AMCON's Forceful Winding Down Companies, Causing More Harm Than Good to the Economy, Experts Warn

Following the recent draconian action taken by the Asset Management Corporation of Nigeria (AMCON), experts in the Nigerian financial service sector have called on the federal government and relevant agencies to caution the corporation before it further damage the nation’s economy. 

AMCON, they stressed, has deviated from its original mandate of working with indebted companies to get them back on their feet and pay back the loans that AMCON took over from banks

In setting up an asset management corporation, the idea was to take none-performing loans (NPLs) out of the banks and put them where they will be managed for a very long period of time. 

For instance, in the case of the United States of America, after the Resolution Trust Company of America bought loans from the SMEs, after the five-year period, all those loans were transferred to Deposit Insurance Corporation and many of those loans still exist.

Contrary to global standards, the experts who do not want their name in print for fear of persecution said the new management of AMCON has deviated from its core mandate and resort to arm twisting tactics.

“When the former managing director of AMCON was at the corporation, it is on record that AMCON recorded significant progress in loan recovery. They achieved this by working with the companies to ensure that they are able to pay back the loans. But things have since changed since the new management assumed duties. All they are interested in is liquidating companies and selling of assets.

“The federal government should call this AMCON to order before they further damage the economy. We all know the situation in the economy today. When you liquidate a company who will lose? Workers will be laid off and more people will be thrown to the labour market further worsening the economic and security situation in the country, “said a competent source in the manufacturing sector.

Meanwhile, some stakeholders in the economy have also decried the level of incompetence in AMCON following recent embarrassing losses in the court of law.

For instance, A Federal High Court sitting in Ikoyi, Lagos yesterday ordered the defreezing of the accounts of NICON Group which has Barr. Jimoh Ibrahim as Chairman. 

Hon Justice Seidu gave the order following the hearing of a case brought before the court to discharge the freezing order hitherto obtained by AMCON. 

After listening to the arguments to discharge the freezing order, Counsel to AMCON led by Mr. Yusuf Ali, SAN could not respond to the applications for the discharge but asked for an adjournment to exploit settlement and reconcile accounts in dispute through their respective accountants.

Ali SAN conceded to an immediate vacation of the freezing order in the face of the applications against it with damming and unassailable facts and for unfettered settlement discussions to take place. 

The honourable court agreed to the application to discharge the freezing order and the matter was subsequently adjourned to August 1, 2016. 

In the same vein, analysts believe AMCON set to be embarrassed again if it does not retrace its step in its case with MRS Holdings Limited.

Contrary to AMCON’s claims our checks revealed that the company is not indebted to Amcon.

In a statement made available to this medium, the company said, “Our attention has been drawn to a recent publication by the by the Asset Management Corporation of Nigeria alleging that MRS Holdings Limited is indebted to it in the sum of N81 Billion and that the Corporation has instituted Suit No: FHC/L/CP/923/2016 to wind up the company over the inability of MRS to pay the alleged debt.

“MRS challenges in the strongest possible terms the false claim by AMCON that MRS is indebted to AMCON in the sum of N81 Billion or any sum at all. The correct position is that MRS obtained a loan from a consortium of banks in Nigeria for a viable project. AMCON took over the loans. However it became clear to AMCON that MRS was paying down on the loan and agreed to restructure the loan on agreed terms of N74 Billion. The said debt has since been fully settled. The terms of settlement was entered as Judgment of Court on 29 June 2015, in Suit No FHC/L/CS/1365/2015. 

“MRS is shocked that in spite of having fully settled the debt, AMCON has decided to re-litigate an already concluded matter. MRS Holdings Limited understands AMCON’s statutory function to recover debts but by no stretch can this mean harassment of companies. AMCON has declared a new aggressive debt recovery drive. MRS has no problem with that but this does not give AMCON a licence to embarrass and harass companies. It is not a crime to obtain loans for viable projects. Execution of viable projects leads to job creation and growth of the economy. However, when companies obtain loans for legitimate businesses are being harassed and embarrassed in the name of aggressive debt recovery, it signals danger for economy growth.” 

MRS said it has taken notice of AMCON frivolous recovery cases against many companies on similar issues to MRS, “Not surprisingly all the cases were dismissed by the courts.”

“MRS is taking legal advice to clear its good name and bring necessary actions to seek damages for the embarrassment and damage caused the Company’s reputation and goodwill by AMCON’s publication and action.

MRS assure all its customers and business associates that the newspaper report will not affect the Company and its subsidiaries’ high quality services that it has always been known for and would seek redress for the damages caused by the publication. MRS further assures the general public that MRS Holdings Limited and its subsidiaries will continue to transact their businesses with the highest ethical standards and in accordance with the extant laws of the country,“ it stated.