Former Abraaj managing partner Sivendran Vetttivetpillai attempted to hide the firm’s precarious financial position from investors while trying to raise $6 billion for a private equity fund, according to US court documents.
At the time of the alleged fraud in late 2017 and early 2018, Dubai-based Abraaj was in the process of raising the $6 billion for a new fund, the Abraaj Private Equity Fund VI – known as APEF VI - based on a track record of positive performance in other Abraaj funds, such as the Abraaj Growth Markets Healthcare Fund.
US court documents obtained by Arabian Business claim that Vetttivetpillai “advocated in an e-mail to others at Abraaj, including CC-1 [Abraaj chief executive Arif Naqvi] that Abraaj should delay marking down positions held by Abraaj investment funds until Abraaj had completed its fundraising for APEF VI”.
Vetttivetpillai, 52, was arrested last week in London and now faces possible extradition to the US on charges of securities fraud and conspiracy to commit securities fraud and wire fraud.
In the indictment, US federal prosecutors allege that Vetttivetpillai, Naqvi and others "inflated the valuations of investments in private equity funds…by more than half a billion dollars”.
“By fraudulently claiming that Abraaj funds were more successful than they were, these inflated valuations deprived investors of accurate information on which to base their investment decisions,” the indictment says.
As part of the scheme, the indictment claims that money advanced by investors was misappropriated to “cover liquidity shortfalls within Abraaj” for the personal benefit of Naqvi and others, including Vetttivetpillai.
Defrauded investors included “several” US financial institutions, retirement and pension funds, as well as a US philanthropic foundation – now known to be the Bill and Melinda Gates Foundation – and a US government agency.
Abraaj, which by January 2018 claimed to manage over $13 billion in assets, collapsed in June 2018 after investors, including the Bill & Melinda Gates Foundation, commissioned an audit to investigate the mismanagement of money in the Abraaj healthcare fund.
Following the Abraaj collapse, Vetttivetpillai filed a case with a claim of nearly $3 million against the firm at the Dubai International Financial Centre.
Naqvi – who was arrested several weeks ago in the UK – stands accused of inflating the value of Abraaj’s holdings and stealing hundreds of millions of dollars and now also faces possible extradition to the US.
Former managing partner Mustafa Abdel-Wadood was arrested at a New York hotel.
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