Ahmed Kuru and his team at the Asset Management Corporation of Nigeria (AMCON) are constantly deploying various strategies to checkmate individuals and firms who have failed to cooperate with AMCON’s efforts to recover their huge debts. While vigorously prosecuting court cases (over 3000 pending) against difficult debtors the corporation has taken other strong actions including publishing the names of its top debtors in newspapers as it did in October 2018. And then there have been indications in the banking industry that AMCON is interested in exploring Alternative Dispute Resolution (ADR) strategies with debtors which in some countries is a popular legal alternative to tedious court cases.
The reason the corporation deploys various strategies in its debt recovery efforts is simple. Many of the debtors engaged in all sorts of legal manoeuvres to escape responsibility. Aided by their lawyers these debtors would rather focus on finding loopholes in the legislation than work with AMCON to settle their debts.
Updating this enabling legislation to block any loopholes has therefore been a major priority of Kuru who has been very keen to ensure that the Act is in tune with the dynamics of changing times and new challenges. This is why the recent announcement that President Muhammadu Buhari had signed the amended AMCON Act into law is a very positive development which is likely to help the corporation consolidate on the progress it has made so far.
Since it was established in 2008 AMCON has recovered N1 trillion from debtors of banks whose loans were taken over by the corporation. Obviously, this volume of debt recovery is a significant contribution to the overall efforts of the Nigerian government to achieve a decrease in non-performing loans. According to Bloomberg the percentage of non-performing loans in Nigeria’s banking sector was 11% in the first quarter of 2019, a reduction from 14% one year earlier. In order to help the banking industry sustain this year on year, AMCON needs to recover more debts.
The sum of the debts that the corporation is seeking to recover is about N5 trillion, while the value of the assets that it is holding is over N1.5 trillion. With so much debt left to recover and considering the difficulties AMCON has worked through in the past, it needs strong legal backing (or more powers) to deal more blows to uncooperative billionaire debtors. The new law certainly comes in handy.
From the details, the new Act will not only fill critical gaps but also provide a greater impetus for AMCON to carry out its functions with minimal encumbrances. Consider the highlights. The AMCON (Amendment Act, 2019) empowers the agency to access the financial details of debtors. The agency can now place the bank accounts of debtors under surveillance. Unlike the previous Act, the new law empowers AMCON to by-pass any legal or procedural restriction, specifically those protecting banking details of debtors, so that the debt-recovery agency could gain access to such records.
Also, AMCON can now establish the location of debtors’ funds at home or abroad. The law also empowers AMCON to furnish government Ministries, Departments and Agencies (MDAs) with a list of debtors, and advice government to deny contract awards to such defaulting companies and persons.
All in all, the new act is a fantastic development which strengthens AMCON’s hand to apply greater pressure on stubborn debtors who have denied the treasury a total of about N5 trillion in withheld monies which, if recovered, would have significant positive impact in growing the economy and fighting poverty in a country which currently hosts the highest number of persons living in extreme poverty in the world.
There is more. The updated AMCON Act also empowers the Corporation to place any bank account or any other account comparable to a bank account of a debtor of an eligible financial institution under surveillance; obtain access to any computer system component, electronic or mechanical device of any debtor with a view to establishing the location of funds belonging to the debtor; and obtain information in respect of any private account together with all bank financial and commercial records of any debtor of any eligible financial institution. The President deserves to be commended for this singular act.
The new Act is not the only good news. As a complement to the new law, Vice President Yemi Osinbajo has set up a task force to facilitate ways and means to recover the debts owed AMCON. Members of the task force are drawn from the Economic and Financial Crimes Commission (EFCC), the Nigeria Financial Intelligence Unit (NFIU), the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Federal Ministry of Justice, among others.
It is significant that AMCON has notched up some major achievements in spite of the constraints posed by the previous enabling legislation. One key example is its timely intervention in the aviation sector which prevented companies like Arik Air and Aero Contractors from going bankrupt. By purchasing their non-performing loans, AMCON temporarily took over the airlines and has been working towards divesting its interests to competent entities. In the same way AMCON helped to resuscitate a once moribund Delta Steel Company by taking it over and subsequently divesting its interest to a new firm. These are interventions which have been greatly beneficial to specific companies and by extension, their industries and the overall economy.
With the new law, the expectation is that the Corporation will not only overcome previous legal challenges, but also make progress in achieving its critical mandate with more speed. With the new firepower it has been given, AMCON should now be in a better position to substantially reduce the mountain of debt that is weighing down the financial sector so that the economy can thrive.
Johnbull T. Oche
