The Asset Management Corporation of Nigeria (AMCON) is a body established and saddled with the responsibility to acquire non-performing loans from eligible financial institutions and to subsequently recover the debts.

It was established in 2010[1] with a ten-year life span to prevent the looming financial crisis in the country as a result of the global financial crisis. As of 2009, the Nigerian Banking sector was in silent distress as Industry-wide debts was in excess of N2 trillion. Hence, the necessity to establish this corporation with its mandate.

The AMCON Act, 2010, has gone through several amendments such as in 2015 and recently, 2019[2] to better reposition the body to achieve its task. The most recent amendment, in particular, introduced some very novel and attention-grabbing provisions. Some have considered these to be controversial and inimical to democratic ethos and practices while others take them to be necessary for the country’s economic preservation.

Whichever perception is favoured by anyone, there is no gainsaying the fact that the intent of the amendment is to empower the body to fulfil its mandate with the overall objective to prevent the nation from sliding into economic insolvency. As it stands today, the debt AMCON is expected to recover stands in excess of N5 trillion[3].

Thus, this article shall examine the new amendments vis-a-vis its applicability in the pursuit to recover non-performing debts.

  1. Ranking of the Corporation’s Interest after the Acquisition of an EBA.

Section 8 substitutes for section 34 of the Principal Act which provides that subject to the provisions of the Land Use Act and section 36 of the AMCON Act, the Corporation, upon the acquisition of an EBA shall be vested with and acquire legal title to the EBA as well as all tangible and intangible assets or properties by which the EBAs are secured. The Corporation shall be vested with power to the exclusion of all other creditors, to take possession of, manage, foreclose or even sell, transfer, assign or otherwise dispose of the acquired eligible bank asset and any tangible and intangible asset by which such EBA is secured in full or partial satisfaction of the debt owed to the Corporation. One important and very noteworthy provision in this act is that the Corporation can exercise any of these powers irrespective of whether the secured interest in the property is equitable.

Paragraph (c) (i) of this section provides that upon the vesting of an EBA as well as tangible and intangible property in the Corporation, the Corporation, without prejudice to the rights of other secured creditors which ranks equally or in priority to that held by the Corporation, shall pay all creditors out of the proceeds of any realisation or receipts from the management of such assets or property in accordance with the priority ranking of their secured interest in such assets; (ii) and neither shall it operate to extinguish any equity of redemption of the charge in relation to such assets or property.

Subsection 3 interestingly states that the provisions of this section are applicable to eligible bank assets including but not restricted to the assets acquired by the Corporation before May 2015, thereby giving the provision a retrospective effect.

  1. Tracking debtors’ hidden funds.

Section 6 of the Principal Act was amended by section 2 of the new Act which empowers AMCON to place surveillance on debtors’ bank account or any other account comparable to a bank account of an eligible financial institution. Also, the body can obtain unfettered access to any electronic and/or device of such debtor with a view to establishing the location of funds belonging to such debtor. Furthermore, the body has powers to obtain information in respect of any private account together with all bank financial and commercial records of any debtor from any eligible financial institution.

The essence of this new provision is to target debtors that are able but unwilling to pay their debts but who rather hide their funds, financial and commercial information to frustrate recovery.

However, this provision seems to have set off concerns as to the breach of banker-customer confidentiality. Section 37 of the Constitution of the Federal Republic of Nigeria, 1999, provides for the right to privacy. The section states inter alia:

The privacy of citizens, their homes, correspondence, telephone conversations, and telegraphic communications is hereby guaranteed and protected.

More so, that section 50 (1) of the 2019 amended Act provides the modus operandi that the Corporation shall adopt in the pursuit of its mandate to recover debts. The provision states that notwithstanding anything to the contrary in any enactment, rule of law, banking practice or rule, or contractual provision, the Corporation shall serve a written notice on any financial institution to disclose or to furnish it, within the time stipulated, with details of a debtor’s bank account.

