Nigeria Content Online

Nominee Managing Director, Asset Management Company of
Nigeria, ( AMCON) Mustafa Chike Obi, speaks exclusively to NEXT on his
nomination, the sexual harassment allegation against him, and the company he
has been nominated to manage. You can aslo watch the full interview. Excerpts:

How would you compare
Wall Street and the Nigerian capital market?

The Nigerian capital market is a developing capital market.
It is not as fully developed as the United States capital market. But it has
some of the essential ingredients that would make it successful. There are a
lot of intelligent people, a lot of active interested parties and I think that
the regulators have spent some time taking what is best from a lot of capital
market in the world. It is not yet complete but it is young and I think it is
moving in the right direction.

How does it feel
leaving your practice to come back to Nigeria?

I did not come back here to make money. My kids are grown. I
have a consulting firm. In fact, just before I came, I had a contract that
would have paid me $4 million by the end of the year. I started it but I
gave it up. So this is all about doing something to make a difference in the
country. It sounds grandiose people don’t believe that but that is the truth.
There is a sense of guilt that we have over there that other people are
building this country and we are not. It’s there. We may find ways to subdue t
but it’s there. And so when somebody gives you opportunity to serve, you are
happy. My wife asked me if I am sure I want to do this. I told her I have no
choice.

What should Nigerians expect from AMCON which many believe will
salvage the situation at this point?

Let me first make it clear that I don’t have a job as
managing director of AMCON. I am a nominee at this point. The process needs to go
through the Senate for confirmation and nobody especially me is taking the
Senate confirmation for granted. The Senate has a role to play and it must play
it fully. Having said that, my thought as a nominee for AMCON is that AMCON was
necessary. It was necessary because some of the things that happened all over
the word also happened here. The Nigerian banking system was no worse than
anywhere else. The mistakes that were made were made everywhere else including
the United States of America. So I think that we should not spend too much
energy beating ourselves up because of what happened. It happened everywhere
else. So AMCON is necessary because it is useful to put al the non performing
loans in one place and manage them. It creates economies of scale. AMCON is
going to be able to have long term financing which will enable it hold on to
these non performing loans for longer period of time and dispose of them
gradually. So what should Nigerians expect from AMCON. Nigerians should expect
that AMCON will relieve the banks of some of the burdens that they currently
carry. It would encourage them to do what they are supposed to do to give loans
to the real economy and hopefully, through good management, AMCON would be able
to dispose of the assets it acquired at the right time. From my part, I expect
that AMCON would be a world class institutions that Nigerians can be proud of.

In line with your
brief, how do you intend to drive this process considering that you are almost
going to build an institution from scratch?

I don’t know how to answer your question about briefing, but
I will tell you that it is not an institution from scratch. A lot of people
have been working very very hard to make AMCON a reality. Those people are the
Central Bank, the National Assembly, they have spent a lot of time on this
Bill. In my opinion this is a very well crafted Bill. The ministry of finance
has worked hard. The Presidency has been involved, the ministry of justice
ensured that the bill conformed to all the legal requirement of the
constitution. So I think that a lot of work has been done. Nigerians will be
very pleasantly surprised that when AMCON starts to operate, it will move very
quickly to relieve the banks of non performing loans and recapitalise them to
the point when they are fully functioning again.

Some people think
AMCON is taking too long. It is still at the stage of confirmation of nominees
after several months and the economy is heamorrhaging. How fast should
Nigerians begin to expect action?

You asked one question but you have made a statement before
the question. You said AMCON has taken a long time. It depends on your point of
view. This Nigerian AMCON Bill, and I have studied a lot of AMCON; including
America, is in my opinion, the model that takes in all the best features of
what all the other asset management companies that have operated in the past.
It necessarily required study and deliberation. It is taking sometime but I
think that the product is the best product we could have got. It is necessary
in a democracy for every body who is involved to have their say. The banks, the
representatives of the people and the enabling institutions like Central Bank
and ministry of finance. These are busy people. They have other things to do.
So it has taken time to get them all together at the same place. But I will
repeat; once this process is complete, Nigerians will be pleasantly surprised
at how fast AMCON will move. I can’t give any timetable because I cannot
preempt the Senate confirmation process. But once that is done, I think that
within 30 days, we will see definite action.

