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Wednesday, 31 July 2019

Dubai financial regulator fines Abraaj USD 314.6 mn for “serious wrongdoing”

Dubai financial regulator hands record USD 314.6 mn fine to Abraaj for “serious wrongdoing”: Former private equity giant Abraaj has been fined a record USD 314.6 mn by Dubai’s financial regulator, the Wall Street Journal reports. The Dubai Financial Services Authority (DFSA) said that Abraaj used funds from investors to pay expenses and send money to executives, then provided misleading financial information to conceal this activity. It also reportedly borrowed money just before financial reporting dates to inflate its bank balances, changed reporting periods to conceal shortfalls, withheld information, and lied about delays in cash distributions. “Serious wrongdoing by two Abraaj group companies included carrying out unauthorized activities in the DIFC and misusing investors’ monies,” DFSA CEO Bryan Stirewalt said in a statement.

Meanwhile, six Abraaj executives face criminal indictment by US prosecutors: Founder Arif Naqvi is one of six former Abraaj executives to have been criminally indicted by US prosecutors just before this fine was imposed. Naqvi is currently on USD 19 mn conditional bail, effectively under house arrest in his London home. An extradition trial will determine whether he will be sent to the US. He maintains his innocence, and has called the charges leveled against him “ludicrous.” Former Abraaj managing partner Mustafa Abdel-Wadood pleaded guilty to charges of racketeering and securities-fraud at a New York court earlier this month. He claims he lied to investors at Naqvi’s behest, and has agreed to cooperate with authorities. Abraaj was widely seen as a standard-bearer for EM private equity before its collapse last year.

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