Abraaj Holdings founder and chief executive officer Arif Naqvi has reportedly been sentenced in absentia to three years in prison by a court in the United Arab Emirates (UAE).
The sentence is in relation to a case involving Air Arabia, a UAE-based transportation company, according to a report by Bloomberg.
Earlier in 2019, Air Arabia had reportedly registered a full-year loss after booking impairments to cover its $336 million exposure to Abraaj.
Abraaj had borrowed money from Air Arabia, on whose board Naqvi sat. The funds were reportedly then used to cover shortfalls in one of the Abraaj funds and mislead investors.
This comes just after Abraaj Group was fined $315 million across two business units for deceiving investors and the regulator by the Dubai Financial Services Authority (DFSA), earlier in 2019.
The regulator, which oversees the Dubai International Financial Centre (DIFC), imposed the larger penalty of $299.3 million on Abraaj Investment Management Limited (AIML) for wrongdoing.
This includes carrying out unauthorised activities in the DIFC and misusing investors’ funds.
Abraaj Capital, the only Dubai-based entity of Abraaj owned by AIML, was hit with about $15.3 million.
AIML was created to manage the Abraaj funds in 2018, following the firm’s restructuring. The restructuring was brought on by allegations of misuse of LP capital linked to Abraaj Growth Markets Health Fund (AGHF), closed at $1 billion in 2016.
Abraaj split its business into two separate entities – a fund management business, and a holding company.
This included wider firm restructuring which also saw Naqvi moved from being chief executive officer of the funds management business to being head of Abraaj Holdings.
Naqvi was reportedly arrested in the UK, earlier in 2019 on charges of defrauding investors, as part of a process to have him extradited to the US.
The US Securities and Exchange Commission (SEC) has charged Naqvi and AIML, with misappropriating funds from US investors. The regulator is seeking permanent injunctions, disgorgement plus interest, and penalties.
He has reportedly been granted bail of approximately $20 million (£15 million).
Others facing charges include Abraaj’s ex-managing partner Mustafa Abdel-Wadood, who pleaded guilty to charges of conspiracy in a US court, earlier in 2019, according to a Bloomberg report.
Mustafa Abdel-Wadood admitted to lying to investors across the globe in an attempt to hide losses at Abraaj and raise more money, according to Bloomberg.
Abdel-Wadood is reportedly on house-arrest with a $10 million bond.
The SEC alleges that Naqvi and AIML misused LP capital linked to the AGHF vehicle.
According to SEC, Naqvi misappropriated over $230 million between September 2016 and June 2018. He also stands accused of commingling the assets with corporate funds of AIML and its parent company, Abraaj Holdings.
The AGHF fund has now been acquired by TPG and renamed Evercare Health Fund.