The World Bank has debarred a former Abraaj Group executive for two years over fraud related to a fund of the defunct private equity firm that was focused on investing in Turkey.
The Washington-based lender said Selcuk Yorgancioglu had been sanctioned over his ties to the Abraaj Turkey Fund I Project (ATFI).
As a result, Mr Yorgancioglu and any of the businesses he controls will not be eligible to participate in projects and operations financed by World Bank institutions during the two-year period.
The suspension is part of a settlement agreement that was negotiated with Mr Yorgancioglu, 55, “under which he admits responsibility for the underlying sanctionable practice and agrees to meet specified integrity compliance conditions for release from debarment”, the lender said.
It said the settlement demonstrated how the agreement and World Bank sanctions could be used to promote better business practices by people and companies engaged in private sector development projects.
Mr Yorgancioglu, who was appointed as co-chief executive in March 2018 for the restructuring process of Abraaj, declined to comment when reached by The National on Friday.
In 2016, the Abraaj Group raised about $526 million in committed capital to invest in Turkey through ATFI, which was domiciled in the Cayman Islands.
ATFI's purpose was to invest in medium-sized businesses operating primarily in health care, education, retail, logistics, consumer goods and services, financial services, logistics and retail in Turkey.
The fund was supposed to make eight to 10 investments with ticket sizes ranging between $30 million and $75 million.
Investors in the ATFI included the European Bank for Reconstruction and Development, which committed €75 million ($82.2 million), the European Investment Fund and the World Bank's International Finance Corporation, which committed up to $50 million to the fund.
Mr Yorgancioglu, a Turkish citizen, was a partner with Abraaj before it collapsed.
A seasoned financier with previous stints at ABN Amro, Finansbank and Deutsche Bank, he was part of the Abraaj investment team that “omitted to disclose material and relevant facts about the financial situation of one of the investee companies”, the World Bank said.
This led to the “misrepresentation of the investment information and thus misled [the] IFC. This constitutes a fraudulent practice as defined in the Sanctionable Practices — IFC’s Definitions & Interpretive Guidance”, it said.
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 $1 billion healthcare fund.
That probe served to deepen scrutiny of the company, and allegations on the misappropriation of funds secured from US investors attracted the attention of the Securities and Exchange Commission, as well as other American authorities.
This January, an independent appeals tribunal upheld action taken by the Dubai Financial Services Authority against Arif Naqvi, the founder of Abraaj Group, which was the largest fine imposed on an individual by the regulator.
The DFSA fined Naqvi more than $135 million in January 2022 and banned him from conducting business in the Dubai International Financial Centre over “serious failings” in respect to the company and its misconduct.
Last month, Naqvi lost his appeal to challenge his extradition from the UK to the US to face criminal charges of fraud and money laundering.
In October 2022, Waqar Siddique, a former managing director at the Abraaj Group, reached a settlement with the DFSA.
He was fined $1.15 million by the regulator in January 2022 and also prohibited from operating in the Dubai International Financial Centre due to “serious failings” in respect of Abraaj.
In November 2021, the DFSA also fined former Abraaj managing partner Mustafa Abdel-Wadood $1.9 million for breaching its rules and deceiving investors.
The DFSA also banned him from conducting any financial services-related business in or from the DIFC.
The World Bank said the settlement agreement with Mr Yorgancioglu had reduced the period of his debarment as he had co-operated, accepted responsibility, taken corrective action and volunteered to abstain from pursuing future opportunities with the lender.
Under the terms of the settlement agreement, Mr Yorgancioglu agreed to undertake corporate ethics training for the sanctions against him to be removed.
He also committed to introduce a corporate ethics training programme at any companies he controls while continuing to fully co-operate with the World Bank.
The debarment of Mr Yorgancioglu could result in other multilateral development banks taking similar steps against him.
Mr Yorgancioglu founded Tork Partners, an advisory and investment company, in 2019 to cater to private and institutional investors doing business in Turkey and in emerging regional markets.
