By Adebayo Obajemu
For the chronic debtors in Nigeria, especially big time individuals and companies who are indebted to financial institutions; the chicken may have come home to roost.
Thanks to the newly acquired powers of the Assets Management Company of Nigeria, AMCON, consequent upon the signing into law last week of the AMCON revised bill by President Muhammadu Buhari, they may no longer have a hiding place going forward.
This is coming on the heels of the signing into law of the Bill, which has granted additional powers to the agency.
The new law – AMCON (Amendment Act, 2019) – empowers the agency to access the financial details of debtors.
The agency can now place bank accounts of debtors under surveillance. The new law empowers AMCON to by-pass any legal or procedural restriction, specifically those protecting banking details of debtors, so that the debt-mopping agency could gain access to such records. AMCON can now establish the location of debtors’ funds at home or in the Diaspora. The law also empowers AMCON to furnish government Ministries, Departments and Agencies (MDAs) with a list of debtors, and advise government to deny contract awards to such defaulting companies and persons.
The Special Adviser to the President on National Assembly Matters, Senator Ita Enang, who broke the news that Buhari had appended his signature to the law, explained that “It (the Act) empowers AMCON to place any bank account or any other account comparable to a bank account of a debtor of an eligible financial institution under surveillance; obtain access to any computer system component, electronic or mechanical device of any debtor with a view to establishing the location of funds belonging to the debtor; and obtain information in respect of any private account together with all bank financial and commercial records of any debtor of any eligible financial institution.”
As a complement to the new law, Vice President Yemi Osinbajo has set up a task force to facilitate ways and means to recover over N5 trillion debts owed AMCON. The agencies represented in the team are the Economic and Financial Crimes Commission (EFCC), Nigeria Financial Intelligence Unit (NFIU), the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Federal Ministry of Justice.
The Bill seeks to give clarity on the provisions in the Act and to enhance AMCON’s debt recovery capabilities thereby improving supporting regimes for enforcement. The Bill is seeking to amend the Act by creating sinking funds required to meet its debt securities.
AMCON was created for the purpose of efficiently resolving the Non-Performing Loan (NPL) assets of Nigerian banks and other related matters. By the AMCON Act 2010 enacted by the National Assembly of the Federal Republic of Nigeria, the corporation is empowered to dispose of managed assets of Nigerian banks.
The amended AMCON Act was enacted on 29th July 2019 and it represents the second amendment of the AMCON Act which comprises of 24 sections. The amended sections are Sections 6, 10, 19, 31, 33, 34, 35, 39, 43, 45, 47, 48, 49, 50, 51, 52, 53, 55, 60 and 61. In addition to the amended sections of the AMCON Act, new sections were introduced which include Sections 33A, 50A and 50B. Key Features of the Bill include:
Tracing and tracking debtors’ hidden funds. AMCON may place any bank account or any other account related to a debtor under surveillance. All said bank accounts of the individual debtors and their companies will be monitored for the effective tracing and recovery of debts.
Naming and shaming recalcitrant debtors and making contracting with government subject to good standing with AMCON.
Holding selling EFIs to their loan sale obligations and giving teeth to claw back rights.
Checkmating debtors’ legal gymnastics and exploitation of legal technicalities to frustrate recovery.
Fast tracking the hearing and determination of AMCON cases. In essence, where a debtor or other party brings an action against AMCON in a competent court, until a final decision is made, no order of attachment can be made against AMCON.
Enhancing AMCON’s rights over collateral securing EBAs from securing interest to legal title.
Fine-tuning AMCON’s special powers. Here the objective of the Bill is to clarify the restrictions placed on the members of the board or any employee of AMCON regarding an involvement in the purchase of assets acquired by AMCON.
To clarify the effect of AMCON’s acquisition of Eligible Bank Assets (EBA) from Eligible Financial Institution (EFI), in terms of the powers, rights and obligations of the EFI in relation to the purchased EBA.
To ensure that an action in court does not restrict the vesting of an EBA in and the assignment of relevant contracts relating to the EBA to AMCON.
To extend the limitation period for any cause of action relating to any debt owed to AMCON by its acquisition of an EBA.
To regulate and properly define the powers of a receiver appointed by AMCON for a debtor company whose assets have been charged, mortgaged or pledged as security for an EBA acquired by AMCON.
To ensure that AMCON is exempted from the provisions of the Investment and Securities Act (“ISA”), in addition to the Capital Gains Tax Act, Companies Income Tax Act and the Stamp Duties Act; and
To establish the Banking Sector Resolution Cost Fund to ensure that AMCON is able to meet its obligations arising from debt securities issued by AMCON pursuant to the AMCON Act and would be utilized if AMCON if AMCON is unable to meet such obligations as and when due from its resources including the proceeds of sale and management of EBA it acquires from EFI.
