AMCON should consider CAMA 2020 corporate rescue mission before liquidation
Since the Asset Management Corporation of Nigeria (AMCON) was founded, the Corporation has approached its legal mandate with dexterity and alluring passion. But this is also certainly not without force and brutalities that have left roll calls of deaths of innocent citizens and collapse of businesses. Hence across Nigeria, many Nigerians have several scary stories to tell about AMCON. It is time for AMCON to shift focus to CORPORATE RESCUE MISSION as enunciated in CAMA 2020.
No doubt, AMCON was established by law in 2010 to buy bad debts from banks, using the Treasury Bill’s money to stabilize the country’s financial institutions. The entire concept was to make banks liquid by buying toxic loans from banks and liaising with the obligor/debtor to provide the obligor/debtor with a conducive environment to repay the debt. If I may ask, was AMCON established to generate profit or to stabilize the financial sector? If AMCON was not established to make profit, it therefore implies that, if AMCON has not generated profit for the government since inception, it has no justification to calculate an obligor’s liability using an index amount above the amount paid by AMCON for the debt.
But if AMCON has ever generated profit for the government in the past 12 years, under what revenue head has AMCON been paying such profit to the government treasury? The record should be made public just as the Nigeria Customs Service, Federal Revenue Service, JAMB, NPA, NIMASA, etc make their revenue generated to government coffers public from time to time.
AMCON no doubt, has the capacity to achieve financial stability of both the financial and productive sectors because it sources its funds from the Treasury Bill via CBN at 6 per cent rate of interest. This certainly is sufficient to stabilize the Financial Sector and at the same time provide obligors/debtors a soft landing to operate and pay back their loans. This way, obligors will be able to retain their staff strength, instead of throwing them back to the already saturated labour market.
Instead, we have found out over the years and which was confirmed by the Chief Executive of AMCON, Ahmed Kuru, when he told the entire world at a two-day annual seminar organized by the National Judicial Counsel and Legal Academy for Justices of the Courts of Appeal, that the corporation is owing CBN more than N4 trillion and that this debt could rise to N7 trillion by the year 2024 at the current rate of inflation. Besides, the AMCON boss noted that the corporation has many legal issues with different courts and called on ‘sister agencies’ to help join forces with the corporation to ensure that debtors pay up the debt owed the corporation.
In the first place, why should AMCON track judges and request them to exercise case management powers to ensure speedy hearing of AMCON cases? Is the law not meant for everyone equally? Why must AMCON cases be given accelerated hearings whereas some other cases have been in court awaiting trial for nine years and so on?
I must admit that AMCON is going about its activity as if it is a profit-making corporation. AMCON was created to buy off bank debts with a view to stabilizing the nation’s financial sector and possibly the productive sector that depends on the financial sector to grow the economy. It beats my imagination that AMCON is talking of its debt growing from N4 trillion to N7 trillion in four years. One would expect that AMCON could charge a 3 per cent maximum mark up on the 6 per cent Interest; thereby making the interest rate to be single digit to encourage growth and easy loan repayment. In fact, it will be sabotage for AMCON to charge an interest rate that is above 10 per cent, having obtained its loan from the CBN/ministry of Finance at 6 per cent interest rate.
At the worst scenario, banks write off bad debts and grant interest free loans. Across Nigeria, AMCON has taken over countless corporate and individual properties and in most cases, sent the workforce of most corporate organizations back to the labour market, when the unemployment rate in the first instance is growing rapidly.
However, more disturbing is the fact that AMCON’s boss complained of several legal cases, pending in the Courts of Appeal. What he failed to tell the people was that this bizarre development was equally as a result of the disturbing attitude of AMCON’s lawyers, its Receivers and in some cases misrepresentation of figures by some banks as when they were packaging the loans for sale to AMCON.
