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AMCON engages forensic auditors for Aero Contractors

By on February 5, 2016

As part of efforts to diagnose factors that have continued to hinder the profitability of Aero Contractors, the Asset Management Corporation of Nigeria (AMCON) said it has appointed forensic auditors to look into the activities of the airline.

Managing Director of AMCON, Mr. Ahmed Kuru, who said this in an exclusive interview with THISDAY in Lagos recently, however declined to disclose the name of the international audit firm.

Based on the exposure of Aero Contractors to AMCON, the corporation had converted part of the debt into equity and that gave AMCON 60 per cent of that company. In addition, the company also owed AMCON another N18 billion outstanding, which it allowed as debt.  Under the agreement reached between the legacy shareholders of the airline and AMCON, the corporation was to produce the chairperson for the airline. But the management of the airline still rest technically with the legacy shareholders.

However, Kuru disclosed that the strategy adopted by AMCON on Aero Contractors had failed to produce the desired result, saying that “we are now reviewing our strategy as to how to approach that airline, particularly because it is a business that must depend on safety. We are sending forensic auditors to go and audit the company to tell us what has happened in the last couple of years.”

Kuru identified corporate governance issues as a major problem faced by Aero Contractors, but added that the corporation has been discussing with specialists on aviation to help turnaround the airline.

“Aero has about five aircrafts now, but they have about 1,500 workers. If you look at what has happened in terms of AMCON’s intervention in Aero, you will see a genuine intention by a corporation to help a business, because we consider aviation as a strategic sector.

“But I can tell you that this new management is seriously interested in what is happening to Aero and we are working to see that Aero continues to fly as one of the most safety-conscious airline in Nigeria. So, we are talking with specialists in the area to see how we can address some of the issues. “We have appointed an international audit firm that would go in there and audit the airline so that Nigerians would know its true situation. Once AMCON is in any business that means Nigeria’s taxpayers’ monies are in that business, so they need to know what is happening,” he said.

However, he pointed out that AMCON would continue to find ways to support the airline.

“We still support Aero in spite of the fact that we cannot see a proper, clear exit strategy around it. But because airline business in Nigeria is also a security matter, AMCON continues to find ways and means to support the airline to continue to operate. But given what has happened in the last couple of months, we are reviewing our strategy.

“We have to also understand that the aviation industry in Nigeria generally is a troubled industry. It is an industry that has a lot of challenges. How you know an industry is troubled is when you look at the sustainability. How many airlines have gone under in the last 10 years? Which of the airline has more than 15 years? That tells you that there are some fundamental structural issues that need to be addressed,” he added.

 

[ThisDay]