AMCON Sunset: N5.4trillion Recovery Impossible Without Judicial Support Says Justice Kafarati, Kuru

Federal high court judges, Staff and management of Asset Management Corporation of Nigeria (AMCON); the leadership of the National Judicial Institute (NJI) and other participants in a group photograph at the end of the one day interactive session between the NJI, AMCON and federal high court judges in Abuja…at the weekend

The Chief Judge of Federal High Court, Abuja Division, Hon. Justice Adamu Abdu Kafarati, has reiterated the need for judges in Nigeria to support the recovery efforts of Asset Management Corporation of Nigeria (AMCON) since the corporation was established as a central element of government’s response to financial crisis in the country. Justice Kafarati, made the remarks at the National Judicial Institute (NJI), Abuja when he addressed federal high court judges at an interactive session between the trio of NJI, AMCON and federal high court judges.

Describing AMCON’s assignment to recover over N5trillion for the country as a national assignment that must be supported by all stakeholders especially the judiciary, the Chief Judge also highlighted the crisis that would have hit the Nigerian economy if government did not establish AMCON at the time they did. AMCON coming to save the banks in Nigeria cannot be over-emphasised, so the corporation must be supported firm judicial processes to recover the outstanding debt because AMCON also borrowed money to rescue the banks.

He said, “My Lords, banks are drivers of the economy as they supply its oxygen. That is why during the 2008/2009 financial crisis in Nigeria (partly triggered by global financial crisis, and partly by domestic activities), government intervened to support the banks by bailing them out in order to allow the financial system to continue functioning. In the absence of government intervention in the banks through the vehicle, which AMCON provided, a number of banks in the country would have failed thereby inhibiting banks from playing their crucial roles in the economy like payment of services to households and companies extension of credits, savings accounts and financial insurance among others.”

Justice Kafarati further said, “The interruption to the critical service that banks provide, and the likely loss of confidence in the system that would have followed, would have led to widespread disruption and ultimate collapse of the financial system in Nigeria. AMCON was thus created in 2010 as the most important step towards resolving non-performing loans in the banks. This was effected through the injection of capital into the ailing banks in consideration for equity. Recognising the grave systemic risk posed by high level of bad debts otherwise known as non-performing loans, AMCON was set up to manage the assets transferred to it with a view to maximizing their value through eventual sale or orderly liquidation.”

He said the judiciary must therefore collaborate with AMCON to recover every outstanding debt because with the purchase of the NPLs, AMCON, he argued, is expected to maximize the value of asset recoveries and minimize costs to taxpayers. The Hon. Justice also reminded the judges that this mandate can be accomplished effectively because the AMCON Act conferred ‘special powers’ to the corporation in its debt recovery drive. In enforcing its powers, he added that AMCON has an obligation to complement the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) in their mandates respecting financial system stability in Nigeria.

According to him, the totality of the conceptual, functional and jurisprudential implications of the establishment of AMCON is that despite the universal financial crisis of 2008/2009, Nigeria was insulated from the collapse of any bank, a run on the banks or notably, the need to withhold depositor’s funds. He therefore said AMCON required the full utilization of the extra ordinary, special and unusual powers to enable it overcome the challenges otherwise confronted by banks in their efforts to recover debts from recalcitrant obligors, especially since the perpetual debtors resort to all manner of legal loopholes to ensure that they never redeem their obligations.

Addressing the judges earlier, AMCON Managing Director/Chief Executive Officer, Mr. Ahmed Lawan Kuru did not mince words acknowledging the overwhelming challenges faced by AMCON in the recovery of the outstanding debt of AMCON, which he put at N5.4trillion. He said, “My Lords, it is clear to us now that we (AMCON) cannot go very far without the support of the courts because AMCON obligors deliberately raise technicalities in courts to elongate and delay their cases with AMCON.”

The AMCON boss informed that as a result of these antics, AMCON as part of its renewed strategy for recovering decided earlier in the year to refocus its strategy by shifting gears from restructuring towards enforcements. He said, “It has become clear to us that in order to attain the target as we approach sunset, we must redouble our efforts in the areas of enforcement. The AMCON Act anticipated a situation where we may need to enforce if negotiations fail. Negotiation has failed us, given our sunset date. It is also clear to us that we cannot go very far without the strong support of the judiciary. Out of the 191,766 cases pending at the federal high court, more than 3,000 are related to AMCON alone.”

Explaining that AMCON is not a profit-making organization, Kuru however asserted that if the national assignment of recovering the N5.4trillion of bad debts is to be achieved, the AMCON practice direction must be strengthened and encouraged. But should AMCON fail to recover this huge debt at sunset, the impact, he stated will be catastrophic to Nigeria’s economy.

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