How AMCON’s jumbo debtors impoverish Nigeria


In countries where every citizen is equal before the law, those who take bank loans and refuse to pay back are regarded as criminals and treated as such. They are either in jail or are hiding under bridges.  

The reverse is the case in Nigeria. Those who collected bank loans and refuse to pay live in luxury apartments and drive in Rolls Royce and other luxury cars. Nigeria harbors 360 super rich men who would have been in jail if every Nigerian was equal before the law. The 360 super rich men owe the Assets Management Corporation of Nigeria (AMCON) a staggering N5 trillion.  Twenty of the 360 super debtors owe N3.5 trillion or 67 per cent of the total sum owed AMCON. What the 20 debtors owe is about the budget of 20 states of the federation.  Armed robbers who steal N10, 000 are prosecuted, convicted, sentenced to death and executed. Those who stole N5 trillion are standing tall. The debt of the 20 super debtors has driven 154 Nigerians into penury. It is partially responsible for Nigeria becoming the global headquarters of poverty. The jumbo debtors are greater than Nigerian laws.

AMCON is a strange development in Nigeria’s banking landscape. It was foisted on the system by Sanusi Lamido Sanusi when he was governor of the Central Bank of Nigeria (CBN). Sanusi inherited from Charles Chukwuma Soludo, a banking industry that was sailing perilously close to systemic failure.

Banks used depositors’ money to pump up their share prices before they made public offers. Those fraudulent insider dealings were largely responsible for the share price calamity that plagued the Nigerian Stock Exchange (NSE) in 2008.

The bearish posture of the NSE triggered in the first quarter of 2008 persisted for two years because of futile attempts by banks to dispose of billions of devalued shares that later became toxic assets on their balance sheets.

Most of the directors advanced huge loans to themselves and their cronies. The loans were mostly not expected to be paid back. The directors have never dealt with a “failure bank” like AMCON so they expected that if the mountain of bad debts forces the banks to collapse, the loans would die with the banks while the beneficiaries smile to surviving banks with their loots. No one expected anyone in the name of AMCON to chase loans defaulters 10 years after the banks had collapsed.

Sanusi changed all that with the emergence of AMCON. It bought well over N5 trillion bad debts with the hope of collecting them within 10 years after which it would be liquidated. AMCON is now 10 years old and is supposed to be liquidated as its shelve life expires. But it has not accomplished its mission. In fact it may not accomplish it in another 10 years.

The peculiarity of the mountain of debt owed AMCON is that most of them were not meant to be paid back. Directors of some of the banks that advanced them collected 30 per cent of the loans as kick-back with the hope that no one would go after the beneficiaries when the loans slip into default.

Others were given without collaterals.  Those with collaterals were made on properties with highly exaggerated value.  Now, 10 years after the loans became bad debts, AMCON cannot take possession of the collaterals because their owners are outlaws.

The oil and gas industry topped the list of defaulters for obvious reasons. Most of the loans defaulters were importers of refined petroleum products. The marketers were so trusted that they were getting dollar-denominated loans to import fuel without collateral.

An intriguing aspect of AMCON debts is the ones owed by staff co-operatives of the three big performers in the upstream sector of the oil industry. The staff co-operatives collected huge loans to build houses for their members.

Under normal circumstances, staff co-operatives are funded by deductions from staff salaries. One month salary of a manager in the oil industry is close to one year salary of a permanent secretary in the civil service. No one knows why the loans could not be paid. 

The congestion in Nigeria’s judiciary is not helping AMCON’s debts recovery bid. The situation in the judiciary is so bad that the immediate past chief judge of the Federal High Court advised AMCON three weeks ago to explore alternative dispute resolution option for debts recovery.  Ironically AMCON exhausted that option before seeking redress in court. The debtors are too powerful to listen to AMCON. But the courts are too congested to help.

The 36 divisions of the Federal High Court have 82 judges. The 82 judges have 191, 766 cases to handle. That is a ratio of 2,338 cases to one judge. In the next five years most of the cases would still be pending in courts.

AMCON has 3, 000 cases outstanding in the courts. The jumbo debtors have hired the best brains in the Nigerian bar to defend them. The lawyers apply delay tactics to frustrate AMCON. The creditor is so frustrated that it wants to pursue the debts by naming and shaming the debtors.  It will not work. In Nigeria criminality enhances people’s social status. The shameless jumbo debtors would be more popular when they are named.

However, the debtors should not be allowed to steal N5 trillion in a country where 154 million people wallow in abject poverty.  The federal government can help AMCON by setting up a special court to try the jumbo debtors. They must be compelled to pay their debts or go to jail. That is the only way to warn high net worth criminals that they cannot take bank loans and walk away.  

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