Dubai DFSA fines $136 mln on Abraaj Group founder Arif Naqvi

Dubai DFSA fines $136 mln on Abraaj Group founder Arif Naqvi

The founder of Abraaj Group which is now defunct, Mr. Arif Naqvi has been banned from Dubai’s Financial Centre and fined $135.6 million because of his role in the private equity firm’s 2019 collapse. Waqar Siddique, Abraaj's former COO, was also fined $1.15 million by the Dubai Financial Services Authority. The verdict notifications have been submitted to the Financial Markets Tribunal by Naqvi and Siddique, who disagree with the DFSA's rulings.

In 2002, Mr. Naqvi formed the Abraaj Group. It expanded becoming the world's biggest private equity firm during his tenure, with an estimated USD 14 assets worth. Mr. Naqvi was the Abraaj Group's major shareholder, CEO, and Executive Vice Chairman. Mr. Naqvi was the Abraaj Group's face and personality, and he built his brand and image around the world based on the Group's ostensibly successful effect investment plan. He was the Abraaj Group's single most powerful individual and the final decision holder on material or contentious issues. Mr. Naqvi was deliberately engaged in defrauding investors about the misuse of their assets by Abraaj Investment Limited (AIML), a Cayman Islands-registered entity not regulated by the DFSA, according to the Judgment Notice. Mr. Naqvi intentionally developed, orchestrated, authorized, and implemented acts that explicitly or implicitly mislead and defrauded investors, according to the DFSA.

Specified that investor funds be used to fund the Abraaj Group's cash flow and other obligations; Investors were assessed according to their likelihood of filing a complaint or dispute, and those who were less inclined to do so had their funds raised and reports withheld. Approved and personally prepared false and misleading investor statements to conceal the misappropriation of their monies. Mr. Naqvi also tried to persuade senior staff members at the investors' firms to dismiss their concerns. Was instrumental in concealing a USD 400 million shortfall in two funds by temporarily borrowing money to produce bank balance verification and income reports to deceive auditors and investors;

Authorized an alteration in a fund's fiscal year – year-end to avoid declaring a USD 200 million loss, and activities arranged for a USD 350 million loan from an individual in favor of making the Abraaj Group seem solvent and satisfy investor requests.

Mr . Naqvi ordered and urged other Abraaj senior management members to deceive and mislead the Funds' financiers.

By their position as the neck of the AIML Global Investment Committee and his conduct in managing the Abraaj Funds, Mr. Naqvi was also intentionally participating in AIML carrying out illicit Financial Service activities in or from the DIFC.