The 2009 banking crisis was triggered largely by the poor quality of bank assets at that era. Many banks suffered from an overhang of “non-performing loans”, otherwise described as “toxic assets” or “troubled assets”.
It was need to keep the financial system stable and contain the financial crisis bedeviling the sector in 2008/2009 that prompted the Federal Government of Nigeria to set up the Asset Management Corporation of Nigeria (AMCON) in 2010 as a bank resolution vehicle through the AMCON Act.
Today, AMCON is doing everything legally possible to recover over N5.4 trillion debts from bad debtors, mainly billionaires in the commanding heights of the economy.
The new 2019 Amended AMCON Act, which was signed into law by President Muhammadu Buhari provided AMCON with sweeping powers, which is intended to help the corporation recover the debts owed it by obligors.
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.
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 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.
Also, Section 48 of the AMCON Act empowers AMCON to either act as, or appoint a receiver for a debtor-company whose assets have been charged, mortgaged or pledged as security to AMCON. This in itself is a unique provision. First, AMCON itself may act as receiver, which is a departure from the provisions under the Companies and Allied Matters Act, thereby enabling it to throw its resources (manpower and otherwise), to ensure quick recovery of debts.
The issue of AMCON’s debt recovery drive has become complex. It touches on the thoughts and deliberations of policy makers; AMCON executives; and even the average citizen (as AMCON oversees funds that trace their roots to the taxpayer). For those of us in the judiciary we are partners in ensuring that AMCON successfully meets the mandate conferred upon it by the AMCON Act – which we are called upon to interpret, from time to time. Besides, task to strengthen AMCON’s recovery drive is of national concern.
“The provisions are further strengthened when dealing with a situation where AMCON or a receiver appointed by it, opts to manage the affairs of the debtor company. In such an instance, the enforcement of all judgements, claims, debt enforcement procedures existing or being pursued before the publication of the notice of the receiver to manage the affairs of the debtor company stands suspended and unenforceable against the debtor company and corporation’s receiver for a period of the shorter of one (1) year from the notice or the period that the receiver continues to manage the affairs of the obligor Company”.
“There are concerns as to whether the provisions on receiver management as contained in the AMCON Act are actually fit for purpose or whether they introduce business rescue legislation into Nigeria by the back door. In the event that they do in fact introduce a form of business rescue, it is evident that this may be a clog in the wheel of AMCON’s recovery drive. Further analysis on this point is provided in paragraph 39 below”.
In addition to receivership, AMCON is also empowered under Section 49 of the AMCON Act to, through an application ex-parte, seek a forfeiture order against the assets of a debtor. This is a particularly important power as it enables AMCON to move stealthily without tipping off otherwise crafty debtors. The forfeiture order vests the control and possession of the assets in AMCON, pending trial and judgement. Upon a favourable judgment, the assets in question are permanently forfeited to AMCON.
“What is clear is that these powers serve as a form of security for AMCON in litigating appropriate cases, comforted by the fact that at the end of trial, the fruits, in the form of the forfeited assets would flow to AMCON. This is clearly a better position than a situation where AMCON successfully prosecutes a case in court but is left to subsequently undertake the ordeal of enforcement post – judgment with the risk that the assets in question may be dissipated by the time of enforcement.”
