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Founder of Collapsed Private-Equity Firm Abraaj Fined $135 Million

By 2022-01-27 No Comments

Arif Naqvi at the World Economic Forum in Davos, Switzerland, in January 2017.
Photo: ruben sprich/Reuters

A Dubai regulator fined Abraaj Group’s founder Arif Naqvi $135.5 million, saying he deceived investors and misused funds, four years after the private-equity firm’s collapse raised questions about governance in the Middle East financial hub.

The Dubai Financial Services Authority said Thursday it was also barring Mr. Naqvi from performing any function in the financial center it oversees.

The…

A Dubai regulator fined Abraaj Group’s founder

Arif Naqvi
$135.5 million, saying he deceived investors and misused funds, four years after the private-equity firm’s collapse raised questions about governance in the Middle East financial hub.

The Dubai Financial Services Authority said Thursday it was also barring Mr. Naqvi from performing any function in the financial center it oversees.

The fine marks the latest chapter in the collapse of Dubai-based Abraaj, which had $14 billion in stated assets until its meltdown in 2018. It counted the Bill and Melinda Gates Foundation, Bank of America Corp. and the U.S. government’s Overseas Private Investment Corp. among the investors in its funds.

A lawyer for Mr. Naqvi, who has denied wrongdoing, didn’t immediately respond to a request for comment. The Pakistan-born former Abraaj chief executive is currently fighting extradition from the U.K. to the U.S., where he is accused of fraud.

The collapse of Abraaj, and the perceived muted response of the DFSA during the initial fallout in 2018, had tarnished investor views of Dubai, once billed as a financial safe haven in a region considered short on governance and long on conflict.

The DFSA in 2019 fined Abraaj as a company $315 million for deceiving investors and carrying out unauthorized activities, then a record penalty in the Persian Gulf emirate.

The Dubai regulator said Thursday it was also fining another former Abraaj executive $1.15 million and restricting his ability to work in the financial center.

The DFSA said both men dispute the DFSA’s findings and have appealed to a tribunal, where the parties will present their cases. The appeal means the regulator’s decision is provisional and could be upheld or overturned.

In the U.S., Mr. Naqvi faces fraud, theft and racketeering charges connected to the collapse of Abraaj. U.S. prosecutors have accused Mr. Naqvi of misappropriating money from Abraaj. The firm entered provisional liquidation in 2018 after running up debts of more than $1 billion.

Mr. Naqvi was arrested at London’s Heathrow Airport in April 2019 as he returned from Pakistan. He faces a prison sentence of up to 291 years if found guilty of all the charges from the Justice Department.

The DFSA oversees the Dubai International Financial Centre, where Abraaj was based. The DIFC has its own English common-law court separate from the rest of the United Arab Emirates, which observes Islamic law.

From the Archives

Arif Naqvi, founder of Dubai-based private-equity firm Abraaj, said he could make profits by doing good. But investors suspected he was mismanaging their money, allegations Naqvi denies. Photo Illustration: George Downs/The Wall Street Journal (Video from 10/16/18)

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Write to Rory Jones at [email protected]

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