AMCON Needs Support Of Judges To Recover N5.4tr NPL, Says Justice Kafarati

AMCON Needs Support Of Judges To Recover N5.4tr NPL, Says Justice Kafarati


Post Views: 384 The Chief Judge of Federal High Court, Abuja Division, Justice Adamu Abdu Kafarati, has reiterated the need for judges in Nigeria to s...

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The Chief Judge of Federal High Court, Abuja Division, Justice Adamu Abdu Kafarati, has reiterated the need for judges in Nigeria to support the recovery efforts of Asset Management Corporation of Nigeria (AMCON) established as a central element of government’s response to financial crisis in the country.
Addressing judges of the Federal High Court at an interactive session between the judges, the National Judicial Institute (NJI) and AMCON, he described the corporation’s task of recovering the over N5tr as a national assignment that must be supported by all stakeholders especially the judiciary.
He also highlighted the crisis that would have hit the Nigerian economy if not for the establishment of AMCON to save Nigerian banks a task that cannot be over-emphasised. He urged support for the corporation by the judiciary to help it recover the outstanding debt, because AMCON also borrowed money to rescue the banks.
Continuing, he noted that given the role of banks as “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,” he added.
Justice Kafarati stressed that “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 Non-Performing Loans, 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, 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 N5.4tr. 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 N5.4tr 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.