The issue then is that what rule will be applied in the interpretation of Section 37 of the Constitutional – the Liberal or the Literal? The approach of our apex court over the years has favoured the liberal approach[4]. This constitutional provision cannot be given a very strict approach, otherwise, it will spell that the law protects the crooked activities of debtors who are solvent enough to settle their debts but are reluctant to so do. There is no doubt that the intendment of this constitutional provision is not for the protection of those who are bent on hurting the nation’s economy.

The Liberal approach to constitutional interpretation will favour the probe of the accounts of a debtor to ascertain such debtor’s solvency or otherwise. A case in reference which defined the scope of the right to privacy is a United Kingdom’s case Kinloch v. Her Majesty Advocate[5] where a man named James Kinloch was convicted on an indictment of money laundering in a Sheriff court at Glasgow. Evidence was gathered by the police by placing him under surveillance. The convict, however, appealed on grounds that the police did not secure authorization under the Regulation of Investigatory Powers (Scotland) Act, 2000 (”The 2000 Act”) as well as breaching his constitutional right to privacy. The appellate court, nevertheless, affirmed his conviction on grounds that his action bothered on illegality which must be investigated.

Although, Kinloch was convicted of a crime, this is akin to the intent of a debtor to conceal his solvency to settle his debts. This can conveniently be taken to be an economic crime. Hence, there could be no anomalies in the surveillance of debtors for the purposes of establishing their solvency for the overall objective of debt recovery. Moreover, section 45 of the CFRN, 1999, provides for instances section 37 can be derogable. The section provides thus:

  • Nothing in sections 37, 38, 39, 40 and 41 of this Constitution shall invalidate any law that is reasonably justifiable in a democratic society-
  1. In the interest of defence, public safety, public order, public morality or public health; or
  2. ……………………………

A debtor’s inaction to settle his/her debts can be construed to be the height of the breach of public morality. As such, section 2 of the Amended Act can safely be regarded as falling under the exceptions under section 45 (1)(a) of the Constitution.

  1. Screening of Potential/Eligible Government Contractors.

This is a very innovative provision in the new amendment Act. This means that AMCON now has the powers to impose obligations on the Federal Government, Ministries, Departments, and Agencies of government of getting AMCON’s clearance before paying or engaging the services of a client who is on the Corporation’s debt list.

AMCON is to provide these bodies with a list of debtors that would serve as a guide. The overall principle is to be able to make a set-off with such clients (who are debtors) where they are expected to be paid for services rendered. This is provided in Section 2 of the 2019 Act (Section 6 of the principal Act).

  1. Publication of recalcitrant debtor’s list.

This is more like the act of naming and shaming of recalcitrant debtors. Section 50B (1) provides that notwithstanding any rule or contractual obligation as to confidentiality, the corporation may publish in national newspapers, a list of debtors who have failed to settle their debts and other repayment obligations to the Corporation in connection with any eligible bank assets that have been acquired by the corporation.

Subsection 2 further provides that the failure of the Corporation to furnish a copy of the newspaper in which the debtor’s list is published to a procuring entity shall not absolve such procuring entity of its obligations. Furthermore, subsection (3) excludes procuring entities from awarding contracts, conducting businesses with, or making any sort of payments to any debtor under any existing contract or business arrangement without first obtaining consent from the Corporation. Suffice it to state that subsection (4) of this section has enlarged the definition of the word “debtor” for sections 51, 52 and 53 of the Act to include – the borrower, guarantors/sureties of the borrower, all directors and shareholders of the borrower, companies, and entities which 50% or more of its share capital is owned by one or more of the afore specified class.

