Determined to recover the N5.4 trillion bad debts it bought from commercial banks, the Asset Management Corporation of Nigeria (AMCON) is seizing valuable assets belonging to prominent Nigerians, who constitute its major debtors. The onslaught was launched about two months ago.
The corporation is sitting on substantial assets, the status of way must be determined on or before its sunset, which is around 2023/24.
AMCON got the nod of a Federal High Court sitting in May to realise its objective. One of such was an injunction against Sea Petroleum Oil & Gas Limited, whose chief promoter is former Minister of Aviation, Princess Stella Oduah.
Princess Odua, a serving senator, has been having a running battle with AMCON over her inability to settle her huge debt of nearly N20 billion.
Last week, the corporation also secured a Federal High Court Abuja Division order to take over Sigma Apartments owned by Sigma Engineering & Construction Limited over N1 billion debt.
Asset tracers are finding it difficult to smoke out more than 5,000 debtors on AMCON’s list from hiding. Besides, buyers are not showing interest in many of the seized assets.
Recently, the corporation openly expressed worry over its inability to sell N182 billion assets it obtained from debt resolution at competitive market price.
AMCON Managing Director/Chief Executive Officer Ahmed Kuru said the corporation’s current Assets Under management (AUM), that is assets obtained from debt resolution, has a book value of N182 billion, which it is unable to sell.
Kuru who spoke in Lagos at a two-day retreat on AMCON Act Amendment Bill said: “Our ability to successfully divest these assets, at competitive market price, is severely hampered by several factors including valuation methodology, unperfected title documents, state of the economy, purchasing power”.
“The third challenge is the uncooperative attitudes of select obligors who are either unwilling and/or unable to settle their indebtedness. Such debtors prefer to resort to all manner of diversionary tactics as opposed to dealing with the problem of their indebtedness. It sees most of them are buying time, to where we do not know”.
At the retreat were members of the Senate Committee on Banking, Insurance and other Financial Institutions.
According to the AMCON boss, the N4.8 trillion bad loans owed to the corporation represents 55 per cent of the 2018 budget.
He expressed doubt on the Federal Government ability to expense AMCON’s debt in the short-term.
Kuru reminded the Senate Committee on Banking, Insurance and other Financial Institutions that the ramifications for failure by AMCON to recover its debt go beyond economic cost.
His words: “It was for that reason, AMCON, after seven years of negotiating with the obligors with no commensurate recovery result, has decided to change its strategy, which now pays strict attention to enforcements as a way of compelling especially the recalcitrant obligors to come and pay up their debts.”
To achieve this however, Kuru said the corporation will be heavily dependent on the legislature, most especially members of the committee to facilitate the amendment of the AMCON Act, since most of the political exposed business heavyweight obligors now employ different antics in law to tie the corporation up in courts.
Highlighting the corporation’s other challenges, the AMCON CEO said: “One of the major areas for amendment is the matter of vesting proprietary interest of all collateral assets acquired by AMCON from commercial banks. The proposed amendment will have retrospective effect. The vesting of proprietary interest of all collateral assets in the resolution vehicle was implemented in Malaysia and was instrumental to their success in recovering debt obligations”.
Chairman of the Senate Committee Rafiu Adebayo Ibrahim said that Nigeria can be made great again, if the legislature, as a matter of urgency, empowers AMCON to go after recalcitrant obligors.
Senator Ibrahim said that legislative backing remained the only way for AMCON to implement the tough mandate given to the corporation when it was set up in 2010.
The senator hinted that the upper chamber has, as part of its oversight function, decided that AMCON must be given all the necessary support to perform as expected at this critical time in its lifespan.
He said AMCON has over the past seven years, done its best to resolve these debts but still encountering resistance from obligors.
The senator, however, urged the AMCON leadership to collaborate with the ministry of Finance, the Central Bank of Nigeria (CBN) and the office of the Attorney- General of the Federation to propose that the President issues an Executive Order on seizure of assets of persons indebted to AMCON.
In a keynote address he delivered at the retreat, Ibrahim restated the Red chamber’s plan for serious discussions as soon as possible with major stakeholders, including the CBN, the FMF, the Nigerian Deposit Insurance Corporation (NDIC) and relevant committees from the legislature among others, where issues hindering AMCON from performing optimally would be discussed. He listed among others, funding model of AMCON as an issue that could enable the recovery agency to finish its assignment on a high.
