Top Abraaj executives arrested on US fraud charges

 

LONDON: The chief executive of the collapsed Dubai private equity firm Abraaj Capital was arrested on US charges in relation to the collapse of the equity firm he headed.

Abraaj founder and Chief Executive Arif Naqvi was arrested in the United Kingdom last Friday while managing partner Mustafa Abdel-Wadood was arrested at a New York hotel on Thursday and charged with fraud and conspiracy, Assistant US Attorney Andrea Griswold said at a hearing in Manhattan federal court.

Both of them have pleaded not guilty, denying each and every charge against them.

According to a police source, there is no case against Naqvi in Britain where he lives and maintains an office. The US media reported that the arrest was made on request of the US authorities on recommendations by the US Securities and Exchange Commission but a spokesman of the Scotland Yard said that it had no knowledge of any arrest made in London.

Abraaj had been the largest buyout fund in the Middle East and North Africa until it collapsed last May after the Gates Foundation and other investors raised concerns about the management of its $1 billion healthcare fund. American prosecutors have alleged that the Abraaj executives defrauded their investors, including the Bill and Melinda Gates Foundation.

Abdel-Wadood appeared at the hearing in Manhattan and pleaded not guilty to securities fraud, wire fraud and conspiracy charges.

American prosecutor said that they would like to have Naqvi extradited to USA to face charges but it is understood that lawyers for Naqvi will resist the move since the collapse of the fund has nothing to do with him and there is no personal liability in this case.

In brief, indictments unsealed on Thursday, prosecutors claimed that from about 2014 until the collapse, Naqvi and Abdel-Wadood lied about the performance of Abraaj’s funds, inflating their value by more than half a billion dollars.

Prosecutors also said that Naqvi and Abdel-Wadood caused “at least hundreds of millions” of investor funds to be misappropriated, either to disguise liquidity shortfalls or for their personal benefit or that of their associates.

Abraaj and Naqvi face related civil charges filed on Thursday by the US Securities and Exchange Commission.

Naqvi has denied any wrongdoing related to the collapse. Abraaj, one of the largest emerging-markets private equity investors, claiming $14bn of assets under management, was sent into a death spiral last year after investors complained about mishandling of their monies in the group’s healthcare fund.

Naqvi born in Karachi to middle-class parents was the first of his kind to break into the western world of finance. 

He has previously denied reports in some sections of media that he was involved in corruption either at the Abraaj or in the sale of Pakistan’s K-Electric. He had denied any misuse or appropriation of Abraaj funds.

Naqvi maintains that the allegations “are entirely false”.

He has strongly maintained that he “neither misused nor misappropriated any Abraaj funds.”

“There was nothing untoward about my requests for transfers or Abraaj Group funds to me or my family, or for my personal investments or obligations,” he had said.

“In drawing down funds from Abraaj, I acted in accordance with the arrangements put in place by the Abraaj Group,” he had said when the issue started, adding that any drawdowns were “properly recorded and accounted for”.

Naqvi has maintained that the use of monies from Abraaj’s healthcare fund for general corporate purposes was undertaken only after having “sought and received independent legal advice as to whether it was permissible”.

—With additional information from Reuters