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Dubai regulator imposes massive fine on Abraaj founder

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Dubai regulator imposes massive fine on Abraaj founder

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Dubai regulator imposes staggering $135.5 million fine on Pakistani-born founder of Abraaj Group

DUBAI, United Arab Emirates — A regulator in Dubai said on Thursday it was fining a staggering $135.5 million on the Pakistani-born founder of Abraaj Group, the Middle Eastern private equity firm now missing, accused of fraud.

The Dubai Financial Services Authority DFSA said CEO Arif Naqvi had been slapped with a monetary penalty “for serious misconduct”. The regulator also said it was fining former Abraaj executive and former chief operating officer Waqar Siddique $1.15 million.

The DFSA said the fine reflects the seriousness of Naqvi’s alleged wrongdoing and is based on his earnings from the Abraaj Group.

Although the fine is only temporary, it is the latest twist in a saga that has crossed several continents and affected some of the richest people in the world. Abraaj managed $14 billion for investors at its peak before its collapse in 2018.

Naqvi and Siddique are challenging the regulator’s decision and have referred the opinions to the Financial Markets Tribunal, where the parties will present their arguments. The DFSA’s decisions are therefore provisional.

Two men tried unsuccessfully through the court to prevent the publication of the notices of fines and to hold the court hearings behind closed doors.

Naqvi has asserted his innocence as he fights extradition from the UK to the US, where prosecutors allege Abraaj Group lured US investors with the promise of socially responsible investments as he is instead given over to massive fraud. He is also accused of taking hundreds of millions of dollars from Abraaj for personal gain.

Among the US investors allegedly defrauded are the Bill & Melinda Gates Foundation and a US government agency that facilitates US commercial investment in hospitals in developing countries.

A former top executive of the Dubai-based company told a US court in 2019 that he was wrong to keep quiet as Abraaj Group tried to recover from huge cash shortfalls by overstating its finances to earn new investors. After signing a cooperation agreement with US prosecutors, Egyptian-born Mustafa Abdel-Wadood, who oversaw Abraaj’s investments as managing partner, pleaded guilty to charges of racketeering conspiracy and fraud on titles and by thread.

Naqvi founded Abraaj Group in 2002, from which it grew into the largest private equity firm in any emerging market. He was the company’s largest shareholder and its ultimate decision maker, according to the regulator.

Regulator alleges Navqi used Cayman Islands-registered company to mislead investors, withheld sale proceeds from investors less likely to complain or challenge the company, wrote misleading statements to investors to conceal use misuse of their funds and was involved in covering up a $400 million shortfall by borrowing money to produce bank balances and statements.

Abraaj Group operated out of the Dubai Financial Free Zone known as the Dubai International Finance Center. Known as DIFC, it’s the financial heart of Dubai characterized by sleek mirrored business towers, Michelin-starred restaurants and luxury hotels for traveling executives.

Dubai regulator imposes massive fine on Abraaj founder

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