Dubai’s financial services regulator is in contact with its US counterpart the Securities and Exchange Commission over the latest arrests made in connection with stricken Middle East private equity firm Abraaj Group.
The company’s founder Arif Naqvi, and a former Abraaj executive Mustafa Abdel-Wadood, were arrested last week on US charges that they defrauded investors including the Bill and Melinda Gates Foundation, France’s Propco Group, and others.
"The Dubai Financial Services Authority is aware of the arrest of two former executives of the Abraaj Group…[and] can confirm it is communicating with the SEC...and other relevant local and overseas authorities on this matter," the DFSA said in a statement on Monday, seen by The National. "The SEC states that Naqvi and Abraaj Investment Management (not regulated by the DFSA) made misrepresentations to US-based investors."
The regulator added that, “where appropriate, it (DFSA) has the power to impose administrative sanctions, but does not have a criminal jurisdiction, therefore it does not lay charges or make arrests.”
It did not say whether administrative sanctions could be imposed on any US-based entities of Abraaj Group, or what other options it was discussing with the SEC.
The DFSA has been investigating a range of matters involving Abraaj Capital Limited (ACL) – the only Dubai-registered entity of what was once the region’s biggest buyout firm with almost $14 billion of assets under management – and its linked operations overseas.
Abraaj is undergoing a provisional liquidation in the Cayman Islands trying to pay down an estimated $1bn of debt. It unravelled last February, when four investors in a healthcare vehicle hired investigators to find out where their money had gone.
Last August, DIFC Courts – which is the judicial body of the Dubai International Financial Centre, where DFSA has regulatory powers – launched proceedings to wind up ACL. The DFSA had earlier banned ACL from taking on new business or moving money to other parts of the business.
The DFSA has yet to conclude its investigations. Its chief executive Bryan Stirewalt told The National last week he was hopeful a public report would be made available at the right time, and insisted the regulator had taken "appropriate" measures against Abraaj in the months after the allegations came to light last year.
According to court papers filed in the US, Mr Naqvi allegedly committed a $230 million fraud between 2014 and Abraaj's collapse last year.
In its statement on Monday, the DFSA said it understood the charges brought against Mr Naqvi and Mr Abdel-Wadood by the SEC are related to the US Investor Relations Office and the Abraaj Health Fund’s largest US investors.
“These investors are located in New York, and contributions to the Health Fund were transmitted from US bank accounts,” according to the DFSA’s statement. “This vests the SEC with oversight and jurisdiction to bring the specified criminal charges.”
Abraaj had companies and funds in multiple jurisdictions, it added.
