Fresh controversy over N120b aviation intervention fund

The whereabouts of the Federal Government’s intervention fund for the aviation sector has continued to generate controversies between the disbursing Central Bank of Nigeria and operators in the aviation sector.

While the Central Bank of Nigeria (CBN) is still on the trail of operators that received the Federal Government’s largesse in 2011, the airline operators have continued to deny ever receiving the fund.

The umbrella body for the airline operators in the country, Airline Operators of Nigeria (AON), has in fact refuted ever receiving a dime from the government in the last 30 years.

Chairman of the association, Capt. Nogie Meggison, for the first time declared that none of the two intervention funds of the government in the last 16 years has ever directly benefited the private investors that are still heavily indebted to banks.

But concerned stakeholders have flayed the AON for the denial, citing that its members indeed received the loan, allegedly diverted the fund to private course, adding that they should be made accountable and liable for conspiracy and diversion of public funds.

It would be recalled that the aviation sector was one of the beneficiaries of the Federal Government’s N500 billion-intervention fund in the wake of the 2011 recession. The fund was to keep the critical sectors afloat the troubled economy.

No fewer than N120b went to the aviation sector and disbursed to operators at seven per cent interest rate.

Among the recipients are Arik Air, Air Nigeria, Chanchangi Airline, Dana Air, Aero, Kabo, Overland, First Nation and Odengene. It is on record that each got between N15b to N35.5b loan.

With some of the domestic airlines now unable to pay salary and at the verge of closing down, there has been fresh agitation for another intervention fund, which warrant probe of the last of such exercise.

At a joint hearing of the Senate committees on aviation and anti-corruption that probed funds injected into the aviation sector last month, it was revealed that N81 billion was still outstanding, while the CBN has recovered N39b of the total fund disbursed.

It was there alleged that several of the recipients actually diverted the funds. For instance, it was alleged that Jimoh Ibrahim, owner of the defunct Air Nigeria, diverted a loan of N35.5 billion into his private account with the help of United Bank for Africa (UBA).

Ibrahim, however, denied receiving the sum from the Bank of Industry, citing that it was the UBA, which actually applied and obtained the loan, which had nothing to do with Air Nigeria. The recipient and whereabouts of N35.5b is still a subject of disagreement between Ibrahim and the UBA.

The minister of transport, Rotimi Amaechi, said neither his ministry nor agencies under it had a record of the fund.

Amaechi testified that based on available records, “the transport ministry and its agencies were not aware of the N120 billion fund.”

It is not the first time that such humongous amount would have been spent without proper records. Former minister of aviation, Femi Fani-Kayode, came into office in November 2006 to meet a N19.5b Aviation Intervention Fund on ground, out of which his predecessor had allegedly spent N8.4b without proper records.

The season of denial has continued till date with the operators refuting claims that they received any form of funding from the Nigerian Government in the past 30 years since the deregulation in 1983.

Chairman of AON, Meggison said domestic airlines in the country are privately owned establishments and have been funded solely by their owners without any form of injection of funds by the Federal Government.

He said that like any other highly capital intensive private entity doing business in Nigeria and employing Nigerians that might be in need of funds, airlines are free to and do approach the banks for loans which are serviced regularly at stipulated interest rates.

“Contrary to what most people in the public think, the airlines never received any direct fund from the Federal Government intervention. Rather, what happened was that the funds released went to the banks in an effort to keep them afloat for bad debts owed to banks by the airlines during a period of economic recession of 2011,” Meggison said.

He, however, call on the government to forge a strategy towards bringing all parties to the negotiating table, and “for the first time, look for a direct intervention funding to airlines in the interest of saving the aviation system from collapse, considering that without the airlines there is no aviation.”

While they agreed that the industry is in a dire strait, industry watchers have faulted the AON on its denial and request for fresh intervention fund for the ailing sector.
A stakeholder, who spoke on the condition of anonymity, said that the development was the typical nature of Nigerian businessmen and their insincerity.

“The operators are not telling the truth. If they say that the money went to the banks and not to them, did the money settle the debts they owe banks? Is it spirit that put the airlines into the indebtedness?

“The truth of the matter is that most of the funds were mismanaged. Some of them accessed the money at five or seven per cent interest rate and used it to acquire property abroad. We know the intrigues that went into it and it was in connivance with the banks.

“Our businessmen are not trustworthy people. Yes, government has good intention and it is a good thing in another clime that would have worked out. But you know our people when it comes to public fund; there is neither accountability nor discipline.

“So, they have no moral right to start asking for another funding from the government. What they should clamour for is more business-friendly environment with government removing multiple taxes, import duties and so on.”

President of the National Association of Aircraft Pilots And Engineers (NAAPE), Isaac Balami, added that had the funds (N120b) gone into operations, the sector would not be in current crisis.

Balami said irrespective of what the government is considering with the intervention fund, there is need for proper corporate government in the aviation sector.

He said gone are the days when airlines were ran like personal business and owners divert money into other non-aviation businesses and forget to save money for salaries and aircraft maintenance.