The Chief Judge of Federal High Court, Abuja Division, Hon. Justice Adamu Abdu Kafarati, has urged judges in the country to support current efforts by the Asset Management Corporation of Nigeria (AMCON) to recover bad loans from debtors in view of the implications for the nation’s economic growth.
Justice Kafarati gave the advice when he when he addressed federal high court judges at an interactive session organized for to officers of the National Judicial Institute (NJI), AMCON and federal high court judges at the NJI head office in Abuja.
Describing AMCON’s assignment to recover over N5 trillion as a national assignment that must be supported by all stakeholders, especially the judiciary, the Chief Judge also highlighted the crisis that would have hit the nation’s economy if government did not establish the corporation at the time it did.
Specifically, the learned judge noted that in view of the strategic mandate of the AMCON, it deserves to be given support in judicial processes to recover the outstanding debt given the fact the corporation borrowed money to rescue the banks.
He explained: “My Lords, banks are drivers of the economy as they supply its oxygen. That is why during the 2008/2009 financial crisis in Nigeria (partly triggered by global financial crisis, and partly by domestic activities), government intervened to support the banks by bailing them out in order to allow the financial system to continue functioning.
“In the absence of government intervention in the banks through the vehicle, which AMCON provided, a number of banks in the country would have failed thereby inhibiting banks from playing their crucial roles in the economy like payment of services to households and companies extension of credits, savings accounts and financial insurance among others.
“The interruption to the critical service that banks provide, and the likely loss of confidence in the system that would have followed, would have led to widespread disruption and ultimate collapse of the financial system in Nigeria. AMCON was thus created in 2010 as the most important step towards resolving non-performing loans in the banks. This was effected through the injection of capital into the ailing banks in consideration for equity.
“Recognising the grave systemic risk posed by high level of bad debts otherwise known as non-performing loans, AMCON was set up to manage the assets transferred to it with a view to maximizing their value through eventual sale or orderly liquidation”, Kafarati added.
The Chief Judge therefore charged the judiciary to collaborate with AMCON to recover every outstanding debt because with the purchase of the NPLs, the corporation is expected to maximize the value of asset recoveries and minimize costs to taxpayers.
He reminded the judges that this mandate can be accomplished effectively because the AMCON Act conferred ‘special powers’ to the corporation in its debt recovery drive. In enforcing its powers, he added that AMCON has an obligation to complement the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) in their mandates respecting financial system stability in Nigeria.
In addition, he explained that the totality of the conceptual, functional and jurisprudential implications of the establishment of AMCON is that despite the universal financial crisis of 2008/2009, Nigeria was insulated from the collapse of any bank, a run on the banks or notably, the need to withhold depositor’s funds.
Justice Kafarati pointed out further that AMCON required the full utilization of the extra ordinary, special and unusual powers to enable it overcome the challenges which the banks faced in their efforts to recover debts from recalcitrant obligors, especially since the debtors resorted to all manners of legal loopholes to ensure that they never redeem their obligations.
Earlier while addressing the judges, AMCON’s Managing Director, Mr Ahmed Lawan Kuru, acknowledged the challenges facing the corporation in its debt recovery efforts of the outstanding debt totalling N5.4 trillion.
He said that, based on the corporation debt recovery experiences so far, it had been discovered that AMCON cannot go very far without the support of the courts because AMCON obligors deliberately raise technicalities in courts to elongate and delay their cases with AMCON.
Kuru told the learned judges and other attendees that as a result of these antics and in furtherance of the corporation’s renewed debt recovery initiatives decided early this year to refocus its strategy by shifting gears from restructuring towards enforcements.
The AMCON boss recounted: “It has become clear to us that in order to attain the target as we approach sunset, we must redouble our efforts in the areas of enforcement.
The AMCON Act anticipated a situation where we may need to enforce if negotiations fail. Negotiation has failed us, given our sunset date. It is also clear to us that we cannot go very far without the strong support of the judiciary. Out of the 191,766 cases pending at the federal high court, more than 3,000 are related to AMCON alone”, Kuru added.