For instance, the media has been awash with how Peace Global Satellite Communications Network allegedly borrowed N178million from WEMA bank and paid WEMA bank N162 Million remaining N16 Million on principal before thunderstorm destroyed Peace Global Satellite network in 2008. Both parties were in court in 2009 over nonpayment of insurance claim and attempt by WEMA bank to sell (Peace Hotel in Lagos), which is the collateral used to secure the loan, until AMCON was created in 2010.
Following the creation of AMCON, WEMA bank went ahead to sell the debt to AMCON in 2012 for N123 Million, claiming that Peace Global Satellite Telecommunication was owing the bank N240 Million on principal in spite of Peace Global’s denial of WEMA Bank’s claim. AMCON went ahead to use N421 Million as index amount to calculate Peace Global’s liability and at 15 per cent interest rate.
Montesque propounded the theory of separation of powers, which is the antithesis of concentrating all powers in one person or body of persons because power corrupts and absolute power corrupts absolutely. The present management of AMCON has the power to ‘kill’ any company, which has any problem with any bank. This is not healthy for our country in a democratic dispensation. The worst form of injustice is evil dressed with the gab of law. What is more, AMCON embarked on organizing seminars for members of the judiciary against investors, who happen to have one challenge or the other with the banks and AMCON happens to acquire the debt and in most cases they are in court with the obligors. Is it right morally for AMCON to be sponsoring or organising seminars for the same Justices that will hear their cases? I consider it a specie of corruption for AMCON to organize seminars for judicial officials to baize judicial officials’ minds against investors.
By such action, AMCON is creating the impression in the mind of judicial officers that whosoever owes AMCON is owing the Federal Government and as such, the judges should assist AMCON to recover the debts. This is wrong because the judges are to declare the law as it is without fear or favour. The law is ‘BUYER’S BEWARE’, so AMCON should conduct due diligence before buying any debt instead of buying a bad debt hoping to cure the legal defect in the transaction by appealing to the sentiment of the judges that the federal government’s money is involved. Whosoever put the federal government money into a legally defective transaction should be blamed and possibly sanctioned instead of transferring such malfeasance to investors.
Besides, it is my considered opinion that AMCON should stop referring to judicial officials as “sister agencies” because the judiciary is supposed to be independent in a democracy so as to serve as the last bastion of hope against the ‘new leviathan’ in town called AMCON. It is not enough that Caesar’s wife is above board, she must be seen to be above board.
In the case of Peace Global Satellite Communications Network, it is embarrassing and absolutely dehumanising to take possession of the obligor’s properties through a court order obtained fraudulently from a Federal High Court Abuja, without disclosing to the court that the same matter is before the Supreme Court. Interestingly, AMCON was a party to the suit in Lagos High Court, Court of Appeal and now Supreme Court, yet, it filed another one in Abuja and suppressed the fact about the existence of those other cases, which border on the same subject matter. Again, despite the discharge of the ex-parte order by Hon Justice Anuri Chikere of the federal High Court, Abuja, which was earlier secured by AMCON, the Corporation continued to use six security guards in uniform to scare away Peace Hotels’ customers in Lagos and two security guards in uniform to traumatise the Managing Director of Peace Hotels in his residence also located in Lagos.
Unless AMCON is trying to tell Nigerians that it is above the law, otherwise no one needs to tell AMCON Chief Executive Officer to withdraw their security guards as the order upon which they were deployed had been nullified by the same court that granted it in the first place.
Consequently, I endorse the recent call by the Civil liberty Organization (CLO), asking AMCON to withdraw its security guards in Peace Hotels Limited and the Managing Director’s private residence in obedience to the judgment of Justice Chikere, delivered November 24, 2020. In the judgment, the judge vacated/discharged her earlier possession order in suit no. FHC/ABJ/CS/156/2020 given in favour of AMCON for lack of jurisdiction and suppression of material facts.
AMCON being a machinery of government meant to protect the financial and productive sectors of the economy should ‘repent’ and start to act above board instead of getting too notorious for oppressing innocent investors and entrepreneurs, which is not part of its mandate or that of the current federal government.
Umonnan is a lawyer and writes from Lagos.
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