Home Business AMCON’s $25bn liabilities heightens economic woes – Reps’ report

AMCON’s $25bn liabilities heightens economic woes – Reps’ report

by Business News Report

THE House of Representatives yesterday lamented that 20 Nigerians owed the Asset Management Company of Nigeria, AMCON, N1.2 trillion. This revelation is coming on the heels of concern raised by the House Ad-Hoc Committee on undue accumulation of debts and alleged fraudulent sale of Banks by AMCON. The Corporation has N5 trillion or $25 billion debts bought of non performing loans from banks arising from the 2007/2008 global financial crisis that rocked Nigerian banks. Some of the non performing loans bought over by AMCON were to politically exposed persons and the corporation has not been able to recover same over the past few years.
Consequently, the House presided over by the Speaker, Yakubu Dogara has mandated its standing Committee on Banking and Currency to investigate the failure of Obligors/bank debtors to liquidate their non performing loans in order to enable AMCON redeem the three years zero coupon bond it raised and to report back to the House within four weeks.
The House expressed its displeasure that the 20 Nigerians owing N1.2 trillion were operating private jets and walking freely unchallenged.
The Green Chamber in a motion sponsored by Rep. Johnbull Shekarau, PDP, Plateau, titled, “Call for the investigation of Asset Management Company of Nigeria, AMCON, Obligor over the non liquidation of N2.473,248,84 trillion” accused banks of owing the company N2.473 billion, an amount they said was hampering the assets managers from carrying out its palliative and redemption functions.
Shekarau had in the debate stated that the Federal Government through Federal Ministry of Finance and Central Bank of Nigeria (CBN) provided initial capital and a three-year zero coupon federal government guaranteed bond to allow AMCON raise N5.67trillion for the intervention.

He lamented that six years after, the company was yet to recover its debts from the banks debtors to enable it redeem the coupon bond it had acquired. The lawmaker said, “The inability to recover this amount has serious implication on the economy especially now that it is in recession.” But AMCON had as at two years ago said it had completed the scheduled redemption of its Series V zero-coupon bonds meaning it has fully exited the public debt market after redeeming N1.87trillion worth of all bonds issued since inception.
Contributing to the debate, Rep. Zakari Mohammed, APC, Kwara said there was need to review the capacities of AMCON to recovering the debts as their intervention at the time was timely and well- thought-out. Chairman, House Committee on Media and Public Affairs, Abdulrazak Namdas regretted that 20 individuals owed the company N1.2 trillion out of the N2. 473 trillion debts, and called for an urgent action.
He however refused to disclose the names of the 20 Nigerians even as he explained that AMCON was established by law in 2009 as an intervention and stabilisation agency to respond to the 2007-2008 global financial crisis that hit the country at the time.
Vanguard gathered that the House Ad-Hoc Committee which was mandated by the House in a resolution on 6th October, 2015, has observed that AMCON had no approved policy on the process and procedure to be adopted for the divestment of its shareholding in its subsidiaries and affiliates.
According to the report, the current debt portfolio of the Corporation is N800 billion above the ceiling stipulated for it by the Central Bank of Nigeria (CBN).
It further noted that the corporation’s balance sheet has a shortfall of N3.8 trillion ($19 billion) and that the geometric accumulation of debts by AMCON will no doubt endanger the dwindling National reserves put at $30 billion at that time particularly as the Federal Government stood as guarantor for AMCON bonds as enshrined in section 27 of the AMCON Act, 2010.
The report said that going by the Committee’s investigation into the sales of some domestic banks, Bureau of Public Procurement (BPP) denied participation in the acquisition and sale of assets of banks, as the Corporation failed to obtain the certificate of ‘No Objection’ prior to March 2014 when AMCON carried out its procurement activities “as they were under the misconception that the scope of application of the Public Procurement Act (PPA) 2007 did not apply to them.
The report said, “The Committee during investigation came to an undisputable conclusion that AMCON only purchased three Bridge Banks, namely, Enterprise Bank, Mainstreet Bank and Keystone Bank. Of all the three banks, only Mainstreet and Enterprise Banks were sold leaving Keystone which is in the process of being divested from. Banks such as Intercontinental Bank and Oceanic Bank were sold before AMCON was created by law.
“Based on the Financial Statement of AMCON for the year-ended 31st December, 2014, we noted that the accumulated losses of AMCON presented in the accounts as at that date stood at N4.269 trillion. In addition, the outstanding bad loans owed to AMCON by different companies and individuals (acquired from banks) as at 31st December, 2014, stood at N3.403 trillion which also has the potential of becoming outright losses.
“Considering the history of recovery success by AMCON coupled with the fact that the probability of recovery of debt is often affected by time passage, the probability of significant percentage of the bad debts becoming actual losses is high.
“In the past five years of the establishment of AMCON, recoveries as at 30th November, 2014 totaled about N527.52 billion (about 30% of EBA portfolio) being cash (N209.45 billion), Asset forfeiture (192.639 billion) and share forfeiture (N125.432 billion).
“The House is worried about the allegation that over N2 trillion was lost in the non-transparent process adopted by AMCON in sale of some banks including Oceanic Bank, Intercontinental Bank, Enterprise Bank and Mainstreet Bank.
“From the review of the bad debts submitted by AMCON, it is obvious that a significant percentage of the unpaid debts acquired by AMCON (from various banks) were actually borrowed from those banks by highly placed Nigerians in individual capacities or through their companies where they have interest.
“Surprisingly, most of those highly placed Nigerians are still living a lavish lifestyle, while AMCON continues to helplessly accumulate losses on their debts at the detriment of the economy of the country.
“Furthermore, the Committee found out that some Obligor take far reaching steps to avoid payment of their debts by resorting to frivolous litigations, concealing their assets within and outside Nigeria to avoid being attached, forgery of documents, falsification and alteration of financial statements, concealment of crucial information in respect to some specific accounts, conspiracy, absconding obligors and repatriation of proceeds etc.”
The Committee during its oversight functions looked into the operations of various regulatory agencies including: Central Bank of Nigeria (CBN); Nigerian Deposit Insurance Corporation (NDIC), Bureau of Public Procurement (BPP) Debt Management Office (DMO); Security Exchange Commission (SEC); Nigeria Stock Exchange (NSE) and other financial institutions.

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