KPMG audit slows decision on Arik

…Extends examination
…uncovers another N25bn debt

The delay by auditing firm, KPMG, to turn in its findings on how Nigeria’s flag carrier, Arik, was mismanaged, is slowing the revival of the once prosperous airline, Woleshadare.net has learnt.

The delay in releasing its findings to government may also have informed why the latter did not reach a deal with Africa’s most successful airline, Ethiopian Airlines, on how to revive the carrier, which was taken over by the Asset Management Corporation of Nigeria (AMCON) over its insolvency and a huge debt of over N500 billion. Government is yet to come up with concrete plans for the airline.

Why some say government plans to liquidate the carrier because of massive debts it was plunged into, others said government was planning to turn it into the proposed national carrier it plans to float before end of the year.

All these are conjectures as government is yet to make a pronouncement on what it plans to do with the ailing airline.

It was also learnt from a reliable source, who pleaded anonymity, that another N25 billion debt had been discovered.

KPMG was supposed to have submitted its report a few weeks ago, but due to alleged lack of disclosure of certain debts by former managers of the airline and other financial deals had slowed down the firm.

The source explained that KPMG was supposed to have completed the audit a month ago, but due to lack of transparency and disclosure from the former managers of the airline, the audit has been extended.

He said: “In truth, KPMG has discovered more liabilities of the airline but is yet to complete the audit so it can provide the entire figure but the previous management has refused to cooperate and that is why it is taking a while.”

Following takeover of Arik Airline by AMCO, with appointment of the receiver, Mr. Oluseye Opasanya, the need for further checks on its financial records led to appointing KPMG.

It could be recalled that new management of the airline had, last February, 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, a 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.

AMCON had said that the review would, among other objectives, cover the position of assets and liabilities and their utilisation; recording and utilisation of loans, propriety of third party transactions, fraud controls over procure to pay (‘PtP’), agents and business partners and financial reporting and Arik Airline’s financial position as at January 31, 2017.

The report is expected to be delivered within 12 weeks.

AMCON has said: “We have hired KPMG to look into the financial position of Arik with a tooth comb and advise us with verifiable facts on what went wrong with the airline. We need to do that because the outcome will help us plug the loopholes and stabilise the airline.”

It noted that the intention is to identify what went wrong with Arik to enable the new management bring it back to full operations.

The Federal Government intervened on February 9, 2017 in the airline following daunting complaints of huge indebtedness to various creditors and the frequent interruptions in its operations, and the concern to safety and security.

Wole Shadare