When AMCON acquires new fangs

In December last year at a forum organized by the NDIC in Lagos for selected group of editors, in the print and electronic media, I found out that there was a nagging feeling of frustration among the financial regulators on how to effectively deal with high profile debtors and checkmate their close allies, the criminal operators among the top of the banking industry. At many stages of our national life, banks have in one way or the other been the bane rather than a support to our national developmental endeavours. Rapacious businessmen in cahoots with reckless bankers have inflicted serial damages to the economy more than many can imagine.

The two regulators, the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) could only do as much without distracting them from their major assignments. Their focus had always been to protect the depositors’ funds and the jobs of the workers in the banking industry. At every turn of failures in the banking industry they have never failed to roll out measures to hedge against future occurrences. Readers may recall that one of the most significant measure rolled out by the NDIC, in recent memory, was the creation of bridge banks in 2011. This followed the collapse of Afribank, Bank PHB and Spring Bank.

The created banks, Mainstreet, Keystone and Enterprise overnight seamlessly took over the opreations of the failed the banks thus protecting the depositors’ funds as well as the workers’ jobs. These bridge banks not only took over the operations of the failed banks but they also cleaned them up and prepared them for willing investors. In a few years this mandate was successfully acquitted. Mainstreet Bank was acquired by the defunct Skye Bank, Keystone by Sigma Golf River Bank Consortium and Enterprise by Heritage Bank.

But there still remained the issue of sorting out the bad debts and prosecuting those culpable among the management who deliberately sent those banks into perdition. Due to a clamour by stakeholders in the financial industry and seeing what is happening in other climes, government then created the Asset Management Corporation of Nigeria (AMCON) as a special purpose outfit to take over the failed banks, its nonperforming loans and other toxic assets in such a manner that both the depositors’ funds and the workers’ jobs are protected. This gesture was to allow the two regulators to focus on their staid functions and allow these more adventurous endeavours to AMCON. The agency was meant to be a stopgap with a short life span of merely ten years. Swallowing bad debts was the easy part of the job for AMCON because the CBN was always there to provide the funds. However, going after the debtors and the bad boys at the top of the banking industry proved rather tough. Bad debtors they were, yet they seemed to be living well which meant they were hiding lots of cash and other assets from the legal reach of AMCON. In addition, these roughnecks, awash with what they have looted from the banks would always be steps ahead, their humps covered by the best legal teams to help them stay away from prison in perpetuity. Another problem was that AMCON was born with some legal defects that made it difficult to prosecute offenders to conclusion.

Obviously AMCON required new powers to succeed. They needed new weapons, new fangs, so to speak, to fight off these insidious foes. This is what was obliged to them by the government now. AMCON now is possessed of the legal teeth to access the financial details of debtors wherever, at home or in the diaspora, without going through unnecessary hassle. The agency can avail the information to the security apparatus to go after their assets as a restitution for what they have looted. They can also give government the information and advise it to deny contract awards to such defaulting companies and persons.

When AMCON was created in 2010 the understanding was that by 2020 it should unravel and disappear. Sensing that nine years have passed and due to the aforementioned deficiencies, AMCON had not achieved much, the President decided to sign the new bill giving the agency new powers. In addition, government has complemented the new law with setting up a very powerful task force towards recovering the unwholesome bad debts. The bad debts are humongous by any standard – a whopping five trillion naira. And to make matters more galling, only twenty well known individuals, who have already been named by AMCON, were owing 67% of the entire loan stock.

Sensing that these greedy individuals are holding the nation by the jugular, government constituted a task force with the EFCC, NFIU, ICPC and the Federal Ministry of Justice as members and mandated them to facilitate ways and means to recover the outstanding amounts. My prayer is that the task force would not limit itself to pursuing the bad debtors, though that could be its principal focus. I say we must pursue with all seriousness the directors of the banks under whose supervision these aberrations occurred. They have betrayed the trust of their depositors and are just as culpable. In any case in some of the banks the huge loans the directors gorged their insatiable appetites were the direct causes of the bank failure. The failure of Skye Bank is said to be a typical example where the tardiness of the bank directors and their alleged greed finally ruined a bank that held out so much promise. In fact, it is generally believed that once we are able to rein in the greed of bank directors then we would on the safe route to cleaner and safer banks.

While we celebrate the new measures that strengthen AMCON, we also must realize that in a few months away, the life of the agency would legally terminate. Unravelling and deciding on fiduciary matters that had gone awry can be an involved affair. Where the amount is so large and the culprits so well connected and rich, as in these cases, lot of time might be required to go through what could be a tortuous legal adjudication. In these circumstances, government must consider, in good time, to extend the life of AMCON to avoid a rush to do so, when it expires next year.

While we are at this, it is also necessary we remind ourselves to keep a good eye on the laws governing the CBN and the NDIC, the key bank regulators. Banks operate in a dynamic environment and it is necessary that the laws governing their regulators be updated parri passu with rapid developments in the environment. I know that NDIC had been in the National Assembly to update the laws governing its operations since the 7th Assembly, to no avail. The proposed amendments in the NDIC Act 2006 when passed would give the corporation sufficient powers to strengthen its supervisory capabilities and in particular address its challenges in the areas of liquidation of financial insured institutions. The amendments would as well dress it with sufficient claws to clamp on the owners who wilfully drove their institutions down the insolvency road. The bill had already passed the First Reading in the Upper House in 2017, but was made to languish till the Assembly expired.

When Umaru Ibrahim the NDIC Managing Director recently paid a visit to the Senate President, Dr Ahmed Ibrahim Lawan, the speedy passage of outstanding bill was, as reported, in the front burner of their discussions. Passing the bill would definitely be a boost to AMCON’s bid to resolve the logjam in the retrieval of all these bad debts.