Last week, a Federal Court in Lagos granted over N2.8 billion against the Asset Management Corporation of Nigerian (AMCON) as damages for libel, in favour of a defendant in a lingering case between AMCON and one of it numerous debtors. The defendant in this case is a company owned and operated by one of the serial, chronic debtors in Nigeria, who also happens to be a senior Advocate- a legal luminary. In this unusual judgement, the judge equally gave a restraining order against AMCON or its assignee from attempting to seize the property, the contested collateral. The judgment is probably the most biased decision a court in Nigeria has pronounced.
It is becoming alarming these days as banks and other financial institutions are unable to recover debts owed them by professional debtors, who rely on gratifying the judiciary to let loose– the financial noose. Judges are profiteering immensely from the ritual cases between institutional lenders and their clients. While the marginal benefits to the defendants and the fraternity of high court judges seem natural in a country with endemic corruption, the overall effect is a cash-crunched economy, incapable of supporting the wellbeing of the citizens.
There are cases of similar nature between AMCON and a litany of defaulters that have remained either intentionally delayed by the court, or the courts have rendered favourable judgements to the defendants. The peril of this anomaly is a systemic failure of the integrity of the courts. It also signals to the financial institutions in Nigeria to restrict their business activities to foreign owned firms within, whose collaterals and other securities are more favourable to the model of lending transactions beneficial to both the lender and the borrower.
Cost of funds in Nigeria will remain high; the risk of lending in the country is even higher. If a business, whose director(s) cannot source for funds to develop, sustain, or expand, then, there is a credibility issue. Credit availability is the best incentive for business growth, but it comes at a cost-that is, the integrity of the business owner(s). All over the world, Nigeria’s business people are known as fraudsters, untrustworthy human beings. Unfortunately, the ante of this stigma has increased. Very few Nigerian business owners can be trusted to apply for a line of credit or overdrawn facility for a business, maintain the agreed terms, and fully pay back when the loan matures.Credibility, which is basically believability, is what makes or unmake great entrepreneurs and enterprises everywhere else.
The fact that big Nigerian banks—GTbank, Zenith, and First Bank hardly lend to Nigerian companies, except the very few blue chips, is an indication that trust, which is the necessary ingredient in banking is lacking. If a borrower takes money from a bank, with forged documents, or with no intention to keep to the obligations of the contract, the new practice is to use the courts and the judges tountangle the commitment.
The pervasive story of Sky bank and its directors, who have looted depositors’ monies, has remained unsolved. No one has been indicted. Under the cover of judicial reprieve, most of the cases against these defaulters have gone cold. The Economic and Financial Crimes Commission (EFFCC) has been neutralized by doses of unethical judgments of the high courts. The anti-graft agency, despite its relentless efforts, has had very few successes in the pursuit of justice in Nigeria–but has recorded big victories abroad–where justice is not for sale, and, dubious Nigerians have been jailed for money -laundering.
AMCON was established in 2010 to relieve the financial burden on businesses-lenders and borrowers in Nigeria, who had trapped the economy. By buying off non-performing loans from the lending institutions, a designed moratorium at feasibly lower interest rates was crafted for the struggling firms and their directors. Unfreezing the cash in the economy, by all accounts, should stimulate growth and prosperity. At a point, the amount of bad loansin Nigeria’s bank had exceeded or were at par with banks liquidities- an unhealthy situation for the financial sector.
For now, unfortunately, AMCON’s rescue mission seems in jeopardy; very few debtors with small loans have successfully paid up, or, have negotiated a structured payment schedule. Again, very few of them are credible.The biggest challenge facing the asset management company is the high number of serial debtors who employ the services of the courts through their lawyers to either write down the amount owed, or simply be exonerated of any liabilities.
This is a grand fraud that will inevitably destroy, not just the asset managers, but the financial institutions in Nigeria. To steer Nigeria’s economy toward a sustainable growth for all, the banks must be liquid and buoyant enough to support genuine investors. But, again, how many Nigerian investors are sincere with impeccable credentials of integrity?
As of this writing, the asset management company is being owed over N5 trillion and, most of the debtors are either in court seeking redress or, have been given some form of succor by the corrupt judicial system. This situation is purely an anathema to a viable economy. AMCON is drowning; orchestrated by the same scourge it was established to alleviate.
The culture of cheating or stealing with impunity cannot be sustained. The ongoing social construct of get rich by all means necessary– to attract social accolades– is not only unsustainable but dangerous to the nation’s well-being. We have seen how murder-for-hire cases, and the undefined kidnapping for ransom have spread all over. If legitimate businesses cannot access funds to promote their goods or services, then it shows the level of desperation the large number of unemployed Nigerians does encounter.
President Mohammadu Buhari’s message to shun thieves and looters is a powerful force that should support the anti-corruption agencies, but with the pervasively corruptjudiciary backing the thieves, crooks, and illegitimatedebtors, how can such a message carry any weight?There has to be a “leverage point” in our judiciary. The point at which, even the judges should search their conscience, not just twisting the law to aid and abet a visible criminal with conspicuous lies.
According to Donella Meadows, the rules of a system define its scope, its boundary, its degree of freedom. Thou shall not kill. Everyone has the right of free speech. Contracts are to be honoured. As we try to imagine restructured rules like these and what our behavior would be under them, we have come to understand the power of rules. They are high leverage points. Power over the rules is real power, and only our corrupt judiciary wields such power. If we want to understand the deepest malfunction of a system, we must pay attention to the rules and who has power over them.
The corrupt, fraudulent judgement against AMCON last week shows how malfunctioned our system is, and it is evidently becoming impossible to rectify it.