Arif Naqvi, the founder and ex-CEO of The Abraaj Group/Bloomberg
Arif Naqvi, the founder and ex-Chief Executive Officer of Abraaj, was arrested in the UK and is awaiting possible extradition to the US, while Mustafa Abdel-Wadood, a former Managing Partner, was apprehended in New York and remains in a federal lockup.
Sunday 14, April 2019
(Bloomberg) --Two former executives of The Abraaj Group, which collapsed last year in the world’s biggest private-equity insolvency, were arrested on US charges of defrauding investors, with one defendant nabbed after arriving in New York with his wife and son to look at colleges.
“The government moved forward because this defendant was present in the US last week unexpectedly,” Assistant US Attorney Andrea Griswold said.
Abdel-Wadood pleaded not guilty and is due back in court on 18 April and he was arrested at his hotel while in New York to shop for colleges for his son. Naqvi and Abdel-Wadood are charged with inflating the value of the Dubai-based firm’s holdings and stealing hundreds of millions of dollars.
Prosecutors say that from 2014 to 2018 they and others not identified in the court papers worked to artificially inflate the value of Abraaj’s emerging-market investments by more than $500 million.
The firm used money earmarked for investments to meet its own operating expenses without telling investors, prosecutors said. Naqvi is also charged with stealing investors’ money for himself and his inner circle, including Abdel-Wadood, a resident of Dubai. The two are accused of conspiracy, wire fraud and securities fraud.
Naqvi was charged in the UAE in a $217 million bounced-cheque case, which was settled after the court sentenced him to three years in prison.
Founded in 2002, Abraaj grew to become the Middle East’s biggest private equity fund and one of the world’s most influential emerging-market investors, with stakes in health care, clean energy as well as lending and real estate across Africa, Asia, Latin America and Turkey.
However, last year Naqvi surrendered control after it was revealed that the firm’s main revenues had not covered operating costs for years.
Abraaj, which managed almost $14 billion, was forced into liquidation in June after a group of investors, including the Bill & Melinda Gates Foundation, commissioned an audit to investigate the alleged mismanagement of money in its health-care fund.