- There is a lot more the corporation can do to make the debtors pay
Troubling – perhaps best describes the latest revelation by the Asset Management Corporation of Nigeria (AMCON) that some 350 Nigerians account for 80 percent of its entire debt; more troubling however is the corporation’s feigned helplessness on a matter that now constitutes a terrible blight on the financial system.
Last week, AMCON’s managing director, Ahmed Kuru, told the News Agency of Nigeria (NAN) that these individuals and/or businesses linked to them owe N4.3 trillion of the N5.4 trillion debt profile of the company – and this against an unflattering overall scorecard of about N700 billion of debt recovery.
His words: “I can tell you that today, our major challenge has to do with the judicial process…In other climes, what they do is that they allow AMCON to own the assets ab-initio, which means I have paid for the loans from the commercial banks, I have taken over the loan and I will take it over with the assets so I can sell the assets from day one.
“But here, somebody can decide to take you to court and he has to be heard. He can lock you up with judicial processes and technicalities for 10 years, 15 years or even 20 years”.
It is a familiar story. Our banks parcel out the commonwealth to a privileged few in the name of credit – most often poorly collaterised. As sure as most of the credit decisions turn out, they go bad. The ensuing toxic assets are traded by the banks for cash while the corporation takes them over, hoping in the end to get the debtors to pay.
Of the lot, some N4.3 trillion – one half of the Federal Government’s entire 2018 budget – farmed out to barely 350 individuals/entities in such circumstances! And now, AMCON says there is no way the country is going to write off the huge sum sitting on the balance sheet of the Central Bank of Nigeria (CBN). In the meantime, its managing director blames the judicial system for unduly delaying the resolution process.
We do sympathise with AMCON over the frustratingly slow pace of judicial processes which it holds responsible for its inability to resolve many of the cases as expeditiously as it would ordinarily have wished. It is also possible that the existing laws no longer serve the corporation well and so would need to be changed. Given the difficult circumstances under which AMCON came into being, that would be understandable. The way to go however is not to use the judiciary as alibi for inertia as AMCOM routinely does, or moan endlessly about the situation it claims is beyond it, but rather to take steps to get the law amended.
At the same time, it needs to be said that the corporation hasn’t quite made a convincing case about its utter helplessness even with the existing law, considering how swiftly and effectively it was able to take over two foremost airlines – Arik and Aero – when both serially defaulted in their obligations to it. Or was it a case of the promoters of the two entities not willing to deploy the law to tie AMCON’s hands? Put in another way – what made it possible for AMCON to move against the two cases while rendering it nigh impossible when it came to the others?
As a baby of the bankers committee, and to the extent that the bad loans being complained about all originated from the banks, a framework of collaboration would seem to us an imperative if only to get the job done. Nothing, as far as we can see, makes it impossible for AMCON to go after the assets of the loan defaulters. All that is required is diligence of efforts and the will to go the whole hog.
A tardy judicial system notwithstanding, there must be something that the financial services industry as a whole can do to deal with individuals/entities known to have acquired ignoble records of preying on the system. But nothing here suggests that the judiciary should not look inward, with a view to helping the system and the country to facilitate the recovery of this huge debt from our high profile debtors.