$40Million Import Duty: Nigeria Customs Investigate Arik Air In Receivership for Illicit Sale of Aircraft
Nigeria Customs Service has commenced an investigation into the diversion of import duties to the tune of $40 million by the management of Arik Air in Receivership.
There are indications that Arik in Receivership abused the duty waivers conceded to airlines by the Federal Government via Nigeria Customs Services which is limited to the importation of aircraft and spares by domestic airline operators.
A source disclosed that in abusing the waiver policy, the management of Arik Air in receivership illegally sold some aircraft and aircraft parts with spurious documentation to back the sale, which was later found to be fake documents.
Upon intelligence report of alleged fraudulent activities and pursuant to due recoveries by Customs, the Comptroller General of Customs directed physical examination of certain aircraft- B737 NG MSN 28640 Reg No 5N-MJI, BOMBARDIER CRJ 900 MSN 15059, Reg No 5N-JEA, BOMBARDIER CRJ 900 MSN 15059, Reg No 5N-JEB and indicated to have been tampered with, sold, and discreetly exported and not in the airline operation in Nigeria.
It was gathered that Arik Air when it started operations in 2006 was granted a presidential waiver for payment of import duty, ETLS, CISS and port charges vide memo reference BO/R.10260/G/1/T/103 to import brand new aircraft to commence passengers’ operations at the time that the country witnessed major safety concerns amidst air crashes.
Customs explained that the condition for the waiver was for such aircraft to be used in Nigeria, emphasizing that the waiver did not extend to the export of aircraft already used in Nigeria, no matter the form.
But reacting to the demand for a physical inspection of the aircraft aforementioned, Arik in Receivership replied to Customs and said that the aircraft in reference had been seized and repossessed by some lessors and partners of Arik.
Findings carried out, however, confirmed that the aircraft were not repossessed by lessors and partners of Arik Air. In fact, a source in Arik Air confirmed that no Arik aircraft was seized under the leadership of the airline’s board and demanded explanations from the Asset Management Corporation of Nigeria (AMCON).
The Arik Air shareholders in a recent press statement in response to allegations of aircraft seizures by Ahmed Kuru, MD of AMCON said, “Contrary to the false claims of Arik Aircraft seizures by Mr Kuru. Arik had no issues with aircraft lessors and financiers, and neither was any aircraft impounded nor seized anywhere in the world until mid – 2019 well into the receivership by AMCON when the lessors were not paid as directed by the CBN letter of 14 March 2017 to banks.”
“We request that both Mr Kuru and the CBN should explain to the public, what objective and whose interest is served by the referenced CBN letter of 14 March 2017. (BSD/GDA/CON/AMC/46/008), hence it cannot be held liable for any default and or aircraft seizure and demanded both AMCON and its receiver managers should be accountable,” the shareholders said.
Investigations also revealed that the Cape Town Convention on International Interests in Mobile Equipment, commonly known as the Cape Town Convention, is an international treaty that establishes a framework for the financing and leasing of movable assets, including aircraft. It was adopted in Cape Town, South Africa, in 2001 and entered into force on March 1, 2006. Nigeria is a signatory to this convention to assist creditors, such as banks and leasing companies, in recovering their assets more efficiently and with greater legal certainty.
The implication of this is that no matter the circumstances, any aircraft that has a Nigerian registration number cannot be repossessed without due order of law courts. Such court ruling can be extended to foreign aircraft in operation in Nigeria as the law guiding the Cape Convention is domesticated.
“Where a foreign registered aircraft is applicable in order to enable enforcement in Nigeria, it must be in accordance with the provisions of the Foreign Judgments (Reciprocal Enforcement) Act, Chapter F35, Laws of the Federation of Nigeria 2004 (the 2004 Act) and the Reciprocal Enforcement of Judgments Act 1922, Chapter 175, Laws of the Federation and Lagos 1958 (the 1958 Act). This will also be the basis for the deregistration of aircraft in Nigeria.
Investigations disclosed that the aircraft B737 NG MSN 28640 Reg No 5N-MJI, was found at an aircraft maintenance facility in Malta and it was confirmed that it was authorized for destruction by Capt. Roy Ilegbodu, (Arik In Receivership CEO) and Mr Kamilu Omokide (Arik Receiver Manager) vide two separate agreements with Messrs. SAHA Aviation UK signed on July 22, 2020, and another on April 28, 2021. Capt. Roy however did not disclose that he authorized the destruction to the Customs and did provide the proof of seizure of parts of the aircraft by Lufthansa Technik Germany as he claimed in his response to the Customs.
Investigations carried out on the Bombardier CRJ 900 MSN 15059, Reg No 5N-JEA, also reveal that there is no legal substance to the claim of the EDC repossession of the 5N-JEA aircraft. Though Capt. Roy Ilegbodu presented a certificate of destruction to the authorities, he failed to inform them that he authorized the destruction of the aircraft, trading in its useful parts and supervised the exportation of the aircraft as scrap metal without disclosure to the Customs authorities through the facilitation of an Arik employee, Phillip Olanrewaju, and some shipping agents.
