Arif Naqvi, the founder of private equity firm Abraaj Group, which is battling allegations of misuse of investors’ funds, has reached an out-of-court settlement with a creditor in a criminal case over a bounced cheque and is waiting to sign off on the deal, his lawyer said.
"The parties reached an understanding late on Wednesday night over the main issues to repay the loan. A document is underway of drafting," Habib Al Mulla, executive chairman of Habib Al Mulla Baker Mackenzie, told The National in an emailed statement on Friday. He did not say when the agreement would be signed.
A judge in Sharjah was scheduled to rule on Thursday whether the cheque in question was issued without the necessary funds, but adjourned the hearing until July 11.
An advisor to Hamid Jafar, the claimant in the bounced cheque case, said in an emailed statement to The National: "The court adjournment on Thursday has given Mr Naqvi additional time to arrive at a viable settlement."
The case relates to a cheque for Dh177.1 million ($48m) signed by Mr Naqvi, who is in the UK but a Dubai resident, and Abraaj executive Rafique Lakhani, and made out to Mr Jafar, another founding shareholder in Abraaj.
The cheque was used as partial security for around $300m of loans made to Abraaj by Mr Jafar, who claims Mr Naqvi had no intention of repaying, Mr Al Tamimi said in a statement to media last week.
Mr Al Mulla last week denied there was no intent to repay the loan, during a telephone call with The National. "There was a loan given by the Jafars to Abraaj Group and to Arif – $200m to Abraaj and $100m to Arif – against which they took cheques as security," he said. "Both parties knew there were no funds for these cheques, otherwise why should he take $300m if he [already] has $300m?"
There have been ongoing discussions and several drafts of a proposed settlement between the two parties, and Mr Naqvi has paid $33m of the total $100m to Mr Jafar, Mr Al Mulla said last week.
The out-of-court settlement being drawn up resolves the dispute over the entire $300m loan, not just the cheque which is the subject of the Sharjah court case, Mr Al Mulla said.
The case is the latest twist in a five-month saga involving Dubai-based Abraaj Group, which has been accused of mismanaging investors’ money in a $1bn healthcare fund. Abraaj has denied the allegations.
The company is undergoing a court-supervised restructuring in the Cayman Islands and last month reached a provisional agreement to sell part of its funds management business to US-based Colony Capital.
Dubai’s financial services regulator the Dubai Financial Services Authority (DFSA) is investigating allegations of fund mismanagement at the firm, and has interviewed Mr Naqvi and other senior executives over the past few months as part of the probe, Reuters reported on Wednesday citing unidentified sources.