The Assets Management Corporation of Nigeria (AMCON) is a time bomb and disaster in the waiting because of the huge liabilities it is acquiring, the report of the House of Representatives ad hoc committee that investigated the “near collapse” of the Nigerian capital market said.
The committee which was inaugurated in March, was headed by Ibrahim Tukur El-Sudi and submitted its report to the House on July 17. The report was adopted on July 19.
The report said: “Following revelations and findings and after rigorous analysis and evaluation of evidence, we hereby state that the AMCON phenomena as currently being run is a mistake and a disaster waiting to happen.
“AMCON is further concerned with accumulation of bubbles that would explode to magnitude that had never been imagined. As at date, AMCON claims to have issued bonds worth N4.5 trillion, but only about N1.7 trillion is guaranteed by the federal government.
“The real challenge of the AMCON bonds is the bond’s ability of being converted into liquid cash. A good number of the AMCON series bond is yet to be registered at the CSCS.”
The report stated also that the way and manner “non-performing loans” were being manipulated by AMCON was “shocking.
“AMCON Managing Director Mustapha Chike Obi was unable to explain the basis and rationale for valuing the book of value of loans to the realisable value. While some balances were marked at very ridiculous values, others were stated at values higher than their book values,” it said.
The panel established that while AMCON assets base is well over N4.5 trillion, its life span is 10 years and with an authorised capital base of N10 billion, “its share capital is less than the minimum authorised share capital of a full-fledged commercial bank in Nigeria.”
The report stated that their probe also revealed that AMCON remains an institution that is under no effective regulation because it accounts to no one.
“No matter how well intentioned the objectives of any institution may be, its existence amounts to an economic naught if it accounts to no one. It is owned by the Federal Government through CBN, Federal Ministry of Finance, yet it is regulated by CBN, it is a case of one regulating oneself,” the report said.
The committee also discovered instances of creating secret reserves and balance sheet manipulation in the transaction involving AMCON, Seawolf, Geometric Power Limited, Diamond Bank and First Bank running into billions of naira.
It said: “In these transactions it was strange to discover that performing loans of Seawolf and Geometrics with various banks were taken over by AMCON. This goes contrary to AMCON’s mandate of acquisition of toxic assets.
“Moreso, AMCON’s MD Chike Obi told the committee that he does not know the MD of Seawolf. We found it strange that AMCON concluded and perfected the transaction of this magnitude running into billions of naira without knowing the CEO of Seawolf.
“This puts to question the manner of its due diligence, transparency and credibility of its processes.”
The lawmakers further found out that contrary to statement from government circles, the nationalisation of three commercial banks last year was fraught with fraud, illegalities and irregularities.
It said: “The nationalisation of Afribank, Springbank, and Bank PHB did not conform to statutory provisions as documents related thereto were based on forgery, fraudulent misrepresentations and abuse of office by Managing Director of the Nigeria Deposit Insurance Corporation Umaru Ibrahim, CBN governor Malam Sanusi Lamido Sanusi, Managing Director of AMCON Mustapha Chike Obi and Bello Mahmud of Corporate Affairs Commission.”
On Afribank Plc, the report stated that the name was changed to Mainstreet Bank Limited which is a private company with authorised share capital of 100,000 ordinary shares of N1 each, owned by two persons, Mr. Gideon Agbedo, a legal practitioner, and Mr. Innocent Obi.
A certificate of incorporation no RC 969929 dated 5th August 2011, signed by Bello Mahmud, Registrar General CAC, certified that Mainstreet Bank was previously called “Shoko Chukin Limited.
The report said: “This action is completely false and dubious. Until date, there is no evidence that the public shares of Afribank were delisted prior to its acquisition by a private company.”
On Bank PHB, the report stated that the misrepresentations and forgeries were the same pattern as that of Afribank.
Bank PHB was changed to Keystone Bank, its share capital of 100,000 ordinary shares of N1 each were owned 50,000 each by Mr. Benson Igbanoi and Innocent Obi (the same Innocent Obi who also owed Mainstreet Bank).
The report also stated that Spring Bank was a private company, too, called “Kinki Osaka Custodians Limited with share capital of N100,000 owned by Mr. Gideon Agbedo and Mr. Barnabas Olowoselu.
The report further stated that, “the roles of NDIC, CBN, AMCON, CAC and the act of omission by SEC in all these are quite condemnable. There is no doubt that these nationalised banks were contrived in misrepresentations of monumental proportions. It’s built in forgeries, with presentations and appearance of fraud and corruption.
“It makes mockery of corporate governance, lacking in due diligence, ethics, professionalism, integrity and legal compliance. It was done in a brazen and very irregular manner; a violation of Section 44 of the 1999 Constitution and Section 25 of the Nigeria Investment Promotion Act.”
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