An Assistant Director of the Economic and Financial Crimes Commission (EFCC), Bawa Usman Kaltungo, has told a Special Offences Court in Lagos that Union Bank of Nigeria Plc allegedly retained about N51 billion realised from a disputed Arik Air loan transaction instead of applying the funds to offset outstanding obligations.
The witness made the allegation yesterday while testifying before Justice Mojisola Dada in the ongoing N76 billion alleged fraud trial involving the former Managing Director of the Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, and other defendants.
Others standing trial include the former receiver-manager of Arik Air, Kamilu Omokide; the airline’s Chief Executive Officer, Roy Ilegbodu; Super Bravo Limited; and Mohammed Abbas Jega.
They are facing charges of conspiracy, stealing, abuse of office, and making false statements relating to alleged fraudulent conversion of Arik Air’s assets valued at N76 billion and $31.5 million.
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Led in evidence by Senior Advocate of Nigeria, Wahab Shittu, Kaltungo told the court that Union Bank was not the direct lender to Arik Air but only acted as a guarantor in a foreign loan transaction that was later restructured and controversially transferred to AMCON.
According to him, the bank subsequently reclassified the facility as a non-performing loan (NPL) and sold it to AMCON on the premise that Arik Air had defaulted entirely on its obligations.
He, however, insisted that this representation was misleading.
Kaltungo told the court that Arik Air had already repaid about 38 per cent of the foreign loan before the facility was reclassified and sold.
He argued that despite this partial repayment, Union Bank proceeded with the sale of the loan for approximately N51 billion.
The EFCC official further alleged that instead of using the proceeds from the transaction to offset the outstanding foreign loan exposure or reconcile the repayment already made by Arik Air, Union Bank retained the entire N51 billion.
He told the court that this development created what investigators considered a financial discrepancy, arguing that the bank remained accountable to Arik Air to the extent of the repayments already made to foreign lenders.
Kaltungo’s testimony forms part of the prosecution’s broader case examining how Arik Air’s assets and financial obligations were managed, transferred, and settled through a complex web of banking and receivership arrangements.
The witness also gave details of other financial transactions involving the airline, including the sale of aircraft and shares.
He told the court that Arik Air’s shares in Zenith Bank were sold for over N2 billion, while aircraft belonging to the airline were disposed of for about $105.7 million.
He stated the aircraft sale proceeds were converted at an exchange rate of N360 to the dollar, amounting to over N32 billion.
However, he alleged that only about N9.2 billion was applied to loan obligations, leaving more than N28 billion unaccounted for.
The EFCC investigator also told the court that the airline’s financial management suffered from poor record-keeping and documentation gaps, which made it difficult to fully trace several transactions.
In a striking revelation, Kaltungo said investigators discovered a brand-new aircraft engine missing from storage during an inspection.
He stated that there was no documentation authorising its removal, no inventory record, and no explanation from relevant personnel.
The transaction at the centre of the case, according to the witness, originated around 2010 as a guarantee arrangement involving Union Bank in connection with foreign lenders.
He said it was later converted into a loan structure that eventually formed the basis of the dispute now before the court.
He also told the court that several aircraft belonging to Arik Air were used as collateral and were valued by international assessors.
However, he noted discrepancies between the loan exposure and collateral value, stating that while the loan stood at about N37 billion, the collateral was estimated at roughly N75 billion.
According to him, this raised questions about the structure and integrity of the financial arrangement.
During cross-examination by Prof. Taiwo Osipitan (SAN), counsel to the 1st and 3rd defendants, the EFCC witness admitted that no forensic audit was conducted during the investigation.
He however maintained that his findings were based on available documents and that the transactions, in his view, were not complex enough to require forensic analysis.
He also confirmed under questioning that there was no documented link between the first and second defendants in the loan sale transaction from Union Bank to AMCON, as well as in the sale of Arik Air’s shares in Zenith Bank.
The defence further drew attention to a court order establishing the appointment of a receiver-manager over Arik Air, which the witness acknowledged as valid and legally recognised.
At the conclusion of proceedings, Justice Dada adjourned the matter till May 18 and 19, 2026, for continuation of hearing.
Source:
allafrica.com
