VZCZCXRO4751
PP RUEHMA RUEHPA
DE RUEHUJA #1992/01 3031410
ZNR UUUUU ZZH
P 301410Z OCT 09
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 7366
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 2196
RUEHZK/ECOWAS COLLECTIVE

UNCLAS SECTION 01 OF 02 ABUJA 001992 
 
SIPDIS 
 
DEPARTMENT PASS TO USTR FOR AGAMA 
TREASURY FOR TONY IERONIMO, ADAM BARCAN, SOLOMON AND RITTERHOFF 
 
E.O. 12598: N/A 
TAGS: ECON EFIN ETRD NI
SUBJECT: CENTRAL BANK OF NIGERIA PUBLISHES A SECOND LIST OF BANK 
DEBTORS 
 
REFTEL: ABUJA 1845 
 
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SUMMARY 
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¶1.  (SBU) The Central Bank of Nigeria published another list of bad 
debtors after its second round of bank audits.  Some individuals 
have challenged their inclusion and threatened litigation.  Some 
loans were secured with collateral, and it is not apparent why the 
banks failed to dispose of this collateral to offset the 
non-performing loans.  The GON also owes debtors for contracts 
completed, such as power plants in the National Integrated Power 
Project and road construction.  Debts recovered as a result of the 
Economic and Financial Crimes Commission's actions are a small 
proportion of the total amount of bad debt.  END SUMMARY. 
 
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PROMINENT INDIVIDUALS 
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¶2. (SBU) The Central Bank of Nigeria (CBN) published a second list 
of bad debtors on October 14 following the completion of its audit 
of the remaining ten banks (reftel).  The list includes prominent 
Nigerian businessmen, companies, and several states.  Prominent 
entities/persons include: Rockson Engineering, owned by Engineer 
Arumemi Johnson; Transnational Corporation (TRANSCORP), a domestic 
conglomerate; People's Democratic Party (PDP) Chairman Board of 
Trustees Chief Anthony Anenih; former Vice President Atiku Abubakar; 
Zenon Oil, owned by business mogul Femi Otedola; prominent 
industrialist Aliko Dangote (a repeat from the first list); Global 
Fleet, owned by Jimoh Ibrahim; presidential adviser Dr. Wale 
Babalakin; Nigerian High Commissioner to South Africa Buba Marwa; 
Nigerian Minister of Labor Adetokunbo Kayode; Oodua Investments, a 
conglomerate jointly owned by Ogun, Oyo, Osun, Ondo, and Ekiti 
States; the Bayelsa State government; prominent political-economist 
Professor Pat Utomi; business mogul Mike Adenuga; Chief Cletus 
Ibeto; and Sir Emeka Offor. 
 
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SOME OF THE DEBTS WERE SECURED 
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¶3.  (SBU) The list of debtors of recently audited banks such as Wema 
Bank and Spring Bank included the collateral posted for the loans. 
Collateral included properties in Lagos, Abuja, and Port Harcourt. 
Normal banking practice calls for banks to dispose of the collateral 
to offset non-performing loans and obtain a court order to wind up 
the business of the defaulting customer if the proceeds from asset 
disposal are insufficient.  It is not apparent why the banks failed 
to dispose of the available collateral in these cases. 
 
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THE GOVERNMENT OWES SOME OF THE DEBTORS 
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¶4. (SBU) Several debtors are creditors to the GON, which often 
delays paying for completed contracts, sometimes for years, which 
can cause contractors to default on loans.  Debtors falling into 
this category include Rockson Engineering, which has almost 
completed the power plants financed under the GON's National 
Integrated Power Project, and TRANSCORP, whose purchase of the 
privatized state telecommunications company NITEL was cancelled but 
is still awaiting a refund from the GON. 
 
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DEBTORS LIST IS BEING CHALLENGED 
-------------------------------- 
 
¶5.  (SBU) Debtors such as former Vice-President Atiku Abubakar 
acknowledged their indebtedness and said they are willing to pay 
their debts.  Others published ads in the local press asserting 
their innocence.  Future View Securities, Extra Oil Limited, and 
Tradjek Nigeria Limited claimed that they neither applied for nor 
QTradjek Nigeria Limited claimed that they neither applied for nor 
received loans from Bank PHB, and challenged Bank PHB to provide 
proof of to the contrary within seven days or face litigation. 
Others who have challenged their inclusion in the list are Netlink 
Digital Television, Mofas Shipping Line, Brigadier (rtd.) Buba 
Marwa, and Professor Pat Utomi.  Companies such as Globe Motors 
claim that their loans have been restructured and are in compliance, 
while others have claimed that their purported indebtedness is a 
subject of litigation.  The CBN responded by inviting debtors to 
challenge it in court. 
 
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AMOUNT RECOVERED IS A SMALL PERCENTAGE OF THE TOTAL 
--------------------------------------------- ------ 
 
 
ABUJA 00001992  002 OF 002 
 
 
¶6. (SBU) The Economic and Financial Crimes Commission (EFCC) has 
held press briefings on the amount recovered from debtors since the 
"name and shame" strategy began.  In October, it announced that it 
had recovered about 135 billion naira ($900 million), which is less 
ten percent of the non-performing loans.  Analysts estimate the 
total bad debt is between 1.5 trillion and 3 trillion naira ($10 to 
$20 billion). 
 
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SOME DEBTORS TO BE RE-INSTATED 
------------------------------ 
 
¶7. (SBU) Equitorial Trust Bank non-executive director and business 
mogul Mike Adenuga, who was initially sacked from the ETB board by 
the CBN, is expected to be back on the bank's board soon.  CBN 
sources stated that upon further investigation no money laundering 
or insider abuse practices were found against him, according to 
local press reports.  The CBN is discussing with Adenuga the 
injection of $150 million of additional capital into the bank. 
 
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COMMENT 
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¶8.  (SBU) CBN actions have been hailed as a tonic to corrupt banking 
practices - a clear economic positive in the long run - but in the 
short term they contributed to a contraction in credit.  Litigation 
from alleged errors in the bad debtor lists could prevent banks from 
recovering debt, most of which will have to be recovered through a 
combination of debt restructuring, collateral sales, and 
court-sanctioned winding up of the debtors' businesses. 
 
SANDERS