….Union Bank’s Deception Unveiled: A Trial that Could Change Nigeria’s Financial Landscape

In a gripping courtroom drama that is fast becoming one of the most pivotal financial misrepresentation trials in recent history, the Special Offences Court of the Lagos High Court revealed shocking allegations against Union Bank of Nigeria Plc. On Wednesday, it was claimed that the bank duped the Asset Management Corporation of Nigeria (AMCON) by passing off a foreign guarantee as a non-performing loan (NPL), a move that has sent ripples through the financial sector.

The trial, titled FRN v. Union Bank, Ahmed Kuru, Kamilu Alaba Omokide, Capt. Roy Ilegbodu, and Super Bravo Limited, took a dramatic turn as former AMCON Executive Director, Mr. Abbas Mohammed Jega, took the stand. He disclosed that a staggering ₦70 billion facility linked to Arik Air Limited was misrepresented. Instead of being a loan, it was a guarantee that Union Bank had issued to European lenders for aircraft financing.

“It was in that London meeting that we first realized Union Bank sold us a guarantee, not a loan… The facility was performing,” Jega testified, recounting a pivotal meeting held on February 24, 2011, with representatives from HSBC and various European Credit Agencies (ECAs).

In that meeting, Union Bank claimed it was compelled by the Central Bank of Nigeria (CBN) to convert the off-balance-sheet guarantee into an on-balance-sheet loan, stating the loan had exceeded its single obligor limit. Jega recounted, “They had to sell the loan to AMCON… but at that time, instalments were being paid to the ECAs. So it was performing.”

Under CBN regulations, AMCON can only acquire non-performing or “tainted” loans as Eligible Bank Assets (EBAs). Jega’s confusion was palpable as he questioned, “I can’t remember how exceeding the single obligor limit becomes an eligible bank asset.”

Upon uncovering the deception, AMCON sought restitution from Union Bank, ultimately recovering the amount through a claw-back clause.

A Collapse That Echoes a National Tragedy

These revelations come amidst the backdrop of Arik Air’s tumultuous takeover by AMCON on February 9, 2017, an event initially heralded as a rescue to avert a national disaster. Once Nigeria’s premier airline, Arik has since spiraled into a state of decline, losing aircraft, routes, and reputation under AMCON’s management.

At its zenith in 2016, Arik boasted 23 aircraft and flew to over 30 destinations, including prime slots at London Heathrow and New York JFK. However, since the takeover, the airline has seen a shocking reduction of more than 15 aircraft, along with valuable international routes and essential maintenance contracts. The situation has deteriorated further, with experienced staff leaving en masse, and operational capacities plummeting.

Despite AMCON’s intentions to restructure, Jega revealed that their efforts were thwarted. “We told Arik the burden in our books wasn’t being sustained by the airline… We proposed a debt-for-equity swap… Initially, they agreed, but they dragged implementation,” he explained.

Importantly, Jega clarified that Arik Air played no part in the original transaction between AMCON and Union Bank. “Arik had no role in the negotiations… Our negotiations were done with the banks,” he stated, highlighting that AMCON inherited not only a phantom debt but also the financial liability tied to the guarantee.

As Jega so succinctly put it, “It’s like we created a loan for Arik with AMCON and the money is also with us.”

With more testimonies anticipated in the coming weeks and the case adjourned until June 30, 2025, industry experts are bracing for potential repercussions that could reshape how banks manage off-balance-sheet exposures and reevaluate AMCON’s intervention strategies.

This saga is not merely about financial misrepresentation; it underscores a broader failure of due diligence and transparency, exposing vulnerabilities in regulatory frameworks that have led to the tragic downfall of what was once Nigeria’s leading airline.