AMCON’s Jude Nwauzor – Head, Corporate Communications made direct reference to my earlier interview published in THIS DAY on April 6, 2021 and made claims of alleged massive mismanagement in Arik under our management and lack of corporate governance and fear of collapse.
Firstly, Nwauzor is an employee of AMCON, who is serving his masters in AMCON. He obviously is not an aviation expert and I don’t think he is a financial expert.
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Putting that aside, the language used betrays a sense of anger and frustration. We raised an issue of accountability and AMCON is angry. Angry about what? That we said they should account for the N375 billion they claim they spent into the airline since takeover.
Let me explain something, Arik is a privately owned company operating within local and international commercial laws before the forceful takeover by AMCON. AMCON by law is supposed to provide statement of affairs to shareholders annually, explaining their actions and the accountability of their performance. Did they do that? The answer is impunity.
AMCON feels they do not need to account to the shareholders for their revenue, expenditure, operations, and financial obligations. These annual reports keep the shareholders abreast with the progress, if any, and interested stake holders informed. It is important to note that after four years of so-called intervention on behalf of God knows who, as claimed by AMCON, we only hear allegations and bad news in the papers, without any formal correspondence.
The communications man said the airline was running without capital from the shareholders, again a serious falsehood. How did Arik come into existence, who invested the initial money, how was the airline operated for 10 and half years without capital injection, and how did we pay off the foreign loans for the aircrafts? Furthermore, the objectives for take-over by AMCON, have they been met. I keep saying, this is wrong and unfair. It is a conspiracy to scam a private businessman, using tools of government in order to achieve a conspired goal. If we go by the statement of Nwauzor, I think that AMCON does not understand that Arik as an operational airline would have regular bills to pay, which on suddenly moving in they found in the books.
On the other hand, Arik owed local banks and agencies in a revolving capital scheme, which was being offset by ticket sales administered by those local banks. The international agencies that he refers to in his overzealous statement as creditors, also fall into the same category.
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Don’t forget, in my previous interview, we explained the forex issue, and this may have affected some of the agencies, but we had deposits with the local banks covering a large chunk of these funds for onward transmission if forex was received from CBN. This was all taken over by AMCON. We had accumulated revenues internationally e.g., Angola, Ghana, Senegal, Cameroun, and other countries which was also taken over by AMCON. These are supposed to be used to pay off outstanding’s in these countries and the balance remitted to Arik in Nigeria. These funds were more than sufficient to pay off most of the outstandings of the foreign agencies. This is normal in the aviation industry.
But AMCON being the intelligent finance managers that they claim to be suffocated the airline of all funds by not using funds for the purpose of satisfying these payments, thereby slowly killing the operations. Today they have the audacity to claim an injection of N375 billion.
This amount is exclusive of revenue generated in four years of operation, which they constantly refuse to disclose. Going by Nwauzor’s statement in which he indicated that the airlines revenue was N7 billion monthly amounting to N 84 billion annually, we can figure out the total revenue in the last four years to be N336 billion. If we add the injected money with this revenue as claimed by AMCON the total amount that AMCON should account for is N 711 billion. This is quite an outstanding amount that AMCON refuses to account for. Another case of impunity!
He also raised issues on corporate governance. It is good. Let’s start with corporate governance. Firstly, do you know how many foreign financial institutions funded aircraft at different times in Arik? I will name them for you: US EXIM bank for Boeing Aircraft, Export Development of Canada (EDC) for Bombardier aircraft, Afriexim Bank and European Credit Agency for Airbus Industries.
On the operational side Credit lines for maintenance by Lufthansa, Boeing, Bombardier, Airbus and Rolls Royce engines. These institutions do not provide these facilities without proper due diligence and yearly evaluation of the airline’s corporate governance and safety audits.
To achieve this level of compliance we engaged the services of SH&E of USA, a world-renowned aviation consultancy firm over a period of seven years. Furthermore, Price Waterhouse Coopers have been the financial and management auditors of the company from inception till AMCON took over. We knew why we needed to do this, and that is why we achieved so many milestones.
Do you think these foreign financial institutions would lend Arik or fund aircraft without proper corporate governance? Words come easy to AMCON when they want to create a negative narrative but let us ask the same question from AMCON. What level of corporate governance did they exhibit from the time they took over?
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Let me start with the takeover procedure, in more sane climes AMCON should have taken an inventory with Arik owners present and recorded that for the courts. Did they do that, no! Instead, they came with two or three lorry loads of Policemen to arrest the chairman in full gestapo style tactics and took him away. No notice, no verifiable inventory, and no handover. Impunity! This explains their meaning of corporate governance.
I have only one comment that I would want AMCON to answer to the satisfaction of the Nigerian people. Was the airline in shambles when they took it over or is it in shambles now?
Let me put it in perspective, in 2017 this was a functional airline with maybe, like every other airline, some financial issues and an exposure as alleged by AMCON in the courts of N136 billion, but today we have an airline in shambles with a so-called alleged exposure of N375 billion. Well-done AMCON! In early 2015 Deloittes of London valued the airline at $3.2 billion. These reports were submitted and defended by Deloitte of London themselves at the Federal Ministry of Finance.
You see, it is hurtful for all the stakeholders to see how AMCON has ravaged this airline. We as the promoters of this carrier feel that there were better ways to address these issues had AMCON’s management acted with maturity and with intention to address the issues fairly. We also feel that AMCON has been high handed and in the process affected the airline negatively. Like I said earlier, AMCON looks like an organisation with the preconceived intention by some individuals to take-over the assets of the airline under the pretext that the airline was having financial difficulties. Obviously AMCON has bitten off more than they can chew.
This airline was audited by various world institutions and organisations, including the United Nations, and nobody complained about corporate governance. AMCON should admit its inability to run the airline and it is high time that the federal government discussed with both AMCON and the shareholders to resolve this issue.
We also call on the federal government to investigate the way AMCON operated the airline including financials of the airline from the time they took over. I believe they have a lot to answer for. On a lighter note, If somebody takes the MD of AMCON’s house and other properties in the same manner as he did to our Chairman and four years later that institution adds three times more debt, with roof leaking, windows missing and furniture damaged and broken, I ask the communications man, Nwauzor if his MD would not react.
Finally, this gentleman has posed an especially important question about socio economic impact that made AMCON move in. I ask AMCON have they resolved the socio-economic impact or are they worsening it?
You see these people who play with government money and other people’s business and build handsomely for themselves in the process have no care in the world about the effect of their actions because they have nothing at stake.
As I was questioned earlier, if there could be a form of dialogue or settlement with AMCON to end this controversy, I do not know if that is possible with this management of AMCON. I think dialogue is a good idea, but the current management is too tainted in illegality for there to be any form of dialogue. It has to be noted that we are also in court since 2017. I think the Federal Government has an important role to play, and an investigation of the four years stewardship of the management of AMCON as concerns their involvement in Arik is a good place to start from. While this is ongoing, AMCON should be stopped immediately from causing further damage to the airline. Addressing the damage caused so far is also an issue that needs to be addressed. So, let’s see how this comes to an end.
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