The attempt by the Asset Management Corporation of Nigeria (AMCON) to recover over N5.4 trillion bad debts would be impossible without judiciary support, Chief Judge of the Federal High Court, Adamu Kafarati, said on Friday.
Mr Kafarati was addressing federal high court judges at an interactive session between the National Judicial Institute (NJI), AMCON and federal high court judges in Abuja.
He said there was a need for judges in the country to support the recovery efforts by AMCON considering that the corporation was established as a central element of government’s response to the financial crisis in the country.
AMCON’s assignment to recover the huge amount, he noted, was a national assignment deserving of the support of all interest groups, especially the judiciary.
“That AMCON is coming to save the banks in Nigeria cannot be over-emphasised. So the corporation must be supported through firm judicial processes to recover the outstanding debts since it also borrowed money to rescue the banks,” the official said.
Highlighting the crisis that could have hit the Nigerian economy if the government did not establish AMCON at the time it did, Mr Kafarati said banks are drivers of the economy, ”as they supply its oxygen.”
“My Lords, during the 2008/2009 financial crisis in Nigeria (partly triggered by the global financial crisis, and partly by domestic activities), the 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 AMCON, a number of banks in the country would have failed, thereby inhibiting banks from playing their crucial roles in the economy, like payment for services to households and companies extension of credits, savings accounts and financial insurance, among others.”
Mr Kafarati said an interruption to the critical service provided by the banks, and the likely loss of confidence in the system that could have followed, would have resulted in widespread disruption and ultimate collapse of the country’s financial system.
He said the creation of AMCON in 2010 and the injection of capital into the ailing banks in consideration for equity, was the most important step by the government towards resolving the problem of non-performing loans (NPLs) in banks.
To recover every outstanding debt, Mr Kafarati said the judiciary must collaborate with AMCON in the purchase of the NPLs, to maximise the value of asset recoveries and minimize costs to taxpayers.
AMCON Managing Director/Chief Executive Officer, Ahmed Kuru, noted the challenges the corporation was facing in the recovery of the outstanding debt of AMCON.
He told the judges it was clear AMCON cannot go very far without the support of the courts since the obligors usually deliberately raise technicalities in courts to elongate and delay their cases with AMCON.
As part of its renewed strategy for recovering debts, he said AMCON decided earlier in the year to refocus its strategy by shifting gears from restructuring towards enforcement.
Out of the 191,766 cases pending at the federal high court, he said more than 3,000 are related to AMCON alone.