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Defunct Nigeria Airways Manager Indicted For N150m Fraud May Be Appointed Federal Aviation Agency CEO

September 28, 2016

The fraud, committed at a time when the naira exchanged for about N80 to the dollar, took place between 1996 and 1997.

Emmanuel Diala, an Assistant Manager of the defunct Nigeria Airways and one of those indicted by the 1998 Federal Government Investigative Committee on Procurement, Clearance and Storage of Engineering Spare Parts for a N150 million fraud, may be appointed by the current government to head the Accident Investigation Bureau (AIB), one of the agencies in the aviation industry.

Mr. Diala, an engineer, was investigated, along with 29 others, by the seven-man committee, which returned a verdict of indictment. The committee was chaired by one Capt. Adeola with Miss O.C. Odunjo serving as secretary. Its other members were Alhaji M. Alli, Mr. G.A. Ayu, Mrs. O. Oluwo, Mr. F.O. Ajagha, and Engr. E.E. Offiong.

The fraud, committed at a time when the naira exchanged for about N80 to the dollar, took place between 1996 and 1997.

The committee report, exclusively obtained by SaharaReporters, said the fraud marked the beginning of the collapse of the once vibrant Nigeria Airways.

In the report, the committee submitted that the sourcing of spares through third parties escalated the cost of checks on the aircraft in the defunct airline’s fleet.

An industry union, the National Union of Air Transport Employees (NUATE), had exposed the fraud in a petition to the Federal Government, which immediately set up a committee to unravel a variety of fraudulent schemes in the then distressed airline.

A source close to one of the aviation sector unions told SaharaReporters that Mr. Diala, who is aspiring to become AIB Commissioner, has polarized the agency by setting the National Association of Aircraft Pilots and Engineers (NAAPE) against the bureau’s management in order to achieve his goal.

A document made available to SaharaReporters indicated that the committee report indicted Mr. Diala (with the staff number S.3775) for grossly inflating the prices of rotable spare parts purchased by him through Revilo UK, an unregistered third party company in the United Kingdom. At the time, Mr. Diala was Assistant General Manager, Material Planning and Procurement in Nigeria Airways.

Mr. Diala, the documents showed, ignored the spare parts manufacturer, Airbus Industries, which had expressed interest in supplying the items at far lower prices, to do a deal with Revilo UK.

The committee report explained that Mr. Diala and his manager, U. Nwoji, took advantage of the airline’s financial state and poor credit worthiness to engage in the costly procurement of spare parts through a third party and circumvented all control measures in the procurement.

The document also accused Mr. Diala, currently a director in the AIB as a contract staff, of conniving with others to carry out repairs and to overhaul “rotable spare parts in the most careless manner imaginable without regards for the cost and safety of such spare parts.” It added that rotable spare parts in very large numbers were dispatched to repair shops abroad continuously without proper follow-up action for their recovery.

It similarly found that Mr. Diala collected over N100 million for the purchase of spare parts for the airline, but without evidence that the purchase was made.

For instance, Mr. Diala was said to have requested for N1,005,628 for the purchase of local materials for the C check on an Airbus A310 with the registration number 5N-AUF, but could not present a material plan for local input for the check.

Also, payments were allegedly made on items considered extraneous to the check. These included repair of toilets, vehicles, customs clearance of spares, and repair of air conditioners.

“Payments for spares ordered were made on account without purchase orders and invoices. The Assistant General Manager. Material Planning and Procurement (Diala), usurped the function of the Invoice Clearance Section in confirming the receipt of spares and materials for the C-Check payments were consequently made at his request.

“Quotations for spares and materials were obtained from Airbus Industries, Aerospares Shannon and Revilo UK. The Assistant General Manager, Material Planning and Procurement, later contradicted himself by stating that Revilo did not submit any quotation.

“Revilo quoted higher prices for items than other vendors like Airbus Industries, but yet, purchase was made through Revilo at higher prices,” the committee report stated.

It further revealed, for instance, that 11 spares within the investigation period were purchased from Revilo at inflated prices, leading to a total loss of $106,841.00 (about N8.5 million at N80 per dollar) by Nigeria Airways.

According to the committee Revilio UK was paid $680,000, while Aerospares Shannon collected $325,000 within the period.

It further submitted that the sum of N187,925.28 was expended on clearing the items through Customs, but it was never utilized for the aircraft’s check.

When interviewed by the committee, Mr. Diala explained that he opted for a third party because various overseas companies were unwilling to release rotable spares directly to the airline except through a third party, an excuse punctured by the committee when it said the spares ought to have been purchased on a cash and carry basis.

“Besides, there is no written evidence to support these claims. From the documents and evidences available to the committee, it is clear that two principal officers, namely Assistant General Manager, Material Planning and Procurement and Manager, Material Planning, played a dominant role in the improper manner spare parts were procured,” explained the committee report.