The central bank has
directed banks to reduce their capital market exposure to 10 per cent. The
question then is what will be left for AMCON to do if the banks have reduced a
huge chunk of the bad loans which is exposure to the stock market

There are several things to this. Central Bank is the
regulatory body for banks. I am not privileged to go through the deliberation
that led to the Central Bank coming up with the 10 per cent. But from my point
of view, it makes sense that banks are primarily focused on lending to the real
economy. That is what banks are supposed to be doing. So if the central bank in
its wisdom decides that 10 per cent is a good number, I will not second guess
that. Your assumption that most of the non performing loans are based on
capital market lending, I can tell you that is not correct. There is
significant amount of non performing loans, more than the majority, that is not
capital market related. So there is still a lot of work for AMCON and the
banks.

One issue of
contention is how these assets are going to be priced. Have you contemplated
the issue of pricing?

Yes. A lot of work has been done on pricing of these assets.
There is a methodology of pricing assets. If you have all the correct
information and all other input, you can price a lot of these assets. One thing
I have heard is people talking about toxic assets. There are no toxic assets in
Nigeria. There are a lot of non performing loans. Toxic assets refer to highly
structured derivative securities that require tremendous pricing
sophistication. We don’t have those here. We have non performing loans with
more or less complete to incomplete documentation.

These loans can be priced and there are various ways of
pricing these loans. I am not going to tell you all the work that has been done
on these loans but I can tell you this; It is going to be a negotiation between
AMCON and the banks. AMCON is there to resolve problems not to create them.
AMCON will give the methodology it wants to use. It will be very transparent,
it will be published. Everybody will understand what AMCON is trying to do. We
will negotiate with the banks and we will come to such agreement. But the pricing
valuation method will be public and be published very quickly after AMCON
starts work.

So what should the
financial market expect about price?

Once AMCON publishes its valuation method, one can have
valid discussion as to which method would be best. Until then, the concept of
AMCON is one of helping, resolving a crisis. There should be no objection to
the AMCON concept. Now we can all discuss various things about its operations
when it starts operating and by law it must publish how it is going to operate.
But until then, I would advise people not to be anxious because the concept is
to provide solution, not to create problems.

Stockbrokers feel
that their interest was not adequately covered by AMCON. How do you address
this?

The Central Bank by law determines eligible institutions and
determines eligible assets. That is the duty of the central bank. AMCON doesn’t
decide who it has to deal with or what assets it has to buy. Central Bank
decides that. So if there is an issue about that, it should be directed at
somewhere else but AMCON, because AMCON is very well defined. AMCON in
consultation with the central bank and the institutions comes up with the price
and everybody is happy. If stockbrokers have a concern, I suggest that
they should wait and see what central bank directs us.

Tell us about your
stint at Kidder Peabody and the circumstances that led to your leaving

It is difficult to talk about my stay at Kidder Peabody
without talking about why I went there in the first place. I will address this
issue and leave it to you to do the research you need to do to validate what I
have said. I left Goldman Sachs where I was a very senior position where I ran
the mortgage trading desk. I was offered a job at Kidder Peabody where I was
promised a tremendous increase in my compensation. I accepted the offer. Within
a very short while, it became clear to Kidder Peabody that they could not pay
me what they had promised. I was called into an office and I was told, “We
cannot pay you this because you would be earning more than the chairman of
General Electric. We are sorry about this. Lets renegotiate.” My response was,
“I left a good situation based on what you promised me. I don’t think there is
anything to renegotiate at all.”

And subsequently, I was accused of sexually harassing an
employee of Kidder Peabody and fired. I filed a law suit against the lady and
Kidder Peabody. Get me clear. I filed a law suit for defamation of character
against both parties. Before the lawsuit could be resolved, I was offered a
very attractive position at Bear Sterns. It was suggested to me that I had to
drop the law suit because they didn’t want a senior member of Bear Stearns
having a lawsuit against another investment bank. After discussing with my
family, I decided to drop the lawsuit. Let me reiterate. Nobody has ever sued
Mustafa Chike Obi for sexual harassment. Nobody. The only suit was filed by me
against my accusers. I will say this again; the financial industry in the
United State is very highly regulated, as in anywhere else in the world.
People who are bad actors tend to be banned in the financial services industry
or given sanctions by the regulatory authorities. There has been no blemish on
my regulatory record. I have never been sanctioned by any regulator and I have
continued to get jobs from serious firms, subsequent to that event and those
firms did all the due diligence they could do and there was never any negative
story associated with my name since the Kidder incidence. I address that
because it is important that people deal with facts and not rumours. And all of
this can be verified by going to the National Association of Securities Dealers
website. You can request for the regulatory record of any individual who is a
registered representative. It is public information and I invite anybody to go
do that and if they have any questions about any records as an investment
banker.

