Auditor Uncovers More Arik Debts

AirlineArik Airline
  • Auditor Uncovers More Arik Debts

Indications have emerged that the KPMG, the firm appointed to audit Arik Air following its takeover by the Asset management Corporation of Nigeria, has uncovered more debts owed by the airline.

Sources at the auditing process told our correspondent on Friday that the 12 weeks given to the firm to complete the audit might no longer be feasible as fresh debts, both local and foreign, had continuously been uncovered since the process began.

One of the sources also said more claims were being uncovered, making it difficult for the KPMG to complete its audit in good time.

The new management of Arik Air in February announced the appointment of the KPMG to undertake a forensic and diagnostic audit of the finances of the airline to ascertain the true state of its finances, few days after it came under receivership.

AMCON had said that the review would among other cover assets and liabilities and their utilisation; recording and utilisation of loans; and propriety of third party transactions as well as fraud controls over procurement, agents and business partners and financial reporting, and airline’s financial position as of January 31, 2017.

The management said the report of the audit, which was expected to be presented in 12 weeks, would also help the government to take necessary steps, either corrective or proactive, to reposition the airline.

The Receiver Manager of Arik Air, Mr. Oluseye Opasanya, last month said in an affidavit filed in support of the airline’s receivership by AMCON, before Justice Muhammed Idris of a Federal High Court in Lagos, that the embattled airline was indebted to its trade and finance creditors to the tune of N375bn.

The spokesperson for the airline, Mr. Simon Tumba, told our correspondent that the KPMG was still working and could not give the timeline for the completion of the audit.

“There is no timeline at the moment for the completion of the report. The whole idea is to combine all the debts and give a fair status of the company in terms of what it owes and what it is being owed,” he said.

Recently, there were speculations that the airline might be given to foreign investors or liquidated. But Tumba dismissed the report, saying the Federal Government had not decided on what to do with the airline.

“AMCON’s plan for Arik will depend on what the KPMG will find from the audit of the airline’s operations,” he said.

The spokesman for AMCON, Mr. Jude Nwauzor, had earlier told journalists that the corporation underestimated the rot in the airline when it took over following a court injunction.

“Left to us, we will never touch Arik; we were mandated to take it over because there was no other vehicle the government would have used to intervene,” he said.

He said that since the takeover in February, AMCON had injected N1.5bn into the airline, adding that the corporation would not keep the airline for a long time.

An aviation expert and Chief Executive Officer of Centurion Security and Safety Consults, Group Capt. John Ojikutu (retd), said that in the event of an outright sale, AMCON must be mindful not to sell the airline to a commercial competitor in the industry.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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