In what is shaping up to be one of the most consequential financial misrepresentation trials in recent memory, the Special Offences Court of the Lagos High Court heard on Wednesday that Union Bank of Nigeria Plc deceived the Asset Management Corporation of Nigeria (AMCON)
The bank allegedly presented a foreign guarantee as a non-performing loan (NPL), which was then sold to the agency as part of its efforts to clean up toxic debt.
This revelation emerged during the continuation of the trial in the case of FRN v. Union Bank, Ahmed Kuru, Kamilu Alaba Omokide, Capt. Roy Ilegbodu, and Super Bravo Limited.
Testifying for the prosecution, Mr. Abbas Mohammed Jega, a former Executive Director of AMCON, told the court that the ₦70 billion-plus facility tied to Arik Air Limited was never a loan.
He said it was, in fact, a guarantee provided by Union Bank to European lenders for aircraft financing.
“It was in that London meeting that we first knew what Union Bank sold to us was actually not a loan but a guarantee… The facility was performing,” Jega testified under oath.
He was referring to a meeting held on February 24, 2011, in London with representatives of HSBC and several European Credit Agencies (ECAs).
According to him, Union Bank informed the gathering that the Central Bank of Nigeria (CBN) had directed it to convert the off-balance-sheet guarantee into an on-balance-sheet loan.
The bank said it could no longer carry the loan because it had exceeded its single obligor limit.
“They had to sell the loan to AMCON,” Jega recalled, “but at that time, instalments were being paid to the ECAs. So it was performing.”
Under CBN guidelines, AMCON was only permitted to purchase non-performing or tainted loans as Eligible Bank Assets (EBAs).
Jega, referencing the directive, told the court: “I can’t remember how exceeding the single obligor limit becomes an eligible bank asset.”
Upon discovery of the misrepresentation, AMCON demanded a refund from Union Bank, eventually recovering the amount through a claw-back clause in the agreement.
A Deception That Helped Sink Arik Air
The revelations come against the backdrop of Arik Air’s forced takeover by AMCON on February 9, 2017, an event that was portrayed at the time as a rescue operation to “prevent a national disaster.”
Instead, the airline, once Nigeria’s flagship carrier with routes across Europe, the U.S., and West Africa, has suffered an incremental collapse in assets, operations, and value under AMCON’s stewardship.
At its peak in 2016, Arik operated 23 aircraft, flew to over 30 destinations, and maintained valuable slots at London Heathrow, New York JFK, and Johannesburg.
Since the takeover, however, Arik has lost more than 15 aircraft, either grounded or repossessed; key international routes, including London, New York, and Johannesburg; maintenance contracts and alliances such as its Boeing GoldCare agreement; personnel and goodwill, as experienced staff either resigned en masse or were laid off; and a significant portion of its revenue base, as operations were reduced and debts continued to mount.
Despite AMCON’s stated objectives, the situation worsened. Mr. Jega explained how AMCON’s attempt to restructure the company also failed.
“We told Arik the burden in our books wasn’t being sustained by the airline… We proposed a debt-for-equity swap. We wanted to appoint the MD, CEO, and CFO… Initially, they agreed, but they dragged implementation,” he said.
During cross-examination, Jega clarified that Arik Air had no role in the original transaction between AMCON and Union Bank. The sale of the misrepresented guarantee was strictly between the two institutions.
“Arik had no role in the negotiations,” he stated. “Our negotiations were done with the banks.”
In effect, AMCON inherited not just a non-existent debt, but also the financial liability of the guarantee, converting itself into Arik’s unwanted guarantor.
As Jega put it: “It’s like we created a loan for Arik with AMCON and the money is also with us.”
With more testimonies expected in the coming weeks, and the case adjourned to June 30, 2025, industry watchers say the revelations may have far-reaching consequences for how banking institutions handle off-balance-sheet exposures and how AMCON’s intervention strategies are reviewed going forward.
The saga reflects not only a failure of due diligence and transparency, but also exposes how regulatory institutions can be manipulated, transforming what was once Nigeria’s leading airline into a shadow of its former self.