Finally, the Bill has ensured clarity on the scope, powers and reduces the possibilities of litigation over the same by creating detailed provisions to regulate and properly define the powers of AMCON, where it acts as receiver appointed by AMCON for a debtor company whose assets have been charged, mortgaged or pledged as security for an EBA acquired by AMCON.
Only last week, AMCON said that it had sent a comprehensive list of its top-notch 1,000 debtors to the National Assembly as part of the strategy to intensify its debt recovery drive.
The agency put the total current exposure on all eligible bank assets at N4.4tn, adding that the market values of the assets had significantly reduced below the valuation at the point of purchase due to the socio-economic downturn, making it extremely difficult to consummate sales transactions.
It said in a statement that the list of the “recalcitrant obligors” was submitted to the members of the House of Representatives Committee on Banking and Currency at a retreat of the committee in Lagos.
It was learnt that about 1,000 debtors were responsible for 90 per cent of the total debt of N4.4tn, translating to N3.9tn.
There were media speculations last week that the 1,000 debtors may have been those responsible for the high net worth debts. Many prominent Nigerians across different sectors of the economy are on the list, according to sources.
Recall that President Muhammadu Buhari had on Thursday signed into law the Asset Management Corporation of Nigeria (Amendment) Act, amending the AMCON Act No.4, 2010.
It should be noted that the AMCON Act provides for the extension of the tenor of the resolution cost fund and grants access to the Special Tribunal established by the Banks and other Financial Institutions Act 2020, which confers on AMCON the power to, among others, “take possession, manage, foreclose or sell, transfer, assign or otherwise deal with the asset or property used as security for Eligible Bank Assets, and related matters.”
The Chairman of the House of Representatives Committee on Banking and Currency, Mr Victor Nwokolo, who received the list from the Managing Director/Chief Executive Officer of the corporation, Mr Ahmed Kuru, was quoted as saying that the committee called for the list so that the National Assembly would know “those holding the country to ransom.”
He said this would enable the lawmakers to meet with relevant agencies of the Federal Government on how to further deal with the debtors to ensure the realisation of AMCON’s mandate in the overall interest of the Nigerian economy.
Nwokolo, who commended the commitment of the Kuru-led agency, said the corporation had been operating under a very difficult condition since its establishment, adding that this had been made worse by the COVID-19 pandemic.
He said the harsh economic realities caused by COVID-19 meant that “the recovery assignment AMCON is doing for the country has been further compounded, which is why the National Assembly is looking at ways of further supporting the recovery drive.”
As at 2018, according to the Chairman of the Asset Management Corporation of Nigeria (AMCON), the debt profile of AMCON was established to be over five trillion Naira, with 20 individuals and companies owing 67 per cent of the said debt.
This necessitated the setting up of a task force by the Vice President Prof. Yemi Osinbajo SAN on July 31 2019 with a mandate to devise a strategy to recover the debt owed to the corporation.
One of such strategies was the mandate given to the Economic and Financial Crimes Commission, Nigerian Financial Intelligence Unit, the Independent Corrupt Practices Commission and the Ministry of Justice to go after these debtors.
Another strategy to strengthen AMCON’s ability to live up to its name was the amendment of the AMCON Act. On the 7th of August, 2019, President Muhammadu Buhari assented to the AMCON (AMENDMENT) Bill 2019. The amendments introduced a lot of far reaching provisions geared towards giving efficacy to the Corporation in her mandate of recovery of debt owed to banks.
While these amendments have been introduced, some analysts who spoke with Business Hallmark have voiced their concerns.
Dr Olufemi Omoyele, director of Entrepreneurship, Redeemers University voiced out criticisms to the innovations under the Act. He said some aspects of the amendments are unconstitutional, adding that ” Setting a time limit for courts to determine AMCON cases within six months violates the right to fair hearing and will prevent the judges from doing a detailed job.
AMCON was established on 19 July, 2010, when the President of the Federal Republic of Nigeria signed the AMCON Act into law. It was created to be a key stabilizing and re-vitalizing tool aimed at reviving the financial system by efficiently recovering the non-performing loan assets of Nigerian banks.
Mandate of AMCON
Section 4 of the Act which encapsulates the mandate of the Corporation can be summarized thus: Enforcement and realization of assets owed to banks; management of the proceeds; and redemption of debt securities.
In furtherance of the mandate of the Corporation, it was conferred with special powers, such as powers to appoint a receiver, to take custody of debtor’s company, to attach and freeze debtors’ bank account, special powers to declare a debtor bankrupt and special powers in winding up proceedings (which provides for a simpler winding up procedure).