The Nigeria Customs Service (NCS) has initiated an investigation into the alleged sale of three aircraft from the fleet of Arik Air Limited. These aircraft were under the receivership of the Assets Management Corporation of Nigeria (AMCON). The deal is reported to be worth an estimated $40 million.
Arik Air Limited’s management has confirmed their cooperation with the NCS to provide details regarding the alleged aircraft sale. However, they assert that the controversial airplanes, specifically the Q-400, CRJ-1000, and CRJ-900, were taken over by their foreign owners, who subsequently decided to sell them to new operators.
The NCS invited Arik Air’s management for questioning concerning the alleged cannibalization of these three aircraft and their subsequent re-exportation. A document, dated October 3, 2023, and signed by I.G. Umar, the Comptroller of the Customs Intelligence Unit (CIU), ‘Re: Request for Physical Inspection of Boeing 737NG. MSN: 28640, Reg No. 5N-MJI; Bombardier CRJ-900, MSN: 15059, Reg: No: 5N-JEB; And CRJ-900ER, MSN: 15058, Reg. No. 5N-JEA,’ requests Arik Air Limited in receivership to provide further information about the deal.
AMCON, the Assets Management Corporation of Nigeria, has stated that it is fully cooperating with the NCS in its investigation into these controversial aircraft. They have also contested claims of illegal sales of aircraft and spare parts belonging to Arik Air after their takeover seven years ago.
AMCON disclosed that three companies owned by the founder of Arik Air, Sir Johnson Arumemi-Ikhide, owed a total of N400 billion in debts before the takeover. They further clarified that Arik Air owed over N240 billion to AMCON, and two other companies owned by Johnson Arumemi-Ikhide, Rockson and Ojemai Farms, were also indebted to AMCON for over N400 billion.
AMCON emphasized that the three aircraft in question, the Q-400, CRJ-1000, and CRJ-900, were acquired through loans from Export Development Canada (EDC), serving as the export bank to support the production and export of Canadian goods. They explained that EDC extended loans to an entity named JEM Leasing Limited to meet Arik’s equipment needs.
The corporation clarified that Arik had no shares in JEM Leasing Limited, which was registered as a special purpose company in a tax haven. JEM Leasing Limited purchased two Bombardier Q-400 aircraft with one spare engine and one Bombardier CRJ-1000 aircraft for Arik Air, which were pledged to EDC.
AMCON asserted that JEM Leasing Limited was responsible for repaying the loan on the two planes, and all relevant documents, including the Irrevocable De-Registration and Export Request Authorization (DERA), were duly executed in favor of JEM Leasing and EDC, with approvals from the Nigeria Civil Aviation Authority (NCAA).
Despite Arik’s pre-receivership financial difficulties, AMCON noted that the airline had approached the Federal Government of Nigeria for a customs duty waiver on the planes, which was granted. Regrettably, due to Arik’s financial challenges, the management defaulted on lease obligations related to the Q-400 and CRJ-1000 aircraft.
The statement added:
“Post-receivership, the receivership team, after initial struggles with meeting lease rentals on the planes, decided to exit the CRJ line of planes. It further agreed not to interfere with EDC’s mortgage rights over the CRJs.
“To come to the decision, the receivership team took into consideration the history of technical availability of the planes, the lack of capital by Arik to buy or effectively overhaul engines, and the need to reduce the complexity of Arik’s operations with several aircraft types in the fleet. An independent valuation of the planes by a specialist international company was conducted.”
EDC concurred to forgive Arik’s remaining lease commitments related to the CRJ 1000 aircraft, which were owed to JEM Leasing Limited, an entity within its jurisdiction. In hindsight, this arrangement proved beneficial for Arik when considering the aircraft’s assessed value.
”EDC confirmed in a letter dated April 21, 2023, that they sold the two CRJ900 aircraft. The decision to sell was made by EDC, not the receivership team of Arik. Regarding the CR1000 aircraft, EDC negotiated with a buyer who chose to dismantle it into its constituent parts.”
AMCON clarified that JEM Leasing Limited, the purported proprietor of the CRJ aircraft, substantiated this fact in a letter dated May 5, 2023, wherein they affirmed the sale of the aircraft to a new owner who opted for its disassembly.
