The Dubai Financial Services Authority (DFSA) has fined KPMG LLP $1.5 million and former audit principal Milind Navalkar $500,000 for failing to follow international standards during audits of Abraaj Capital Limited (ACLD), an Abraaj Group entity, for a number of years up to October 2017.
The DFSA's decisions were issued in June 2021 but only published on Monday as KPMG and Mr Navalkar sought an order from the Financial Markets Tribunal to prevent publication, the regulator said.
The tribunal subsequently refused both KPMG’s and Mr Navalkar’s requests for privacy and both then appealed to the DIFC Court against the FMT's decision.
A judgment was issued by the Dubai International Financial Centre Court on September 16, 2022, dismissing the appeals of KPMG and Mr Navalkar, meaning that the tribunal's original decision was upheld.
The tribunal's decision will be published on its section of the DFSA’s website, the regulator said.
KPMG and Mr Navalkar deny all of the DFSA’s allegations and have applied for review of the decisions to the FMT, where the parties will present their respective cases.
“The DFSA’s decisions are therefore provisional and reflect the DFSA’s belief as to what occurred and how it considers KPMG LLP’s and Mr Navalkar’s conduct should be characterised,” the DFSA said.
“The DFSA’s decisions may be confirmed, varied or overturned as a result of the FMT’s review.”
ACLD was a wholly owned subsidiary of Abraaj Investment Management Limited (AIML), a company incorporated in the Cayman Islands, which acted as the primary investment adviser and manager of private equity funds in the Abraaj Group.
The Abraaj Group, which was founded in 2002 and claimed to manage about $14 billion of assets at its peak, was the Middle East’s biggest private equity firm and one of the world’s most active emerging market investors, with interests across Africa, Asia, Latin America and the Middle East.
It was forced into liquidation in 2018 after investors, including the Bill & Melinda Gates Foundation, commissioned an audit to investigate alleged mismanagement of money in its $1bn healthcare fund.
That probe served to deepen scrutiny of the company, and allegations of misappropriation of funds secured from US investors attracted the attention of the Securities and Exchange Commission, as well as other US authorities.
In its decision issued on June 29, 2021, the DFSA said KPMG considered the Abraaj Group to be one of its most valued clients, classifying it as a “global priority” client and referring to it as “one of our crown jewel clients” when discussing it with other KPMG member firms.
The DFSA maintains that had KPMG performed its audit of ACLD to the expected standard, it probably would have identified that for more than five years ACLD’s financial statements did not conform to accounting rules, and that the unit had failed to maintain adequate capital resources and was concealing the true state of its finances from the audit firm.
As Mr Navalkar was KPMG’s audit principal who was appointed to the ACLD audit, he was responsible for signing off the report on ACLD’s audited financial statements and also ensuring that the audits and reviews of its financial statements and DFSA returns were carried out to the required standard, the authority said.
“The DFSA found that Mr Navalkar was knowingly concerned in KPMG LLP’s breaches and he also failed to act with professional competence and care,” it said.
The DFSA fined ACLD more than $15m in July 2019 for failing to maintain adequate capital resources, in breach of its rules, and for providing the regulator and KPMG with false and misleading information relating to its capital resources.
“ACLD also omitted to provide its auditor with information relating to material transactions with other Abraaj Group entities and prepared financial statements which did not accurately represent ACLD’s financial position,” the DFSA said.
“ACLD was also knowingly concerned in unauthorised activities of its parent, Abraaj Investment Management Limited (AIML)", which the DFSA previously fined more than $299m in July 2019.
ACLD was the only Abraaj entity authorised by the DFSA and the only entity in the Abraaj Group audited by KPMG LLP.
The other entities in the Abraaj Group were audited by other audit firms in the KPMG global network that operate outside of the DIFC.
Company%20profile
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Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
More coverage from the Future Forum
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Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
The specs
Price, base / as tested Dh12 million
Engine 8.0-litre quad-turbo, W16
Gearbox seven-speed dual clutch auto
Power 1479 @ 6,700rpm
Torque 1600Nm @ 2,000rpm 0-100kph: 2.6 seconds 0-200kph: 6.1 seconds
Top speed 420 kph (governed)
Fuel economy, combined 35.2L / 100km (est)
Dengue%20fever%20symptoms
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Red flags
- Promises of high, fixed or 'guaranteed' returns.
- Unregulated structured products or complex investments often used to bypass traditional safeguards.
- Lack of clear information, vague language, no access to audited financials.
- Overseas companies targeting investors in other jurisdictions - this can make legal recovery difficult.
- Hard-selling tactics - creating urgency, offering 'exclusive' deals.
Courtesy: Carol Glynn, founder of Conscious Finance Coaching
Key findings of Jenkins report
- Founder of the Muslim Brotherhood, Hassan al Banna, "accepted the political utility of violence"
- Views of key Muslim Brotherhood ideologue, Sayyid Qutb, have “consistently been understood” as permitting “the use of extreme violence in the pursuit of the perfect Islamic society” and “never been institutionally disowned” by the movement.
- Muslim Brotherhood at all levels has repeatedly defended Hamas attacks against Israel, including the use of suicide bombers and the killing of civilians.
- Laying out the report in the House of Commons, David Cameron told MPs: "The main findings of the review support the conclusion that membership of, association with, or influence by the Muslim Brotherhood should be considered as a possible indicator of extremism."
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
