The rank of critics of the report of the House of Representatives ad hoc Committee, which probed the near collapse of the nation's capital market, swelled at the weekend when the Managing Director, Assets Management Corporation of Nigeria (AMCON), Mr. Mustafa Chike-Obi, broke his silence on the issue. He described the report as a bunch of nonsense.
The Ibrahim el-Sudi-led committee in its report had, among others, taken exception to the valuation methods adopted for the various bad loans acquired by AMCON, insinuating that the corporation was opaque in its activities.
However, fielding questions from THISDAY in his office last week, Chike-Obi dismissed the committee's report, which alleged that the corporation did not have any particular valuation method, threatening to drag the committee to court should they discard their legislative immunity over the report.
Insisting that the corporation was transparent in the purchase of bad loans from the various institutions it handled, the AMCON boss said the methods adopted for the valuation of the assets were published in Nigerian newspapers.
He said: "In November 2010 when AMCON started operations, the valuation model for valuing the loans was published in all the newspapers. It's in fact part of the CBN guidelines on how AMCON should operate and it was gazetted."
Chike-Obi explained that there were three types of loans that AMCON was empowered to purchase. "The first were loans backed by tradable securities. There was a valuation method. The valuation method was a 60-day moving average of the shares plus a 60 percent premium. The rationale for that was that when you buy a bulk of shares in a depressed market, you always have to pay a premium.
"Our analysis was that the appropriate premium was 60 percent. That was published. The second type of loan was those backed by tangible collaterals like real estate, equipment, and aircraft. These are tangible assets. The pricing module was the average of open market valuation and the first sale valuation of those assets.
So if a loan was backed by a house, you take the value of the house in the open market and take the first sale valuation, the average of the two pricing is the pricing of the loan. The third are loans that have no securities or whose securities are not presentable. For that, AMCON decided to pay the flat five percent that was the formula. It was published and it was gazetted," he said.
On the query raised over SeaWolf Oilfield Services Limited's loans, Chike-Obi said the committee missed the point by alleging hanky-panky in the deal, saying the corporation took the best option.
He explained that the debtor company had already started the repayment of the loan.
Chike-Obi said: "They asked me whether I had met the MD of Seawolf before I bought the loans and I said no and that was a problem for them and they said it was irresponsible. They used all manners of abusive words against me.
"AMCON acquired 13,000 loans. The contract to acquire loans is between the banks and AMCON. If we start asking the debtors whether they want to pay back or not, then there would be no AMCON, so we don't talk to the debtors until we acquire the loans because we have no relationship with the debtors until we acquire the loans. So on what basis would I have approached the MD of Seawolf before I bought his loans. "If I had gone to him before I bought the loans then, I didn't have any relationship with him, why would he talk to me? And even if we could talk to 13,000 debtors, do they know what it means to talk to 13000 debtors?"
He also criticised the report for labeling AMCON a time bomb.
According to him, "They made an announcement that AMCON is a time-bomb waiting to explode and they based this on a whole bunch of nonsense."
He said the inflammatory comments by the committee were capable of discouraging potential foreign investors from Nigeria.
"You are supposed to fix the capital market, you then make a wild statement like that and what do you think the foreign investors are going to do? I'm sad that all of this is based on talking to me for one hour in a public hearing, if they had any follow-up questions, I would have gladly explained," he said.
The AMCON boss said he was ready to go to court over the report provided the committee members are ready to stake their integrity by doing away with legislative immunity.