Background checks
revealed that you filed a $10 million suit against the lady in question. So was
it on this basis that you had to withdraw the case?

It was on the basis that I either had to continue with the
lawsuit or continue with my career and my family strongly advised that I
continued with my career. That’s why I dropped the lawsuit.

You seem enthusiastic
to serve the country. What can you say about Nigeria at 50?

I have the privilege of looking at Nigeria from oversea and
I focus a lot on what has happened. There is a long way to go but we have come
a long way as well. Some years ago we couldn’t attract people like the minister
of finance, to name one, the director general of the SEC (Securities and
Exchange Commission) to name another. We couldn’t attract a lot other people
that are back. This country has come a long way and I think that if we focus on
what we have accomplished as a country, we can make the steps necessary to get
to where we want to. I am very optimistic about Nigeria. I am very happy to be
given a chance to serve and I think that this is the place where people of
talent and good intentions can make a big difference and my hope is that I can
make a big difference to Nigeria. I feel sad at being away for so long and
other people have brought it to this point. But better late than never. I hope
I can be able to add my effort.

Tell us about your
work experience in the financial market in Nigeria?

I will give you some background first. My father, Professor
Chike Obi was an academician and my older brother followed in his footsteps. He
had a PhD in physics and was professor in University of Ilorin. I was supposed
to follow in their footsteps but I realised very quickly that my love was for
the finance industry. So I abandoned that path and I came and I worked for
Chase Merchant Bank, one of the three initial merchant banks in this country at
a time when the merchant banking industry was being formed. I worked for two years
in the treasury department.

I rose to become the head of the treasury department. And I
am proud to say that we were the ones who made treasury department become an
important profit centre in banks because at the time it was a vibrant function.
So I spent two years first as an analyst in the treasury department, we were
selling bankers acceptances and commercial papers to pension funds and
insurance companies. Later on the function grew to managing the bank’s
liabilities, making sure the bank’s excess funds are well invested and managed
in such a way that the bank functioned adequately. So it became a profit
centre. I did that for two years and I left to go to Princeton University. So I
did spend two years in Nigeria. Many of my colleagues are now senior members in
that industry and I am still in touch with them. I have been aware of all the
development over the years through my colleagues.

So you think that
sufficiently positions you for this new role?

I think that the AMCON job needs more than experience. I
think it needs thorough understanding of the financial market. It needs an
international exposure. It needs a thorough knowledge of international
financial theory. It needs knowledge of the Nigerian people and Nigerian market
and situation. I think that if it was a one man job, nobody will be qualified
to do it. But luckily, there are other people that are going to be involved
that would bring in other aspects of leadership and skills so that when you
have a team you have a team that can cover all the various aspect. We need
somebody the international market can respect. We need somebody the domestic
market can respect. So we are trying to create a team at AMCON. I wish there
was just one person with all the qualities but it’s difficult to have it.
That’s the idea.

There is renewed
interest by Nigerians in the Diaspora to come back home to contribute their
quota. How do they fit into a system which is different from what you are used
to in the developed economies?

I think that the most important thing in anything you do in
life is passion. It is not skill. I know people who are skillful at things and
they have no passion and don’t get anywhere with it. If you have passion and
love for anything, everything else will come to pass. You will follow it to the
end. What I would tell people who are coming from anywhere, Diaspora or not,
who are given important responsibilities in Nigeria, I will tell them that if they
don’t have the passion and love for what they are about to do, they should not
do it. Because once you have the love and passion for what you are doing, it
doesn’t matter if you don’t have electricity for four hours, it doesn’t matter
if you in traffic jam for four hours. You are consumed with what you want to do
and how you can contribute. For me, I am like a little boy now. I am excited. I
want to do something. I want to make a difference. And do I notice that it is
warmer here than it is in New Jersey. Do I notice that generators are humming
in the background and they don’t in New Jersey? I notice that but they are
background noise. I’ll rather be here than anywhere else in the world.

How did you come
about your name Mustafa

My father Professor Chike Obi was a nationalist. He named my
elder brother Balogun to show that once you are a Nigerian, it doesn’t matter
which name you get. So I got lucky with Mustafa and my brother got lucky with
Balogun. For your information, my wife is Itsekiri, I grew up in Lagos and I
live in the United States. We have been married since 1982 and we have two
children.