Citizens won’t pay for mega bank debtors

The suggestion made by bosses of the Assets Management Company of Nigeria [AMCON] that public funds would be used to pay off N5 trillion in toxic bank assets if AMCON itself fails to recover them by its winding up date was one of the most disturbing things we have heard in recent times. AMCON’s Managing […]

The suggestion made by bosses of the Assets Management Company of Nigeria [AMCON] that public funds would be used to pay off N5 trillion in toxic bank assets if AMCON itself fails to recover them by its winding up date was one of the most disturbing things we have heard in recent times.

AMCON’s Managing Director/Chief Executive Officer Ahmed Kuru reportedly said this in Abuja last week at a seminar for its Receivers/Receiver Managers in General Enforcement.

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He spoke through AMCON’s Group Head, Resolution Strategy, Aliyu Kalgo.

Kuru said if, at sunset, AMCON is unable to recover its N5trillion debt, the burden will automatically become the Federal Government’s debtand taxpayers’ money will be used to settle it.

The Nigerian public, he said, would be made to pay for the recklessness of only a few individuals who took advantage of the loopholes in our laws to escape their moral and legal obligations to repay debts.

AMCON first revealed two years ago that 350 Nigerians are responsible for more than 80% of this N5 trillion debt profile.More recently, it said just 20 individuals/entities are responsible for 67% of the N5 trillion debt.

Clearly, it is unconscionable if the ordinary citizen is made to cough out this humongous amount which was borrowed, then mismanaged and or squandered by a few corporate and banking fatcats.

Most of these toxic loans were acquired either through violation of the banks’ stringent lending regulations, through collusion between bankers and crooked businessmen, or through outright theft by bank directors. Under no circumstances should the ordinary citizen be made to pay for the crimes of any of these fat cats.

Last September, Vice President Yemi Osinbajo inaugurated an inter-agency committee to help recover this debt. Committee

members included heads of Nigeria Financial Intelligence Unit, NFIU; ICPC; Central Bank, Nigeria Deposit Insurance Corporation [NDIC], EFCC, Federal Ministry of Justice and AMCON.

He gave the committee targets and asked it to submit reports of its progress. Recent statements by AMCON chiefs seem to indicate that little progress was made, hence the threat to transfer the burden to citizens.

Some financial experts have however said that AMCON’s figures are all jumbled up. According to them, since its creation in 2010 to help avert banking sector distress by buying up toxic bank assets, AMCON raised N1.7trn by way of a bond issue to CBN.

AMCON has so far recovered N1.1trn or 65% of this amount, which is what it must recover. The N5 trn mentioned, these experts say, represent the face value of the toxic assets it acquired.

They say the face value of outstanding toxic loans is being written down by a banking sector sinking fund from a deduction of 0.5% of the system’s total assets, which was N167.90bn last year.

These experts added that AMCON does not have to wind up in ten years if its mandate is not done, and that since only 350 persons/entities are responsible for 80% of this money, it should concentrate sharply on them.

Under an amendment to its enabling Act last year, AMCON acquired more powers to do this.

These include tracing and tracking debtors’ hidden funds; naming and shaming recalcitrant debtors and making contracting with government subject to good standing with AMCON.

Other new powers include checkmating debtors’ exploitation of legal technicalities to frustrate recovery as well as fast tracking the hearing and determination of AMCON cases.

We urge AMCON and the Federal Government committee assisting it to fully utilize these powers and recover as much as they can of the face value of toxic bank assets. Under no circumstances should citizens be made to pay what banking and corporate fat cats made away with.