Revealed: how Abraaj execs decided which investors to pay

Internal memos reveal how the now defunct Abraaj Group used colour coding to prioritis investors depending on how much noise they made
Revealed: how Abraaj execs decided which investors to pay
By Bloomberg
Wed 31 Jul 2019 04:03 PM

It paid to make noise as an investor in the now defunct Abraaj Group.

As the buyout firm’s financial woes grew, senior management drew up a colour chart to pay limited partners according to how much “noise” they made, a report by Dubai’s financial regulator showed.

Abraaj, which once managed about $14 billion, was forced into liquidation last year after being accused of mismanaging investor funds. The firm’s backers included the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corp.

In 2016, when Abraaj faced a shortfall in one of its key funds, the company prioritized “payments in order of importance, noise makers and those that will come back, with the latest being legacy investors and passive voices.”

“I have colour coded the attached; ask ... as well ti [sic] opine on who is making noise,” according to an internal email, cited in Dubai Financial Services Authority’s report.

Dubai’s financial watchdog slapped Abraaj with a record $315 million fine on Tuesday for deceiving investors and misappropriating their funds.

Abraaj’s liquidators in the past year have been trying to sell the company’s funds. London-based Actis took over two funds this month, while Colony Capital acquired its Latin American operations earlier this year.

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