The decision of the Assets Management Corporation of Nigeria to vacate the premises of Capital Oil and Gas Industries Limited on Thursday morning, contrary to its earlier position not to do so (despite a court ruling) was borne out of the need to protect the interest of the Nigerian public.
The Managing Director of, AMCON, Mustafa Chike-Obi stated this in an exclusive interview with THISDAY in Lagos, yesterday.
He said even-though AMCON could have remained at the premises until the Court of Appeal rules, it decided to vacate the premises because "we want to make sure that we are not associated in any way with anything that might have to do with scarcity of petroleum products."
Chike-Obi explains further: "We had a number of considerations in mind. The first one was the public interest. There was a pipeline explosion in Lagos and we do not want AMCON to be associated in any way with shortage of petroleum products during the holiday season. So, even though we believe that the impact of Capital Oil is minimal, we still want to make sure that we are not associated in any way with anything that might have to do with scarcity of petroleum products.
"The second reason we vacated the premises was that we don't want a situation where we are there and people are saying we are not obeying court order. Even though our legal position is strong, we don't want to be seen as somehow defying the court decision.
"Another reason is that we were also worried about liability. So, having considered all the issues, we have decided that while pursuing every legal action, we will vacate the premises until we get another order that is specifically asking us to take over the property Then we will take action."
The AMCON boss also justified the decision to shut down capital Oil's premises: "Let me give you the chronology of events. We acquired these loans in December 2010 and we have been talking to this gentleman since then. He has signed 2 or 3 agreements with AMCON and he has reneged on all of them for various reasons.
"He was on the news recently of some civil dispute with Coscharis/Access Bank for which they had gone to the UK and obtained a freezing order worldwide. Some of the assets that were under that freezing order were assets that AMCON has the legal mortgage to for the debt it possesses. So, we felt it was important for us to protect or indicate to the world our interest in those assets and that's what we did."
On whether the value of Capital Oil and Ifeanyi Ubah's assets could pay the company's debt, Chike-Obi said he believed so, "but we cannot be sure until we get the full extent of the assets and value."
He said further: "Capital Oil assets are impressive. He has trucks and depots all over the country; a jetty that is world class and includes vessels. But he owes other people and so we do not know how all of that will sort out. But we hope we can recover much of our money one way or another."
The AMCON managing director disclosed that Capital Oil's debt was now N65 billion: "It was N53 billion plus N12 billion of interest accumulated over the last 2 years and the interest is accruing at the rate of about N800 million to N900 million a month.
"This is a situation where people owe that kind of money (and I am not passing judgement) but the lifestyle of the person that owes does not demonstrate that they are indebted to Nigerians. It was Nigerian depositor's money that was used to build those facilities and it is AMCON's responsibility to the depositors to get that money back.
"We have a lot of other debtors in the oil and gas downstream industry. In fact, many of them have come and have settled in good faith and they have been restructured. We have found Capital Oil and Gas to be recalcitrant, reluctant and unwilling to pay. I believe that his case is more of an unwillingness to pay than inability to pay and that is very unfortunate."
He also said the loss declared by AMCON for the 2011 financial year was expected: "it was anticipated and it did not come as a surprise to AMCON because it was planned for. The loss came about because we had to restore the depositor's funds that had been lost in the banks.
"So, 90 per cent of that loss is a one off event based on the restoration of deposits to the banks and that was N2.1 trillion of the loss. The rest of the loss comes as a result of accounting. We issued bonds to buy the non-performing loans and replace these depositors' funds."