Recalcitrant
group of wealthy Nigerians is holding the national economy to ransom. According
to the Asset Management Corporation of Nigeria, established to purchase
toxic
debts and save the economy from crashing, these people have refused all
entreaties to repay their loans totalling N2.5 trillion. This is disturbing.
The obligation of these Nigerians is one-third of the N7.44 trillion budget for
2017 or 80 per cent of AMCON’s total exposure. To get the economy out of the
woods, AMCON must take every legal step to recover this mountain of bad debts
fully from these overindulged wheeler-dealers.
Essentially,
AMCON is up against just 350 Nigerians, who have been indebted to the taxpayer
since 2010 when the bad debt bank was created. The infamous 350 club is an
infinitesimal number compared to Nigeria’s estimated 180 million population,
according to the World Bank. But, significantly, their debt stock covers the
entire deficit of N2.35 trillion in the just-signed 2017 budget.
Coincidentally, the financially-handicapped Federal Government is going to
borrow from local and international organisations to finance the deficit when
there is a ready-made solution to its woes.
As of
December 2016, the likes of Capital Oil and Arik Air were allegedly behind in
repayment by billions. Curiously, some of the companies concerned deny owing,
while others dispute the figures. So, they have taken AMCON to court. The long
list of litigation is a serious setback for AMCON, which says the debtors are
contesting a total of N1.7 trillion in court. Sadly, court judgements these
days are inconsistent, allowing the debtors to escape with their assets intact
and continue their obscene life of luxury, while indebted to the Nigerian
state.
In truth,
these debtors are not financially bankrupt, as they want the public to believe.
Their arrogance manifests in a leak by AMCON Managing Director, Ahmed Kuru, who
alerted the nation in 2016 to the fact that many of the debtors were running
around in private jets and yachts. Therefore, nothing should stop AMCON from
recovering the debts.
To be fair,
AMCON has already taken some measures to ensure recovery of the debts, though
they seem not to be far-reaching enough. As of June 2016, 400 obligors were in
the red for N4.5 trillion, AMCON said, but this has reduced to 350 persons
owing N2.5 trillion. AMCON froze the assets of Capital Oil, over an alleged
debt of N100 billion in 2016. Capital Oil is back in business, having wriggled
through the legal maze. Likewise, AMCON took over the Silverbird Group early
this year, claiming that the group had refused to settle its obligations. Arik
Air suffered a similar fate in February.
AMCON must get
very tough in discharging its duties, as it was set up to rescue the economy
from distress. But it is frustrating that its intervention has been thoroughly
abused by a select few, who use subterfuge and their connections to undermine
the system. It had total obligor accounts of 12,000, but because of the poor
debt recovery process, it made a loss of N351 billion in the 2016 full
financial year. In other economies, bailouts have not only stabilised those
systems, but have also yielded profits.
Yet, the
Nigerian government is partially liable for the fiasco. As disorganised as
ever, it is still doing business with almost all the companies and individuals
in question. This contravenes sound business principles and ethics. Abuja
should mend its ways. Why will a serious government still engage those that
Kuru aptly labels “economic saboteurs” in business transactions or award juicy
contracts to them?
In a similar
rescue package during the global financial meltdown of 2007, the British
government committed over £1 trillion in bailout to distressed banks, and
bought controlling shares in RBS and Lloyds, a drastic action that enabled it
to have a say in the running of the banks. But in Nigeria, AMCON debtors appear
untouchable. This negates the principle behind the bad debts bank, as loans
collected are supposed to be repaid.
As of 2012,
British banks had repaid £1 trillion out of the £1.16 trillion stimulus package
they collected as of 2008, the United Kingdom government said. The immediate
past American president, Barack Obama, said in 2012, “We got back every dime
used to rescue the banks.” Although not all the 707 banks that benefitted from
the bailout package of $245.2 billion under his presidency have met their
obligations, the United States government had recovered $266.7 billion (plus
interests) by 2012, giving the US Treasury Department a healthy profit of $21.5
billion. The pertinent question is, why is the case different in Nigeria?
Our
creakingly slow legal system and a labyrinthine bureaucracy are not helping
matters. AMCON needs expansive powers to tackle its bad debts. AMCON should
institutionalise a strict policy that brooks no sacred cows. The law should
take its full course.
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