This is a punitive measure provided against particularly high profile and solvent debtors who have refused to settle their debts by putting them in public glare. Another rationale behind this measure is to compel these debtors and related parties (by the expanded definition of debtors) to make settlement with government and its Ministries, Agencies, and Departments (MDAs) so as to be able to secure AMCON’s concurrence.[6]

  1. The prohibition of grant orders of attachment against AMCON

Section 7 of the 2019 amendment Act inserts a new section 33A which states inter alia:

‘’No action or proceeding shall lie against the corporation or any of its directors or officers by reason only of the acquisition of an eligible bank asset by the Corporation under this Act, and any action or proceeding already existing shall cease and abate except where the eligible bank asset became vested in the Corporation as specified under this Act’’

This section, as well as section 8 which amends section 34 of the Principal Act which seeks to prevent the courts from interfering with the smooth operations of the Corporation under the 2019 new amendment act seems to be the most controversial provision of all. This implies that the courts are stopped from granting injunctions against the Corporation when the Corporation exercises its powers to attach any eligible bank assets (EBAs). Although this may appear draconian, understanding the mischief this is meant to cure will aid a better contextualization. It is no doubt that AMCON proceeds against very powerful individuals who are ready to deplore any legal gymnastic and other arsenals to their defence. As such, these rich individuals secure the services of very smart legal representatives who run to the courts to secure injunctions and other prohibitive orders against the attachment of these EBAs by the Corporation.

It may be instructive to note a quote from Otto Abasiekong & Oyeyinka Oyewo – AMCON, AMPs, and Debt Recovery Turnaround – First Glance, Proshare Business, 17 May 2019 –

‘’…AMCON and its debt recovery partners (AMPs) are in a bind as the debt recovery process has so far proven to be long and arduous. Major challenges facing the recovery process relate to the antics of local lawyers to frustrate the smooth and speedy determination of cases by introducing technicalities that slow done (sic) the judicial process’’

However, in a recent ruling of a Lagos State High Court presided over by Honourable Justice Jose, it declared the said provisions as unconstitutional. The court ruled that the powers of the court could not be curtailed by an Act of the National Assembly. An applicant had sought an injunction to restrain a party to the suit as well as AMCON (which joined the suit as an interested party). The court ruled against AMCON’s objections holding that the provisions of the Act were unconstitutional and nothing in an Act can curtail the powers and sanctions of the Court, which extends to all persons, government, authority and entities such as the Asset Management Corporation[7].

The cheering news, however, is that this decision can still be tested on appeal. Conversely, this should serve as a wakeup call on the need to organise enlightenment programmes for the judiciary to understand the mischief the new amendments seek to cure; as well as to enhance the efficiency of judges. This leads to the next point where cases involving the Corporation are fast-tracked.

  1. Fast-tracking of AMCON’s cases

Section 20 of the amended Act substitutes section 53 in the Principal Act. The section provides that the respective heads of court shall designate in their jurisdictions, one or more courts to hearing the Corporation’s cases, and this will be to the exclusion of other cases. Subsection (1) of this section particularly paragraphs (a) to (c) state the instances in which such cases will be fast-tracked to wit:

  1. Cases connected with or pertaining to the acquisition, disposal or realisation of EBAs and any collateral or security by which such EBA is secured in which the Corporation or a receiver appointed by the Corporation or the eligible financial institution from which the Corporation acquired the eligible bank asset is a party.
  2. Cases relating to debts owed or even alleged to be owed to AMCON by reason of its acquisition of an EBA; or
  • Matters connected with or pertaining to the exercise or intended exercise of power by the Corporation under the Act to recover debts owed to the Corporation or otherwise realise an EBA or take enforcement or realisation action in relation to any asset or property by which such EBA is secured.

Subsection (2) provides that the heads of relevant courts shall determine the number of courts to be reserved for treating these cases exclusively, depending on the volume of cases before the court. Furthermore, subsection (3) provides that these cases shall be heard within six months in the case of existing actions at the time of coming into force of the Act, as well as cases filed after the coming into force of the Act.

Subsection (4) of section 20 provides that the head of courts shall issue or caused to be issued special practice directions applicable exclusively to the specifically designated courts for the expedited and accelerated hearing and determination of causes and matters before the courts. This is to aid the actualization of subsection (3).