According to him, the Senate will at this stage bare its fangs by amending the AMCON Act because the corporation has been a key stabilising and re-vitalising tool in the local financial system.
He said the legislature therefore supports the proposed plan by AMCON to publish the list of especially the 350 obligors that accounts for nearly 80 per cent of the AMCON’s huge debt.
AMCON purchased the Eligible Bank Assets (EBAs) of Sea Petroleum & Gas Limited from Union Bank Plc sometime in 2012. But, despite the overtures and genuine efforts made by AMCON to reach an amicable settlement, the Senator Oduah and her co-promoters have remained recalcitrant.
Having exhausted all avenues of peaceful resolution of the humongous debt, AMCON was forced to seek judicial redress. The court order also affects Princess Stella Oduah’s other business interests for which AMCON has since appointed Moyosore Jubril Onigbanjo, a Senior Advocate of Nigeria (SAN) as a Receiver over Sea Petroleum Oil & Gas Limited; Sea Petroleum and Gas FZE as well as Star Tourism and Hotels Limited, all Princess Oduah’s assets.
The court also ordered the freezing of the funds of Sea Petroleum & Gas Limited and its affiliated companies and principal promoters held anywhere by any entity or persons in Nigeria; authorised AMCON and its Receiver to take over all assets pledged as collateral for the facility by Sea Petroleum Oil & Gas Limited.
Besides, the order on Sigma Apartments was given by Hon. Justice B.F.M. Nyako said the apartment is promoted by Saidu Samaila Balarabe Sambawa, a former minister of Sports & Social Development.
The order came on the application of AMCON after the corporation exhausted all avenues of peaceful resolution with the obligor regarding the huge debt, but was left with no other choice.
According to AMCON, information on the website Sigma Apartments described the apartment as “an epitome of refined living, featuring 48 fully furnished service luxury apartments designed for those accustomed to the finer things in life.
“The apartment is conveniently located in the heart of Abuja metropolis midway between the northern and southern retail hub of the vibrant Abuja, downtown of Wuse ll. The site further describes it as a hospitality brand that provides extended stay accommodation for sojourners in Abuja.”
Sigma Apartments promoter and his directors have had running battles with AMCON over their inability to settle N1 billion debt. But, despite the overtures and genuine efforts made by AMCON to reach an amicable settlement terms, the businessman and his co-promoters have remained recalcitrant, thus pushing AMCON to seek legal solution to the issue.
Other debtors on the run
According to Kuru, the hiding debtors will surely be found. He said the corporation has engaged lawyers and asset tracers to go after them, adding that hiding does not solve the debtors’ problems nor absolve them of their obligations. He however said the corporation has so far recovered N740 billion at the close of the 2017 financial year.
AMCON had acquired 12,537 non-performing loans worth N1.7 trillion from 22 financial institutions, following the 2009 banking crisis.
Kuru said: “Some of them have decided to change their addresses, and there was even an instance where someone’s house, was number 19, he legally removed it to plot 2015. If we looked for him, we will not find him, because he has changed his address.
“But, we are looking, and hiding will not help. To borrow money is not criminal. We must borrow money from banks. But, what we do thereafter will make it criminal. If you want to hide under national hero, there is a problem.
“It is an obligation, and most loans are taken from depositors’ money. It is simple logic, if you do not pay, banks needs to collect their money for them to pay depositors. So, we must meet our obligations.”
The AMCON boss also spoke on debts allegedly owed the corporation by the promoter of The Hardley Apartments and former captain of the Nigeria Super Eagles, Nwankwo Kanu.
AMCON had in 2015, obtained an order from the Federal High Court, which gave the corporation permission to take possession of The Hardley Apartments located at No. 46 Waziri Ibrahim Crescent, Off Elsie Femi – Pearse Crescent, Off Adeola Odeku Street, Victoria Island, in Lagos State. This order still subsists, pending the determination of the substantive matter.
When asked if Kanu’s debt will be forgiven based on his status as a “national hero”, Kuru said: “Part of the obligation to be a national hero is to meet obligation. You must be able to meet your obligation. A hero must be able to meet his obligations. You took a commercial loan to set up a hotel. What he told us was that somebody cheated him. He had one partner that was supposed to be remitting money and was not remitting money. How does that concern us? Let him take that person to court”.
