AMCON Not under Obligation to Keep Debtor’s Profile Secret
Re cent ly you came up with are solve not to negotiate with debt ors because you have not achieved your targets. Don’ t you think that will create more problems foryou? Already, we are inside problems, whether we negotiate or we don’t negotiate, it’s already a problem. However, the law that sets us up has anticipated those issues. The law encourages that we negotiate and that we have done in the last seven years. But you may want to know what negotiation means? Negotiation means you sitting down with somebody, he tells you stories. He tells you lie, and you know he is actually telling you lies, but you must still continue with that talk. Meanwhile, some of the obligors are truly facing challenges, while others are just unwilling to pay. Now negotiation means somebody telling you what he is anticipating. But we must not forget the fact AMCON has a time period when it is expected to fold up. Originally, you will recall it has a period of 10 years for it to exist. So the assumption is that within a period of 10 years, we would have liquidated and wound up our operations. This is the seventh year. Now, if somebody comes to tell you that l want to pay you in the next 10 years, that is a story. Even the Act recognises the fact that, if obligors are not in a position to pay, you should have recourse to the collateral. The Act also recognises that if you are going to have recourse to the collateral, there is a process; and first thing is to go to Court, and if the Court gives an order and takes over the property and hands it over to you. That is what we are saying, but it does not mean that, if an obligor walks into my office l will shut my mouth and just looks at his eyes. If an obligor enters my office to say, l’m going to pay you this amount today or tomorrow and then, this is guarantee or additional collateral or something tangible, it makes sense. So what we are saying is that, we would not repeat what we have done in 2011 today. It does not make any sense. In 2011, you can tell us stories because we had 10 years to hear your story out, but we have heard these stories out for seven years, and based on those stories, the performance is less than 10 per cent in the last seven years. So, if l continue to play out that it’s either l am foolish or stupid because l know it has not worked, and the Act anticipates something like that, which has nothing to do with AMCON as an organisation. The Act anticipates that when you are getting closer and things are like this, then you are under obligation to call up the collaterals through court process. So we are now going through court process.
Could you please tell us how much has been recovered so far?
You know there are different types of recovery, but so far, we have recovered about N759 billion out of the original N3.7 trillion which is now around N5.4 trillion. However, substantial part of that is through assets seizure, forfeiture or outright cash payment, not through story telling. The ones that have gone through storytelling, and there is no performance around them is more than N2 trillion. These are people that have given you proposal to say they will do A, B, C and D. They say they are anticipating something and nothing has happened. So tell me if you are in our position do you continue to sit down to have conversations when you know it has not worked. You must change your strategy.
Okay, you changed strategy; don’ t you think it is high time the Act was amended?
Yes, you just took the word out of my mouth because we are now in the process of amending the Act because the obligors are getting smarter and more desperate. So under that kind of situation, based on past experience, we now proposed to the National Assembly areas we believe we need to amend. You know in other climes, what happens is that, for you to hold the assets, you go to the court and the law says the asset automatically belongs to AMCON on transfer. But here you still have to go through the process of converting the assets to yourself and based on that, somebody can lock you up in the court for 20 years. But if the law says, this loan that l have purchased have this underlining collateral, and the collateral belongs to me (AMCON), now you are obligated to come and talk to me .But l have the discretion to either sell it to you or him. There are so many amendments that we are proposing. We are proposing that the Act recognise that our case must be heard at the federal high court, we are proposing that … so that we accelerate the process because we are running out of time, and some of the obligors, like you rightly mentioned are aware of this, and are buying time using the court process. So that after that there is nothing we can do and the only option left for us would be to go to the National Assembly to extend the period. But tell me something, you are financial journalists; before the loans were transferred to AMCON, they would have gone bad with the financial institutions; the financial institutions would have provided for them, and in certain instances, they would have even written them off their books; then suddenly, there was AMCON and so they transferred the loans. So, you find some of those that have been with the financial institutions for a minimum of five years, now you transfer them to AMCON, and AMCON has been here for seven years, you add that five to seven years and it gives 12 years. Now tell me, even if you lend money to a neighbour and you have not collected the money within three to four years, and you come and you start asking him, he will think that something is wrong with you. You will hear things like, “Hey! What is happening now? This money you gave me over four years, so what is the problem? Is there any issue? In this case it is 12 years, how can you tell me that l should still be going through this process in 12 years? What l have is the collateral which is the security, and the security unfortunately for me has depreciated. Over a period of time, some of them have been vandalized, but that is my only recourse. And quite a lot of these obligors have left those primary businesses to move into some other things; but the law also recognises that. The law says that even if you decide to move into another business, we can go after you in that business. That is number one.
