As part of a probe into the misuse of investor funds at private equity firm Abraaj, the Dubai Financial Services Authority (DFSA) has questioned founder Arif Naqvi and co-chief executives Omar Lodhi and Selcuk Yorgancioglu among other senior executives, sources told Reuters.
While the DFSA declined to comment, Abraaj said its discussions with the regulator were “ongoing.”
“The DFSA is kept apprised of developments in the overall Abraaj Group and has our full co-operation on all relevant matters. While we do not comment on confidential discussions with our regulators, we are highly focused on strengthening our corporate governance and internal controls,” it said in a statement.
Abraaj is currently trying to sell its investment management arm to Colony Capital after investors including the Bill & Melinda Gates Foundation and International Finance Corp claimed it mismanaged their money in the $1 billion healthcare fund. Abraaj has denied the allegations, though summary findings of a review by Deloitte, which was appointed by Abraaj to audit its operations, revealed cash shortage led the firm to use investor funds.
While the report showed no evidence of embezzlement or misappropriation, it highlighted a lack of “adequate governance” and “overall weakness” at Abraaj.
Last month, the firm stopped fund raising activities and filed for provisional liquidation in the Cayman Islands while it seeks to sell parts of the business.
In a statement in June, DFSA said it would be “discussing various matters with the Joint Provisional Liquidators of Abraaj Holdings and Abraaj Investment Management Limited and would continue to work toward safeguarding the interests of investors.”
The regulator has the power to fine or ban individuals and businesses from working in financial services within the Dubai International Financial Centre (DIFC), where Abraaj has regulated entity Abraaj Capital.
However, the firm said it was early to assume the regulator would take such action.
“We believe these are decisions best communicated by the regulator in the fullness of time and early speculation is unhelpful to the process,” it said in its statement.
A Sharjah court will deliver its judgement on a $300 million bounced cheque case against Naqvi and colleague Mohammad Rafique Lakhani today, according to Gulf News, after the public prosecutor’s office issued arrest warrants earlier this month against the two executives.
The cheques relate to loans from Hamid Jafar, founder of Sharjah-based Crescent Group, to Abraaj and Naqvi.
Bouncing a cheque is a criminal offence in the UAE. If Naqvi were to be found guilty, he would face up to 3 years in prison. Currently, he is believed to be out of the country.For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.