Liquidators overseeing Abraaj Group's insolvency now estimate chief executive officer Arif Naqvi's alleged theft to have cost the firm $385 million, an amount significantly more than what prosecutors claimed.
Just in case you need a quick recap on the Abraaj case to brush up your memory, and also because a lot of you have asked me to do an explainer on this… here goes.
Who is Arif Naqvi?
He is one of six former Abraaj executives who face charges stemming from the private equity’s firm’s 2018 collapse.
What is this unfamous Abraaj case?
The Dubai Financial Services Authority fined two Abraaj Group companies a combined $315 million for deceiving investors and misappropriating funds.
Problems began in February 2018 with allegations that money in Abraaj’s health fund had been misused. Naqvi and Abraaj denied wrongdoing and blamed unforeseen political and regulatory hurdles for a delay in deploying the money.
After Abraaj defaulted on loans, Kuwait’s Public Institution for Social Security and a fund linked to Sharjah-based Crescent Group’s Hamid Jafar moved to force the company into a court-supervised restructuring. Abraaj Investment Management Ltd., which managed the private equity funds, and its parent, Abraaj Holdings Ltd, filed for provisional liquidation in the Cayman Islands, where they’re registered.
PricewaterhouseCoopers LLP, helping to oversee Abraaj’s restructuring, said the group’s main revenues hadn’t covered its operating costs for years. Abraaj had borrowed to fill the gaps and fund asset purchases and wound up owing creditors more than $1 billion.
But there were wider repurcussions
Abraaj’s downfall eroded investor confidence in private equity companies in emerging markets. Abraaj was one of the largest such investors, with $13.6bn in assets under management.
Since it began unravelling, private equity firms based in the six Arab nations of the Gulf Cooperation Council have raised almost no money. That’s in spite of strong performances almost everywhere else, according to Seattle-based data provider PitchBook and London-based Preqin.
Now let me get to the latest update
In court papers last year, US prosecutors said Naqvi stole more than $250m. But in a new filing on Friday, the liquidators put the losses much higher, claiming Naqvi stole $385m from 2009 to 2018 as he moved money for his own use in more than 3,700 transactions.
The liquidators are at work trying to trace the transactions and have asked a New York judge for permission to file subpoenas on 18 banks.
Naqvi, who has denied wrongdoing, is under house arrest in London facing possible extradition to the US.
(Source: Arabian Business YouTube channel)