Number two, the law also recognises the fact that even when directors of the company, those who are directly related to the day-to-day running of the business, we can go after them in their personal businesses. We can go after their houses , we can go after their other assets. So, it has nothing to do with us, it is the law, because the law recognises that we will reach a point, where it is going to be very hard, and so, the only thing now for us to do is to forget recovery. And if we forget the recovery, who is going to pay the N5.4 trillion, the tax payer? Because it is real, it was not concocted, it is funds given to banks to buy loans from them, and it has to be recovered. It is a real issue. Even if you are very successful, when you operate a system for three or five years, you will need to change your strategy, talk less when you doing something that is not working anymore, you know it, and somebody else knows it’s not working anymore; and he is happy it is not working anymore, you must be stupid not to change your strategy.
We have to change our strategy now into what the law anticipated at the beginning. Recovery is one of the most difficult things you can do.
In reviewing the Act, how far have you gone?
The bill is with both the Senate and the House of Representatives (National Assembly) at the moment and l can tell you they have been very supportive because they recognise the fact that this is a national issue and they are worried. So, they are working with us. We have gone very far and hopefully before the end of this year, we will get the Act amended. We are actually at the last lap of the journey. I may not be here but the journey must be completed.
AM CON is winding up in the next three years as originally proposed by law. How are you preparing?
This is what l have started doing. I’m changing my strategy to ensure that l meet that deadline. And even l don’t meet the deadline, it should not be out of not doing anything. All our strategy now is focused around our deadline. At least, we know it and we are working towards it. So, by the time we are approaching we will know what to advise government to discuss with the National Assembly as to the outlook of things.
Don’ t you think it’ s too late for you to change your strategy now?
It is not too late because if you would recall, your first question was “won’t changing your strategy result into a problem?” And now people are saying, what is the problem? Three years is not too late for us to change our strategy, and you don’t want to keep an Asset Management Company alive forever because you will be encouraging rascality. So, three years is not too late. There is no proposal that requires installment payment that will work. The only thing that can work now is asset disposal. The underlining assets must be surrendered to us and we must sell it to meet our obligations . Remember, AMCON has basically three major mandates: Number one, to purchase the loans from the banks and give them live support that they can on-lend; number two is to provide financial accommodation to those banks so that they are stable because of the global economic crisis; number three, is to recover the debt or loans that was given during this process and pay the obligations. Nobody complained about the first two but now that we are on the third, the process of recovering, everybody is complaining, isn’t it? This is after we gave them money and picked the loans. If you would remember, at the beginning, some obligors were coming to us, urging us to go pick the bad loans from the banks, because once you buy the loans from the banks, it comes with discounts. Everybody was celebrating that AMCON was buying the bad debts from the banks because it takes pressure off them, and it also reduces the loan amount. But now that we are in the recovery mode, we are bad guys. You push and somebody says it is personal. You are supposed to pay me N10 billion but you say you only have N1 billion, so what happens to the remaining N9 billion? But it is not a question of what you can afford, but what your obligation is. If it’s about what anybody can afford, we can finish within three months. You have to meet up with your obligation because we also have an obligation to meet. It’s not easy but unfortunately someone has to do it.
There is this proposed bill at the National Assembly for the creation of the National Asset Management Agency. What impact will that have on AM CON?
l don’t think it will have any impact because it is targeted at government assets. They are some of those assets that must have been confisticated by the EFCC, which people have bought with government money, or some of the assets that government have that are currently lying fallow in certain locations. I think the proposal is about creating an agency that should manage government assets. Our assets (AMCON) in the real sense of it are not appropriated government assets. Our assets are to be sold to meet certain obligations, to pay back loans, so it will not affect our operations.