Ahead of its 2024 sunset, the Chief Judge of the Federal High Court, Abuja Division, Justice Adamu Kafarati, has said that there is need for judges in Nigeria to support the debt recovery efforts of Asset Management Corporation of Nigeria AMCON, which currently stands at about N5.4trillion, insisting that the corporation was established as a central element of government’s response to financial crisis in the country.

Justice Kafarati, made these remarks, spoke while addressing Federal High Court judges during an interactive session of the National Judicial Institute NJI, AMCON and Federal High Court judges at the NJI, Abuja Nigeria’s capital city.

Describing AMCON’s assignment to recover over N5trillion for the country 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 Nigeria’s economy if government did not establish AMCON at the time it did.

According to him, the importance of AMCON coming to save the banks in Nigeria cannot be over-emphasised, so the corporation must be supported firmly through the judicial processes so as to recover the outstanding debt because AMCON also borrowed money to rescue the banks.

He said, “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.”

Justice Kafarati further said that any interruption to this 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. He recalled that AMCON was thus created in 2010 as the most important step towards resolving non-performing loans in the banks, adding that this was done 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.

“The judiciary must therefore collaborate with AMCON to recover every outstanding debt because with the purchase of the NPLs, AMCON is expected to maximise the value of asset recoveries and minimise costs to taxpayers. 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, AMCON has an obligation to complement the Central Bank of Nigeria CBN and the Nigeria Deposit Insurance Corporation NDIC in their mandates in respect of financial system stability in Nigeria”, he also said.

According to him, 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. He therefore said AMCON required the full utilisation of the extra ordinary, special and unusual powers to enable it overcome the challenges otherwise confronted by banks in their efforts to recover debts from recalcitrant obligors, especially since the perpetual debtors resort to all manner of legal loopholes to ensure that they never redeem their obligations.

Managing Director/CEO of AMCON, Mr. Ahmed Kuru, while addressing the judges earlier, acknowledged the overwhelming challenges faced by the corporation in the recovery of the outstanding debt of N5.4trillion.

He said, “My Lords, it is clear to us now that we (AMCON) cannot go very far without the support of the courts because AMCON obligors deliberately raise technicalities in the courts to elongate and delay their cases with AMCON.”

He hinted that as a result of these antics, AMCON has reviewed its strategies for recovering the loans by shifting gears from restructuring towards enforcements. He said, “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 Courts, more than 3,000 are related to AMCON alone.”

Explaining that AMCON is not a profit-making organisation, Kuru however asserted that if the national assignment of recovering the N5.4trillion of bad debts is to be achieved, the AMCON practice direction must be strengthened and encouraged. He however warned that should the commission fail to recover this huge debt at sunset, the impact, will be catastrophic to Nigeria’s economy.