From Uche Usim, Abuja
Plans by the Asset Management Corporation of Nigeria (AMCON) and the Economic and the Financial Crimes Commission (EFCC) to jointly hunt down debtors said to be owing commercial banks over N4.6 trillion now appear heavily threatened by litigation, recession and ghost debtor syndrome.
Daily Sun investigation revealed that the AMCON and EFCC debt recovery initiative may likely hit a dead end as the bulk of the non-performing loans are said to be largely unsecured and currently bugged down by litigations.
Another big headache the two government agencies are having is the fact that some of the debtors have turned out to be ghost phenomena, since their addresses cannot be traced again due to poor due diligence by the banks at the time of loan approval.
Other factors threatening the success of the planned loan recovery exercise include the re-investment of the loans in the capital market during boom era, which was followed by a bust that crashed the market. Today AMCON and EFCC are also battling multiple litigations in various courts with recession which has affected most business concerns belonging to the debtors drawing the last blood. It was revealed that some reckless waivers granted some of them by the Federal Government may also have complicate the recovery process.
Investment analysts say the development has exposed the entrenched corruption in the banking sector, a development that forced a former Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, to conduct a stress test on Deposit Money Banks (DMBs) in 2009, to reveal their exposure to huge NPLs.
Recall that following that stress test on the banks, AMCON provided financial accommodation to 10 banks to the tune of N2.2 trillion, while EFCC detained the Chief Executive Officers of the affected DMBs in its bid to recover the toxic loans and block further spurious facilities.
But against the backdrop of its prolonged recovery efforts, the Managing Director/Chief Executive Officer of AMCON, Mr. Ahmed Kuru, and EFCC’s Acting Chairman, Mr. Ibrahim Magu, at a high-level meeting in Abuja last week, vowed to revisit, reinvestigate and duly prosecute debtor banks implicated in the massive NPLs along with their internal and external collaborators.
Commenting on the latest onslaught by AMCON and EFCC, an ex-banker and former Managing Director of Unity Bank Plc, Rislanudeen Muhammad, said: “At the risk of sounding pessimistic, I don’t know whether significant recovery can be made from what remains of the AMCON debts. Most of the loans were bad and fully provisioned in the books of those banks ab initio.
“Significant percentage of the loans sold to AMCON by DMBs were either secured or unsecured especially oil and gas and shares margin loans, for which the DMBs were paid only 10 per cent of the value by AMCON.
“For those secured loans that got higher value of 50 to 70 per cent, AMCON has a right of claw back against the DMBs. Besides, AMCON is from inception supposed to be self-liquidating through recovery and in other cases restructuring of the bad loans as well as annual contribution by DMBs to the so-called banking sector resolution fund,” he explained.
Also commenting, a top executive in one of the commercial banks who craved anonymity described the planned recovery as a political statement from both the AMCON boss and his EFCC counterpart.
“Both of them want to be seen as working. Where will they start from? Are they going to quash court cases? Some of those cases were total abuse of processes and procedures. Some of the debtors have died. It is a whole bunch of circus. Let us see how things pan out,” he said.
But AMCON boss, Ahmed Kuru, revealed at the meeting with his EFCC counterpart that the company has, since its establishment, acquired debts from 22 banks worth N3.7 trillion.
Kuru observed that despite AMCON’s recovery efforts, the Corporation still held unresolved loans in excess of N4.6 trillion representing about 75 per cent of the total national budget, even as he expressed concern that failure on the part of AMCON to resolve the debts would have far-reaching implication for the nation’s economy.
Meanwhile, Nigerians have urged the government to immediately name and shame to chronic debtors if it wants the citizens to reckon with the recovery efforts.
According to Onyema Ije, a furniture importer, “we have patiently waited for the Federal Government to release the so-called list of chronic debtors and looters of the nation’s treasury as it promised years ago but to no avail. When will these recalcitrant debtors be named and shamed?
“Banks prefer to loan money to politicians without any collateral, but will ask a businessman to deposit almost everything he owns except his life.
“To get a loan to do any legitimate business is an uphill task. So, if the government is serious, let them name and shame the debtors. That embarrassment means a lot in the recovery drive. Nobody wants to be shamed publicly. These fake rich men fund their lavish lifestyles with depositors’ funds. It is totally absurd and unacceptable,” he said.
Another businessman, Bankole Imole, shares a different perspective with regards to the N4.6 trillion toxic loans. He listed the high interest rates slammed loan seekers by the DMBs and the harsh business climate as some factors responsible for high loan default.
“Not all loan defaulters are crooks. Under an unfavourable business climate like what we have in Nigeria, if you are not prayerful and work extremely hard, you may not be able to repay bank loans with ridiculous interest rates of up to 30 per cent.
“Look at the way naira slided in a short while. A lot of businessmen today are trapped in debt. The rate of the money you borrowed and the value of the money itself have vandalised any investment structure. How can you recoup your capital, let alone some profit to repay your loan? Here lies the issue.
“But that is not to lend credence to those who deliberately got bank loans with fake collateral in connivance with the bank officials to swindle such DMBs. Such banks and their officials should be guests of the EFCC but again, the operating climate does not help matters,” he said.
He further urged both the EFCC and AMCON to work assiduously and ensure some of the toxic loans are recovered. He said the issue of NPLs had weakened banks’ ability to lend money at lower interest rate to customers.
“Let the agencies recover these monies. Our economy will be better for it. N4.6 trillion is a whole lot. It is over 70 per cent of the 2017 budget and if the money is out there in the hands of some Nigerians who have penchant for not repaying bank loans, like we are made to believe, then EFCC and AMCON should go after them without further delay,” he added.
However, Johnson Chukwu, the Managing Director of Cowry Asset Management, an investment banking firm, while speaking on a television show recently, said several factors were responsible for the high lending rates of banks despite the fact the CBN put the Monetary Policy Rate (MPR) at 14 per cent.
He said banks accrue several costs including overheads, a development that forced them to lend at about 30 per cent.
Meanwhile, the Chairman of EFCC, Ibrahim Magu, has explained that the anti-graft agency will go after the debtors as most of the obligors may not have acted alone in their unwillingness to repay but in connivance with some of the bank officials whose motive was to cheat the banks ab-initio.
“In the appropriate circumstances, these bankers would also be called upon to account for their roles in granting these questionable facilities,” he stated.
Magu described the assignments of both agencies of government as “very tough, overwhelming and challenging.”
He noted, however, that it was for such daunting tasks that the EFCC established AMCON Desk with dedicated EFCC officials that ensure that all cases related to it being handled the anti-graft agency get speedy attention.