N5.4tr debt: AMCON seeks special tribunals to try debtors - THE NATION
APRIL 15, 2021
By Collins Nweze
The Asset Management Corporation of Nigeria (AMCON) is seeking the establishment of special tribunals to try those owing it N5.4 trillion.
It (AMCON) has approached the National Assembly for inclusion in the provisions of the amended Banks and Other Financial Institutions Act (BOFIA) 2020.
The BOFIA 2020 allows setting up of special tribunals for hearing financial matters emanating from financial institutions.
AMCON’s Managing Director/Chief Executive Officer Ahmed Kuru dropped the hint yesterday during his presentation before the Senate Committee on Banking, Insurance and other Financial Institutions at the National Assembly, Abuja.
He said the proposed amendment, among others, will be critical to AMCON’s expected deliverables as it would quickly enable the corporation to resolve the debts.
Kuru said: “By the following introduction of new sections, the corporation is seeking to be accommodated by the provisions of the newly amended BOFIA (2020), which sets up special tribunals for hearing financial matters emanating from financial institutions.
“The designation of a special tribunal for financial cases immediately assumes the achievement of quicker resolution of matters as judges are designated to hear only such financial matters.
“Moreover, BOFIA prescribes a maximum period of six months to conclude matters brought before the Tribunal. AMCON being accommodated under this Tribunal will assist AMCON with its speed of recovery.”
The Senate Committee chaired by Senator Uba Sani (Kaduna State) had invited AMCON top executives and that of other key stakeholders/sister agencies of the Federal Government, including the Central Bank of Nigeria (CBN), the Ministry of Finance and the Nigeria Deposit Insurance Corporation (NDIC) for a continued engagement regarding the amendment of the AMCON Act No.3 (Amendment Bill) 2021 with the Senate Committee on banking insurance & other financial institutions. The bill was originally sponsored by Senator Opeyemi Bamidele (Ekiti State).
Kuru explained that to enable AMCON succeed in its national call to duty, “it is soliciting the continued support of the Senate Committee on Banking, Insurance & Other Financial Institutions with the proposed amendments for adoption.”
Justifying the proposal, Kuru reminded the Committee that Section 61 (b) in ascribing a tenor for the operation of the Resolution Cost Fund describes same as a period of 10 years from the calendar year 2010 but may be extended by not more than a maximum of five years by the National Assembly.
“This, he said, “was done under the assumption that the debt obligations will be extinguished within 10 years.
“The effect of the above description therefore is that the tenor ascribed for the life of the Resolution Cost Fund has elapsed by time. Going by this, the tenor expired in December 2020. The need for the amendment of the provision of the Act therefore becomes inevitable towards ensuring a sustained operation of the activities of AMCON.”
Kuru described as worrisome that if the commission can only get a little above N1 trillion if it liability in excess of N5.4 trillion are disposed.
According to him, AMCON Act encourages asset tracing for accounts for the gap, plus contributions from the financial institutions including the CBN.
He, however, regretted that “as at today, the contributors have not been able to meet the expected yearly amounts, which is mainly due to the fact that the assumptions have not materialised.
“Therefore, the only remedy is to provide an inbuilt legal mechanism whereby they continue to contribute in addition to recoveries until the whole debt is paid, otherwise the obligation falls on taxpayers.”
AMCON had purchased 12,743 bad loans worth N3.8 trillion from 22 Eligible Financial Institutions (EFIs) for a purchase price of N1.8 trillion. The purchased are covered by various collaterals. Of this number, AMCON has so far resolved about 4,000 Eligible Bank Assets while more than 8,000 EBAs are still outstanding. AMCON has also mapped out about 6,000 accounts for the Asset Management Partners (AMPs.)
The corporation had to inject a total sum of N2.2 trillion to 10 Nigerian banks – bridged and owned banks (intervened banks) – bringing Net Book Value (NAV) to Zero.
The corporation recently took over Skye Bank (now Polaris) under the bridged bank concept of the CBN and NDIC. The bank had stabilised and operating efficiently.
The AMCON boss, who attended the senate engagement with other top officials of AMCON, listed the areas requiring National Assembly intervention to include: the Cessation of the Resolution Cost Fund/defined tenure; dissolution date of the Corporation, recovery through special tribunal for enforcement and recovery of eligible loans as well as certificate of Sale of Certificate of Transfer as a valid registrable instrument for AMCON.
Those in Kuru’s delegation included: Executive Director (Operations) Aminu Ismail; Company Secretary Saidu Jallo; Head, Legal Albert Nwanozie; Chief Finance Officer Gbenga Ataiyero and Head, Intergovernmental Department Sa’ad Ahmed.