KPMG uncovers N20.5bn hidden debts in Arik Airline’s books

Apart from the N375 billion already in the books of Arik Air, more debt-induced records have been discovered through the audit findings of the embattled airline by the auditing firm, KPMG.

A source at the firm revealed that “An estimated N20.5 billion have so far been found from the financial transactions, in 2010, bordering on insurance and other international services entered into by the management, which was thought to have been settled before its financial crisis took unmanageable condition”, said the official of the auditing firm, who pleaded for anonymity.

Following takeover of Arik Airline by the Asset management Corporation of Nigeria (AMCON), with appointment of Receiver, Mr. Oluseye Opasanya, the need for further check on its financial records led to appointing KPMG.

It was learnt that so far more funds had bern uncovered from old debts owed by the airline.

It was gathered that the time frame 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.

Another source said more claims might even be uncovered before the completion of the KPMG audit.

It could be recalled that new management of the airline had on February 2017 set out to give Arik Airline a new start, with a forensic and diagnostic audit of the finances of the airline to ascertain the true state of things, few months after it came under receivership.

AMCON had said that the review would among, other things cover assets and liabilities and their utilisation; recording and utilisation of loans; and propriety of third party transactions.

It will also introduce fraud controls mechanism 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, was expected to be ready in July 2017.

According to spokesman of the airline, Mr. Simon Tumba, the KPMG was still working and is in better position to give the right deadline for the completion of the audit.

“There was no timeline at the time of engaging the firm for the completion of the report, but 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.

He dismissed the report that the airline is to be sold to a foreign buyer, adding that 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.

On his part , AMCON’s Corporate Communications manager, Mr. Jude Nwauzor, said the corporation had underestimated the rot in the airline when it took over following a court injunction.

“Left with 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.

“There have been more revelations of financial dealings in the Arik Airline, which were hidden from us until recently. If that were known, AMCON would have not gone into the airline, the best option would have been for it to finally go under,” Nwauzor said.