These are the largest financial penalties ever imposed by the financial regulator.
Tuesday 30, July 2019 BY KUDAKWASHE MUZORIWA
The Dubai Financial Services Authority (DFSA) has imposed financial penalties of $300 million and $15 million on Abraaj Investment Management Limited (AIML) and Abraaj Capital Limited (ACLD), respectively for carrying out unauthorised activities in the Dubai International Financial centre (DIFC) and misusing investors’ monies.
The regulator stated that its investigation, which commenced in January 2018, found that AIML carried out unauthorised financial services such as fund management, misled and deceived investors in Abraaj funds over an extended period as well as misused investors’ monies in various funds to meet its own operating and other expenses, and made false statements about the use of money.
DFSA said that Abraaj Group used investor’s monies to make payments to entities connected to some members of AIML staff and to meet ever-increasing cash shortfalls.
The Dubai financial regulator accused AIML of borrowing money from investors just prior to financial reporting dates to produce temporary bank balances at a level expected by the investors, changing the reporting period for a fund to disguise shortfalls as well as deflecting demands from various parties to provide updated financial information and bank statements.
Additionally, DFSA stated that ACLD failed to maintain adequate capital resources, deceived the DFSA about its compliance with various rules and was knowingly involved in AIML’s unauthorised financial services activities.
Recently the DFSA announced that its probe into Abraaj Group will focus on senior management who were responsible for the conduct of the affairs and funds as well as people who may have failed in their responsibilities to identify or report irregularities.
Abraaj Group, which filed for provisional liquidation in June 2018 in the Cayman Islands, was the largest buyout fund in the MENA region until it collapsed last year after a row with investors over the allegedly improper use of money in a $1 billion healthcare fund.
US prosecutors have charged several senior executives of Abraaj including its founder Arif Naqvi and former managing partner Mustafa Abdel-Wadood with criminal charges, accusing them of taking part in a massive international scheme to defraud investors.
Naqvi, who is in London and on bail will face a court hearing for an extradition to the US next year, the founder of Abraaj has denied any wrongdoing.
TAGS : Dubai Financial Services Authority, Abraaj Group, Abraaj Capital Limited, Abraaj Investment Management Limited, Cayman Islands, Arif Naqvi, Mustafa Abdel-Wadood , Dubai International Financial centre