By Babajide Komolafe
LEGAL luminaries including the former Chief Judge of the Federal High Court, Hon. Justice I. N. Auta, OFR, and the President of Court of Appeal, Hon. Justice Zainab Adamu Bulkachuwa, CFR, have joined the campaign by the management of Asset Management Corporation of Nigeria, AMCON, in calling for a paradigm shift in debt recovery processes in Nigeria. Such shift according to them would act as act panacea, if indeed the Corporation were to meet its mandate of resolving its huge outstanding obligation.
Current AMCON management under the leadership of its Managing Director/Chief Executive Officer, Mr. Ahmed Kuru, upon assuming office and reviewing the challenges as well as bottlenecks inhibiting recoveries mounted a strong campaign that the current practice where habitual and recalcitrant debtors are treated with kid gloves, especially by agencies of government would not help AMCON resolve these loans before its sunset date.
According to Justice Auta, the approach to debt recovery and resolution must change at this point in the life of AMCON especially going into 2018 and beyond because the corporation came as a child of necessity at the time it was created with all the good intentions in the world to recalibrate the beleaguered economy of the country at the time.
Poor corporate governance
In his words, “Nigeria witnessed the 2007 global financial crisis, which was caused by insolvency, illiquidity, poor corporate governance and outright financial crimes. However, with the creation of AMCON by the federal government, no bank has been liquidated, depositors’ funds are safe and no bank has been subject to collection queues.”
Justice Auta having enumerated the facts argued that it is extremely important for all stakeholders, especially Judges to note the correlation between bank failure, which AMCON saved, and a large concentration of non-performing loans. He added that Judges have critical role to play in the insulation of the macro-economy from fragmentation since most disputes that relate to banking, which AMCON currently shoulders are presented before them. Describing the AMCON framework as “extremely complex” he said AMCON’s goal can only be accomplished if all stakeholders, especially the entire hierarchy of the bench appreciate the fundamental underpinnings of its regime.
Lending her voice to Justice Auta’s position, Justice Bulkachuwa noted what she described as “deliberate reluctance” of debtors to redeem their obligations to AMCON, stressing, “Having realized deliberate reluctance of debtors to redeem their obligations to AMCON, it would seem that AMCON has limited options other than resorting to our courts to enforce its enormous powers towards debt recovery. To recover as much debt as possible within its defined lifespan, expediency is essential if AMCON is to achieve its value maximization and financial stability goals.”
Corroborating the position of the two distinguished Justices, Kuru submitted that AMCON is currently indebted to the CBN to the amount of N4.7trillion, which is more than half of the proposed 2018 national budget. Aside that, more than 70 per cent of AMCON’s Eligible Bank Asset (EBA), portfolio is also locked in one form of litigation or the other meaning that without the support of the judiciary, AMCON cannot see the light of day. On the back of that, he said there is also a rising number of appeals emanating from trial courts on AMCON cases, adding that at this stage in AMCON’s existence, expeditious determination of appeals brought before the courts remains key to AMCON’s ability to resolve all outstanding assets and prevent the undesired economic consequences of failure to recover the assets.
The inability to resolve the debt he argued would have dire implications for the entire Nigerian economy.