“An institution is the lengthened shadow of one man”- Emerson, 1803-1882, VANGUARD BOOK OF QUOTATIONS, VBQ p 105

“Every great enterprise starts off with enthusiasm for an exalted aim; and ends up bogged down in petty politics” – Charles Peguy, 1873-1914, VBQ p 49

The Assets Management Corporation of Nigeria, AMCON, is one of those institutions created in Nigeria with all the enthusiasm in the world to solve a critical problem, like its counterparts elsewhere globally; which not only failed woefully, but made the situation worse. AMCON, like a few of the consolidated banks licenced by Professor Soludo, Governor of the Central Bank of Nigeria, CBN, in 2006, was handed to individuals who cast their shadows on the organisations they led as Chief Executive Officer, CEO.

“Haste makes waste.”

AMCON should never have been necessary. It was the lasting monument to the failure of Soludo’s bank consolidation policy which reduced the number of banks operating in Nigeria in 2005 from 73 to 25 in 2006. Banks were ordered to increase capitalisation to N25 billion or merge or close shop – all within seven months. At the time of the announcement, only three banks were within touching distance of N25 billion – First Bank, Union Bank and UBA. Most of the rest were so far off that it was obvious to objective observers that Soludo, not a banker and lacking banking experience, had jumped headfirst into consolidation only as an academic concept.

 The decision which was unveiled in Lagos was attended by bankers, financial experts and media. I was there 20 years ago. I recollect quite vividly, Mr Atedo Peterside, during the question and answer period, making two points. While agreeing with Soludo about the need for bigger and stronger banks in Nigeria, he pleaded for timeline extension to enable the banking sector to get prepared for the new regime. Second, he argued that a banking sector consisting of only “megabanks” was not a healthy situation. Instead, he urged the CBN to consider categorising banks into three groups – national/international, regional and local – each group operating with its own share capital requirements. All the suggestions were rejected. In fact, every alternative idea was turned down.

 I wrote nothing less than six articles on these pages predicting the eventual collapse of some of the “megabanks” which emerged from the banking consolidation programme. For instance, when in 2008, the global banking crisis started in the US and Europe, Soludo assured Nigerians that our banking sector was “insulated” from contagion by the global crisis. I disagreed. By then, evidence available to me had already proved beyond reasonable doubt that we could no longer put our money – in any form – in the banks and “go to sleep with two eyes closed”; as Soludo promised us in 2005.

 In August 2008, I published an article on this page urging our readers to dump their bank shares. It was obvious to me that a major banking crash was coming.  From information available to me (and I don’t know why they were unknown to CBN, there was clear evidence that at least eight of the banks were being steadily and mindlessly looted by their directors – especially Managing Directors. Furthermore, there was a great deal of mutual contagion. Friends and relatives of the directors of one bank accumulated non-performing loans in other cooperating banks. At the time my article was written, which was indirectly rebutted by CBN, First Bank shares were selling for over N50 per share; Intercontinental, N35 per share and Oceanic Bank about N28 per share and still going up. I sold all my shares except a few against the advice of my stockbroker. By December 2008, bank shares were in a free fall. Till today, no bank has come close to the August 2008 price; millions of Nigerians who borrowed to purchase bank shares were ruined for life.

How and why AMCON was created

“The evil that men do lives after them….” William Shakespeare, 1564-1616.

Every big lie eventually has an expiry date. Soludo’s illusion about creating a stronger banking sector was inevitably exposed by facts which could no longer be denied. It became inescapably clear that the banks had been publishing falsified Annual Accounts and Reports; declaring fictitious revenue and profits; paying unearned dividends (mostly to the major shareholders) until 2008. By 2009, the CBN was forced to admit, however reluctantly, that the dream had become a nightmare.

 The AMCON Act which was passed into law by the National Assembly, NASS in 2010 was the final admission by the CBN that banking consolidation has failed. Without it, all the banks approved for operations by Soludo in 2006 would have been swept away by their own recklessness and fraudulent practices. Every country had to introduce one form of the rescue plan or another; but, the Nigerian AMCON Act was based on the models adopted in Ireland and Malaysia. The banks were allowed to dump their toxic or non-performing loans on the federal government under stated conditions; but, on the understanding that the loans will eventually be repaid. It is to AMCON’s everlasting shame that all the other national institutions established for this purpose had folded up because the loans had been repaid; while Nigeria remains the only nation which is still grappling with the consequences of the banking crisis of 2008.

 The Act has been amended twice since its inception, but, the payback has not improved significantly. Several reasons account for this. The Nigerian law left too many loopholes for lawyers to exploit. Some of the more powerful lawmakers in Abuja were/are among the largest loan delinquents. Influential Senior Advocates of Nigeria, SANs, colluding with complaisant Justices in courts have frustrated all the efforts aimed at loan recovery. But, lately, we are finding out that whereas borrowers were assisted in other countries to restructure and repay the loans, AMCON might actually be the stumbling block in some cases.

Today, Intercontinental and Oceanic have faded into history; along with other banks – Skye, BankPH etc. But, the liquidated banks and virtually all the survivors from the tsunami which swept others away still left about N4 trillion loans outstanding almost fifteen years after. AMCON has been mostly responsible. For four years under Jonathan and eight years, under President Buhari, AMCON has been sabotaging the intentions of those who established the institution without being called to order by the FG which condoned every wrong-doing as long as the perpetrators were in the corridors of power. For the sake of those who might think that this is an intervention in support of any party now in dispute with AMCON, permit me to refer to two, out of four articles, published on this page which call into question the integrity of its Directors as well as its spokespersons.

 Right now, a former Managing Director/CEO of AMCON has been charged to court by the Economic and Financial Crimes Commission, EFCC, for fraudulently mismanaging the assets of one of the companies handed to the corporation. He had accomplices. That, obviously, was not the intention of the framers of the AMCON Act. The institution was supposed to try to manage the affairs of the companies whose toxic debts were handed to it professionally….

To be continued