Subsection (5) of this section further provides for a time limit within which the Court of Appeal shall hear and determine all appeals emanating from the courts designated under subsection (1). It states that such cases must be heard on an accelerated basis within sixty days in priority to all other appeals. The President of the Court of Appeal shall issue or cause to be issued special practice directions for the Court in respect of those appeals emanating from designated courts.

Subsection (6) also provides that the Supreme Court shall hear and determine all appeals emanating from the Court of Appeal in relation to appeals against the Court of Appeal’s decisions on appeals from designated courts. It further provides that the Chief Justice of Nigeria shall issue or caused to be issued special practice directions for the Supreme Court exclusively for the expedited and accelerated hearing and determination of such appeals.

The whole principle behind the highlighted provisions is to prevent delays in hearing and determining AMCON matters because of the workload of courts. It must be pointed out that failure to hear and determine the cases within the stipulated time frame is not fatal to the cases.[8]

Concerning the Practice Directions provided in the Act, it is instructive to note that the several heads of courts mentioned in these provisions are yet to issue such. This in itself may cause a snag in meeting up with the time frame provided in the Act. A Practice Direction is a supplemental protocol to rules of civil and criminal procedure in the courts.[9] This is also supposed to cover any possible lacunae that may have been noticed in the parent Act (AMCON Act). Thus, the delay in this may well be a possible reason the expected outcomes of the 2019 amendments are yet to be effectuated. It is therefore expectedly incumbent on AMCON to drive the process by engaging and lobbying the various heads of the aforementioned courts to speedily issue these practice directions, to assist the courts in keeping with the time frame and conversely, to assist the corporation in meeting up with its mandate.

  1. Jurisdiction and definition of “Court’’

Section 21 of the amended Act substitutes for section 55 of the Principal Act. This section confers exclusive jurisdiction on the Federal High Court to try offences under the Act.  Section 23 which also amends section 61 of the Principal Act defines ‘’courts’’ as used in the Act to mean the “Federal High Court’’ or ‘High Court of a State’’ or other superior courts exercising original jurisdiction as may be applicable.

Conclusion.

It is palpable that the Asset Management Corporation of Nigeria could hitherto be likened to a warrior sent on a quest without commensurate weaponry for the mission. With several lofty, and what a lot of interests may term controversial provisions – whichever divide anyone falls – one thing is certain, and that is, that the Act’s single purpose is to cure the mischief of an economic crime of borrowing and the refusal to refund even when solvent enough to so do. Going by the witnessed challenges by AMCON in its quest to recover bad debts, one would agree that the 2019 Amendment Act is both timely and necessary if the Corporation will meet its mandate in the space of time allotted to it. With what can be described to be an injury-time for the Corporation, there is no doubt that the Corporation has been imbued with venom like the rattlesnake about to rattle the world of debtors. To understand the ferocity this Corporation is coming with, check the movie: The Bling Lagosians.

[1] Established by the AMCON Act, 2010.

[2] This Act was signed into law by President Muhammadu Buhari on the 7th of August, 2019.

[3] This was mentioned by the Vice President, Prof. Yemi Osinbajo at the inauguration of an inter-agency committee set up to resolve the challenges in recovering the debts. This was done on the 16th of September, 2019.

[4]  The State v S.O Ilori & Ors’ S.C. 42/1982. Dominic Ifezue v Livinus Mbadugha S.C 62/1982.

[5] [2012]UKSC 62

[6]Muyiwa Balogun, “The AMCON Act Amendment Act 2019: Genesis, Efficacy & Implications in Troubled Assets Resolution’’.

[7] COURTROOM MAIL – 28TH October 2019. <https://www.courtroommail.com/section-364-of-amconamendment-2act-is-unconstitutional-court/>

[8] Josco AG. Global Resources Ltd & Anor v. AMCON (2018) LPELR 45637 CA.

[9] Intellectual Property Quarterly, Volume 2, (Sweet and Maxwell, 1998).