Also regarding Bombardier CRJ 900 MSN 15059 with Reg No 5N-JEB, contrary to the Arik in Receivership claim, it failed to answer the Customs query on the aircraft, according to an informed report.
“Our investigations reveal this aircraft is currently located in Canada and operating with a new registration of C-GXIG under the AOC of AvMax Group since 28th November 2022. Arik in Receivership failed to back up the claim of repossession by EDC with requisite legal instruments and how AvMax acquired the ownership,” one of the airline industry insiders said.
Industry experts have questioned the transfer of Arik CRJs to AvMax known to be leasing CRJ aircraft to another Nigerian airline operating CRJs when the CRJ aircraft type had been dismissed by Mr Kamilu Omokide (Arik Receiver Manager) as a very bad choice of aircraft by Arik Air shareholders.
Meanwhile JEM Leasing Limited, owners of another aircraft (CRJ 1000) registered as 5N-JEE has dissociated itself from the plan to sell and/or tear down the aircraft.
The company reacted to a recent announcement made by Arik in Receivership that JEM Leasing Limited had decided to sell the aircraft.
“JEM Leasing dissociates itself from the purported decision and arrangements regarding the sale and tear down this new generation CRJ 1000 aircraft in its entirety and urge the criminal investigative authorities of Nigeria to promptly investigate this asset destruction act and the claims of Arik Air (in Receivership) with regards to this false claim,” a statement made by the company stated.
A financier interested in investing in Nigeria who spoke on condition of anonymity lamented the implications of what appears as enterprise fraud in the receiverships in the aviation industry in Nigeria. He said there is a loss of confidence in investments in the sector and that it will continue “until we put our house in order and call for an investigation and punishment of all persons invested in these criminal enterprises across different sectors”.
Recently a report indicated that many aircraft in the Arik Air fleet had been cannibalised.
A source gave the list of the aircraft that were allegedly cannibalised and destroyed by the management of AMCON under receivership to include Boeing B737 with registration number 5N-MJC; Boeing B737 with registration number 5N-MJD; Boeing B737 with registration number 5N-MJJ; Boeing B737 with registration number 5N-MJK, and Boeing 5N-MJF. There was also Boeing aircraft painted in NG Eagle livery which included Boeing 737 with registration number 5N-BXV; Boeing B737 with registration number 5N-BXW and Boeing B737 with registration number 5N-BXX.
All the Boeing aircraft in Arik Air fleet are New Generation (NG) models, which are either Boeing 737-700 or 800 NGs, it was learnt.
Also, CRJ 900 aircraft was torn apart and this category includes 5N-JEC, 5N-JED and 5N-JEE. In addition to these were three Bombardier Q400 namely 5N-BKV, 5N-BKU and 5N-BKX.
Last Friday, SaharaReporters reported that shareholders of Arik Air Limited had slammed the Managing Director of AMCON, Kuru, for allegedly using misinformation and deliberate fabrication of falsehood to run the company aground.
The shareholders said that Arik Air under AMCON’s receivership operated only two aircraft and the Arik Hangar in Lagos was a static display of 14 abandoned new generation aircraft while the rest had “either been cut to pieces, sold, and shipped out of the country.”
The shareholders, however, noted that despite the misinformation and falsehood that AMCON had been dishing out, they were ready for “an open dialogue” with the Corporation.
However, they said such a dialogue must be in the presence of the “relevant investigative authorities such as police, EFCC, CBN, the Ministry of Justice and the Ministry of Aviation & Aerospace.”
The shareholders also alleged the mismanagement of the airline taken over by AMCON eight years ago, saying contrary to the claim by AMCON that it inherited seven aircraft, there were 17 serviceable aircraft in the airline’s fleet during the takeover in 2017.
SaharaReporters had reported that there had been a lingering dispute between Arik Air’s shareholders led by Chief Johnson Arumemi and AMCON.
AMCON’s Managing Director, Kuru recently challenged Arik Air shareholders to present a plan for the repayment of their N240 billion debt in order to repossess the airline.
However, in their response to the claim, the Arik Air shareholders dismissed the N240 billion claim, saying, “The MD of AMCON should cross-check his facts as his agency never filed the sum of N240 billion, in its claim of the airline’s indebtedness in any court. This is patently false, contradictory, and misleading. We ask him to consult his lawyers so as to spare the public the needless overload of his misinformation.”
In a statement made available to SaharaReporters on Friday, titled: “Arik Air Receivership –How Alhaji Ahmed Kuru, MD-AMCON Misinformed and Misled the Government,” the stakeholders regretted that a senior government official like Alhaji Kuru, entrusted with the vital responsibility of the economic affairs of Nigeria will publicly make false and misleading statements in order to justify the monumental damage he led against Arik Air.
“This is a private airline that has proudly flown Nigeria’s flag around the world while conducting its business constructively and contributing to the economic growth and development of Nigeria.
“While we wish to refrain from media assaults and trials of persons as Alhaji Kuru/AMCON has done repeatedly in the past 6 years, we are beholden with the moral duty to set the records straight, in order to expose the desperate attempt to misinform Nigerians and distort the facts of the monumental destruction of Arik by AMCON and its receiver Manager(s).”