Asset Management Corporation of Nigeria (AMCON) was established by law in 2010 to buy bad debts from banks using Treasury Bill’s money in order to stabilize the country’s financial institutions.
The entire concept was to make banks liquid by buying toxic loans from banks and liaising with the Obligor/Debtor to provide the Obligor/Debtor with a conducive environment to repay the debt. But the way AMCON officials have been operating, suggest that they are more interested in taking over obligor’s properties instead of creating a conducive environment for such debts to be paid. If AMCON was not established to make a profit, and it has not generated profit for the Government since inception, it has no justification to calculate an Obligor’s liability using an index amount above the amount paid by AMCON for the debt. But if AMCON has ever generated profit for the government in the past 12 years, under what revenue head has AMCON been paying such profit to the Government Treasury? The record should be made public just as in other federal agencies.
AMCON no doubt, has the capacity to achieve financial stability of both the financial and productive sectors because it sources its funds from the Treasury Bill via CBN at 6% rate of interest. This is sufficient to stabilize the Financial Sector and at the same time provide Obligors/Debtors a soft landing to operate and pay back their loans. This way, Obligors will be able to retain their staff strength instead of allowing them to throw their workers back to the already saturated labour market; a development that is adding to the crime rate in Nigeria.
The Chief Executive of AMCON, Ahmed Kuru told the entire world at a two-day annual seminar organized by the National Judicial Council and Legal Academy for Justices of the Courts of Appeal, that the corporation is owing CBN more than N4 trillion and that this debt could rise to N7 trillion by the year 2024 at the current rate of inflation. Besides, the AMCON boss noted that the corporation has many legal issues with different Courts and called on ‘Sister agencies’ to help join forces with the corporation to ensure that debtors pay up the debt owed the corporation.
One would expect that AMCON could charge a 3% maximum mark up on the 6% Interest; thereby making the interest rate to be a single-digit in order to encourage growth and easy loan repayment. In fact, it will be killing for AMCON to charge an interest rate that is above 10 percent having obtained its loan from the CBN/ Ministry of Finance at 6 percent interest rate.
When AMCON’s Chief Executive complained of several legal cases pending in the Courts of Appeal, what he failed to tell the populace is that this bizarre development is equally as a result of the disturbing attitude of AMCON’s lawyers, its Receivers and in some cases misrepresentation of figures by some banks as at when they were packaging the loans for sale to AMCON.
The present management of AMCON has the power to ‘kill’ any company which has any problem with any bank. This is not healthy for our country in a democratic dispensation. The worst form of injustice is evil dressed with the gab of law. What is more, AMCON embarked on organizing seminars for members of the judiciary against Investors who happen to have one challenge or the other with the banks and AMCON happens to acquire the debt and in most cases they are in court with the Obligors. Is it right morally for AMCON to be sponsoring or organizing seminars for the same Justices that will hear their cases?
The impression one gets away with is that AMCON is creating the impression in the mind of the judicial officials that whosoever owes AMCON is owing the Federal Government and as such the judges should assist AMCON to recover the debt. This is wrong because the judges are to declare the law as it is without fear or favour. The law is ‘buyer beware’ so AMCON should conduct due diligence before buying any debt instead of buying a bad debt hoping to cure the legal defect in the transaction by appealing to the sentiments of the judges that Federal Government’s money is involved. Whosoever put the Federal Government money into a legally defective transaction should be blamed and possibly sanctioned instead of transferring such malfeasance to investors.
Curiously too, in a judgement delivered at the Court of Appeal in a case between AMCON and Adedayo Shittu, the court ruled on 15th December 2020 that the provision of section 34(6) of the 2019 AMCON Act clearly runs against and is inconsistent with the provision of section 6(6) of the Nigeria constitution, and is, to the extent of it being inconsistent with the provision of the constitution, null and void. The implication is that the power derived from AMCON Act which allows the corporation to sell off obligor’s property when matter is still in court has been removed from AMCON.
AMCON being a machinery of Government meant to protect the financial and productive sectors of the economy should be seen acting above board and not oppress innocent citizens.
Edomi is the Publisher/Editor-In-Chief of South South International.