House committee wants Arik Air liquidated to prevent waste of public resources

Arik Air
Arik Air

The House Committee on Banking and Currency on Tuesday proposed the outright liquidation and sale of the assets of Arik Airline to prevent the continued waste of public resources.

The airline was recently taken over by the Asset Management Corporation of Nigeria, AMCON.

The committee’s chairman, Jones Onyereri, was speaking during a visit to AMCON head office in Abuja by the committee as part of its oversight functions to review the Corporation’s 2016 budget performance.

Mr. Onyereri, who said there were no reliable statistics to show the impact of the services provided by the airline, said selling off the airline would influence other smaller and efficient airlines to grow.

On behalf of the committee, the Chairman expressed serious concern over the quality of loans acquired by AMCON from eligible financial institutions in the country.

He called on the banking sector regulator, the Central Bank of Nigeria, CBN, and the Federal Ministry of Finance among others, to immediately take steps to ensure all wrongly declared loans by commercial banks were recovered, to enable AMCON cover its funding gaps.

The committee said loans without proper documentation, or which were unrecoverable due to packaging or state of the collateral, should be reloaded back to the financial institutions, since they were now making profit.

Although Mr. Onyereri said the committee was satisfied with the renewed vigour the current management in AMCON was pursuing its obligors, he said there was need for the government to review some of its processes as they related to AMCON debtors.

“Giving contracts to individuals or companies that are heavily indebted to AMCON to say the least defeats the whole essence of creating the special agency in the first place.

“It will not be desirable for the Federal Government to continue to patronize individuals and companies who are hugely indebted to AMCON, while those companies on the other hand, refuse to repay their debt,” he said.

He called on the Federal Government to direct the Ministry of Finance to deduct from source, the value of debts owed by such debtor companies, or individuals with expected receivables from the Federal Government.

Besides, Mr. Onyereri said it may also be necessary to propose that such debtor companies to obtain clearance from AMCON as a prerequisite for Federal Government patronage in the future.

The committee said it was willing to support further legislative reviews of the AMCON Act, and noted that the six per cent interest rate charged by the CBN on cost of funds should be reviewed downwards, to lessen the excessive burden on AMCON and help to bridge the funding gap.

Welcoming the committee, the Managing Director/Chief Executive Officer of AMCON, Ahmed Kuru, informed the Committee that for AMCON to survive and meet its obligations, the root causes of some of the loans that ended with it needed to be revisited.

Mr. Kuru said AMCON was dealing with obligors that have the financial capacity to engage it from court to court in their plot to evade repayment, thereby sabotaging the effort of the federal government to resuscitate the economy.

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He said there was need for all relevant government agencies, especially the legislature to rally round AMCON, since its failure would mean the gains Nigeria recorded in 2010/2011 with the creation of the corporation would be lost on the economy.


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