A recalcitrant group of wealthy Nigerians is holding the national economy to ransom. According to the Asset Management Corporation of Nigeria, established to purchase toxic debts and save the economy from crashing, these people have refused all entreaties to repay their loans totalling N2.5 trillion. This is disturbing. The obligation of these Nigerians is one-third of the N7.44 trillion budget for 2017 or 80 per cent of AMCON’s total exposure. To get the economy out of the woods, AMCON must take every legal step to recover this mountain of bad debts fully from these overindulged wheeler-dealers.
Essentially, AMCON is up against just 350 Nigerians, who have been indebted to the taxpayer since 2010 when the bad debt bank was created. The infamous 350 club is an infinitesimal number compared to Nigeria’s estimated 180 million population, according to the World Bank. But, significantly, their debt stock covers the entire deficit of N2.35 trillion in the just-signed 2017 budget. Coincidentally, the financially-handicapped Federal Government is going to borrow from local and international organisations to finance the deficit when there is a ready-made solution to its woes.
As of December 2016, the likes of Capital Oil and Arik Air were allegedly behind in repayment by billions. Curiously, some of the companies concerned deny owing, while others dispute the figures. So, they have taken AMCON to court. The long list of litigation is a serious setback for AMCON, which says the debtors are contesting a total of N1.7 trillion in court. Sadly, court judgements these days are inconsistent, allowing the debtors to escape with their assets intact and continue their obscene life of luxury, while indebted to the Nigerian state.
In truth, these debtors are not financially bankrupt, as they want the public to believe. Their arrogance manifests in a leak by AMCON Managing Director, Ahmed Kuru, who alerted the nation in 2016 to the fact that many of the debtors were running around in private jets and yachts. Therefore, nothing should stop AMCON from recovering the debts.
To be fair, AMCON has already taken some measures to ensure recovery of the debts, though they seem not to be far-reaching enough. As of June 2016, 400 obligors were in the red for N4.5 trillion, AMCON said, but this has reduced to 350 persons owing N2.5 trillion. AMCON froze the assets of Capital Oil, over an alleged debt of N100 billion in 2016. Capital Oil is back in business, having wriggled through the legal maze. Likewise, AMCON took over the Silverbird Group early this year, claiming that the group had refused to settle its obligations. Arik Air suffered a similar fate in February.
AMCON must get very tough in discharging its duties, as it was set up to rescue the economy from distress. But it is frustrating that its intervention has been thoroughly abused by a select few, who use subterfuge and their connections to undermine the system. It had total obligor accounts of 12,000, but because of the poor debt recovery process, it made a loss of N351 billion in the 2016 full financial year. In other economies, bailouts have not only stabilised those systems, but have also yielded profits.
Yet, the Nigerian government is partially liable for the fiasco. As disorganised as ever, it is still doing business with almost all the companies and individuals in question. This contravenes sound business principles and ethics. Abuja should mend its ways. Why will a serious government still engage those that Kuru aptly labels “economic saboteurs” in business transactions or award juicy contracts to them?
In a similar rescue package during the global financial meltdown of 2007, the British government committed over £1 trillion in bailout to distressed banks, and bought controlling shares in RBS and Lloyds, a drastic action that enabled it to have a say in the running of the banks. But in Nigeria, AMCON debtors appear untouchable. This negates the principle behind the bad debts bank, as loans collected are supposed to be repaid.
As of 2012, British banks had repaid £1 trillion out of the £1.16 trillion stimulus package they collected as of 2008, the United Kingdom government said. The immediate past American president, Barack Obama, said in 2012, “We got back every dime used to rescue the banks.” Although not all the 707 banks that benefitted from the bailout package of $245.2 billion under his presidency have met their obligations, the United States government had recovered $266.7 billion (plus interests) by 2012, giving the US Treasury Department a healthy profit of $21.5 billion. The pertinent question is, why is the case different in Nigeria?
Our creakingly slow legal system and a labyrinthine bureaucracy are not helping matters. AMCON needs expansive powers to tackle its bad debts. AMCON should institutionalise a strict policy that brooks no sacred cows. The law should take its full course.
