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October 27, 2011

UPDATED: Arik Air President Free, but Three Top Execs Arrested for Tax Evasion

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UPDATE #3 12:00pm ET: A spokesman for Nigeria’s Federal Inland Revenue Service says that Mr Rob Thomas (Senior Vice President), Mr Chris Ndulue (Deputy Executive Vice President) and Steve Garroro (Chief Financial Officer) have in fact been arrested on tax charges. Arik Air continues to deny that anyone has been arrested.

UPDATE #2 10:30am ET: Arik Air has issued a statement denying the reports of the arrests.

The Executive Board of Arik Air is dismayed to read a report published on Wednesday (26 October) by Punch newspaper relating to the “arrest” of members of the Board including the CEO/ President and other senior management personnel. It is, however, not surprised that Punch continues to publish false and defamatory allegations wantonly as it has done so on previous occasions.

The CEO/ President, Dr Michael Arumemi-Ikhide, is currently in the airline’s UK headquarters where he has been for the past few weeks. Dr Michael was not present at Wednesday’s meeting with the Federal Inland Revenue Service (FIRS) let alone in Nigeria.

No other Arik employees have been arrested as has been alleged by the report with Executive VP, Chris Ndulue, SVP Operations, Rob Thomas and VP Finance, Steven Gharoro, currently attending to business as usual at the company’s headquarters in Lagos.

Wednesday’s meeting between representatives of Arik Air and The Federal Inland Revenue Service was a scheduled appointment to discuss various standard income tax compliance issues including the reconciliation of accounts. The airline shall continue to cooperate fully with the FIRS.

UPDATE #1 6:50pm ET: Conflicting reports have emerged as to whether or not anyone actually was arrested. We are working to verify.

The founder and president of Arik Air and three of the airline’s top executives have been arrested in Nigeria after the company ran up an unpaid tax bill worth more than $21 million, according to local media reports.

Arik Air Airbus A340-500 CS-TFW parked at JFK after arriving from Lagos

Arik Air Airbus A340-500 (CS-TFW) parked at JFK after an early morning arrival from Lagos. (Photo by Senga Butts)

Dr. Michael Arumemei-Ikhide, who founded Arik Air in 2002 and serves as its president, was taken into custody by Nigeria’s Federal Inland Revenue Service (FIRS). Also arrested were Chief Financial Officer Steve Garroro, Senior Vice President Rob Thomas, and Deputy Executive Vice President Chris Ndule.

Authorities say the company owes nearly N3.5 billion ($21.6 million) in Value Added Tax (VAT) and certain withholding taxes. The executives are to be arraigned in Abuja in the coming days.

The arrests come just two days after the airline became a member of the International Air Transport Association (IATA), an important milestone toward growing Arik Air’s international reach through interline and codesharing agreements with other airlines. Two weeks ago, the airline ordered two Boeing 747-8 Intercontinental jets worth $635 million at list prices.

Previous attempts by the government to collect the debts were met with resistance from the airline. After officials raided Arik Air’s Lagos headquarters and arrested chief pilot, Victor Egonu, in 2009, the government says in 2010, the airline agreed to a payment plan and remitted N1.6 billion, but has since failed to adhere to the payment schedule. Subsequent attempts to discuss solutions with the airline have been ignored, according to tax officials.

There is no word if the arrests will affect the airline’s operations.



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