the airline since 2017. We have to obey the judiciary in order not to have anarchy in our land. I am also aghast that AMCON has not reacted to this issue that is going on. The silence of the Corporation has so many implications as far as this case is concerned.

“In 2020 when Senator Okon (Arik Air Vice Chairman) made publication through the media and requested for the account of the operations of Arik Air, the response from AMCON was negative and aggressive. In November 2021, when Chief Ijewere requested from the Receiver Manager the accounts of the company he also received negative response. The Receiver Manager referred him to Corporate Affairs Commission (CAC). He went to CAC and he was refused access and the officer at CAC asked Ijewere to seek the general consent of the Registrar of the Commission.

“My aim is to fulfil the commitment I have with the Nigerian people, which is providing them with top flight service with state-of-the-art equipment as I was doing before this intervention. I wish that top management of AMCON will step into this issue and get it resolved amicably for the benefit of our country. I remain committed to the founding vision I had in 2006, which is to provide best flight service to Nigerians,” Arumemi-Ikhide said.

When asked the Receiver Manager whether AMCON decided to appeal this judgement because it does not want to render account of the company, Omokhide Alaba said: “AMCON is appealing the acceptance of the judge without evidence that accounts were filed. A year audit is not conducted in 15 (14) days. AMCON is also appealing the lack of specific consideration for the months it takes to complete audits. Otherwise, rather than the demand of Sir Johnson that the Receiver Manager should send reports to him, the Receiver Manager is aware and accepts his statutory responsibility of reports and is committed to fulfilling it with or without an order of court.”