“I think part of the integrity test is for somebody’s ability to honour his obligation voluntarily without going through court process. If you want some concessions and some considerations, I think that is another issue entirely. But you cannot on the basis of being a national hero not meet your debt obligation because I have not heard of any ‘National Heroes’ Fund.”
Kuru said the corporation will by next month be releasing the names of debtors to the press, and the obligations standing against their names.
His words: “But, we decided last week that we will give them a last chance, and take this as a final notice. You have N10 billion obligation, and you want to be a senator. Fine, you may not have N10 billion to pay me.
“But, let us sit down and have an understanding. I will pay you in two years, or I will pay you in five years. There is no body to give N2 billion or N30 billion today. But, sit down with us and explain how you want to pay. They are just looking the other way and want to take responsibility as leaders. I do not think it is fair”.
Kuru said that by 2023, AMCON should have ceased to operate after the expiration of its 10-year mandate.
He said: “Frankly speaking, personally, I feel that by 2023, regardless of whatever is the situation, AMCON should wind down because if after operating for 10 years, in addition to two to five years when the facilities were in the commercial banks, you did not do anything, then there is nothing you can do by 2020.
“So, at that stage, I believe that what we should be able to do, if we have any outstanding collaterals that were not realized, I think, we have enough facilities in CBN and NDIC to take care of that.”
Legal backing will
According to Kuru, the corporation needs legal support as its debtors are getting bolder by the day and employing all kinds of tricks to tie the corporation up in court.
Kuru, who spoke at the opening of a three-day retreat in Kano, said obligors are smarter, desperate, more aggressive and recalcitrant.
“This”, he says, “calls for a need to revisit the AMCON Act which governs its operations.”
Kuru said that AMCON has over 3,000 cases and counting in different courts across the country.
He described as unbelievable that obligors, despite having the means to pay their loans have refused to pay what they owe AMCON and chose to do business with other names.
Kuru added that AMCON, having achieved remarkable milestones in the last seven and half years of its creation, has a determination to deliver even more if given the needed support from all key stakeholders, such as the legislature, the judiciary, the executive among others.
Presenting an abridged highlight of the corporation’s achievements in the last seven and half years, Kuru said: “AMCON has fully redeemed all Federal Government guaranteed bonds issued to the commercial banks for purchase of non-performing loans.
“The face value of the bonds was N3.7 trillion; the banks became stable and were able to support businesses; AMCON has successfully divested from the three bridge banks – Mainstreet, Enterprise and, Keystone banks; AMCON has recorded total recoveries worth N975 billion of which cash and assets account for 60 per cent and 40 per cent, respectively.
“Our second challenge has to do with the disposal of assets due to the economic downturn. AMCON’s current Assets Under Management (AUM), that is assets obtained from debt resolution, has a book value of N182 billion, which we are unable to sell.
“Our ability to successfully divest these assets, at competitive market price, is severely hampered by several factors including valuation methodology, unperfected title documents; state of the economy and, purchasing power among others.
“Our third challenge is the uncooperative attitudes of select obligors who are either unwilling and/or unable to settle their indebtedness.
“Such debtors prefer to resort to all manner of diversionary tactics as opposed to dealing with the problem of their indebtedness. It sees most of them are buying time, to where we do not know!”
Chairman of the House of Representatives Committee on Banking & Currency, Jones Chukwudi Onyereri, stated that the legislators will work with the Senate for a quick passage of the AMCON Amendment Bill. The Bill will ensure that the corporation gets all needed support from the National Assembly to meet its mandate.
Onyereri said that given the sunset date of AMCON, which he stated was created by the government not to operate in perpetuity, the National Assembly, the executive and the judiciary must ensure that the recovery agency of government meets its obligation within the expected and acceptable timeframe. He said,
“Earlier this year, we had a public hearing and a technical session on the AMCON amendment Bill. The Report on the Bill is out and will soon be presented before the House.
“This shows our commitment in ensuring that AMCON gets all the support it can get from the National Assembly in carrying out its mandate.
“This Bill is very important and we promise to work with the Senate in ensuring a quick passage of the Bill. As we are all aware, AMCON was not created to exist in perpetuity. There is a sunset date for AMCON and it is expected to have achieved its mandate before the sunset date.
“Therefore, and more importantly, we are here to interact with AMCON to see how we can further help in making sure that AMCON achieves this mandate for the common good of the country.”