Nairametrics|The Asset Management Company of Nigeria (AMCON) has revealed that Arik Air and AeroContractors both failed because of bad corporate governance. AMCON took over AeroContractors and Arik Air in February 2016 and February 2017 respectively. Both airlines had one of the biggest fleets in the country, and were established by Nigerian families: Arik by Arumemi Johnson-Ikhide and Aero by the Ibru family.
Family businesses tend to be run informally and often mix personal and business finances. AMCON is making the same mistakes as the firms under its management. The most recent financial statements for AMCON on its website are for the year ended December 2014. Between the end of December 2014 and 2017, AMCON has taken over several other businesses and divested its stake from a few others. The company also earns dividends from its current holdings.
However, there have been no statements by AMCON on how such funds are being spent. Why has it taken AMCON so long to release audited financial statements? It could at least have released unaudited results. Having taken over both airlines in a sorry state, AMCON is yet to state the current financial state of both airlines, but continues to pump money into them.
Nigerian firms tend to release financial statements quite late, as exemplified by the late submission of many companies’ financial statements to the Nigerian Stock Exchange (NSE) despite the fines involved.
One way of instituting corporate governance in firms is to diversify ownership base by listing on the Nigerian Stock Exchange (NSE). Financial institutions need to encourage family owned businesses to institute corporate governance structures in place before they give out loans to these firms. The government should also make the corporate governance code mandatory for firms that are large and operate in strategic sectors. The Companies and Allied Matters Act (CAMA) needs to be enforced by the Corporate Affairs Commission (CAC), and appropriate penalties enforce
