The Dubai government fines Arif Naqvi, founder of “Abraaj”, of 500 million dirhams.

The DFSA fined Arif Naqvi, founder of the Abraaj group, and Waqar Siddiqi, the group’s former chief operating officer, for their role in the collapse of the company. private equity Abraaj in 2019.

The Dubai Financial Services Authority has imposed a fine of $ 135.56 million (497.86 million dirhams) on Naqvi and a fine of $ 1.15 million (4.22 million dirhams) on Siddiqi. The authority also barred and restricted them from exercising any work in or from the Dubai International Financial Center.

The DFSA said in a statement that both Naqvi and Siddiqi had opposed the DFSA’s findings and referred the ruling against them to the Financial Markets Legal Authority in so that the case was brought before it by all parties. Therefore, the decisions made by the authority are temporary and reflect his beliefs about the observed behaviors.

The Judicial Authority for Financial Markets will decide on the possible initiative of the DFSA and will refer the matter to the Authority with the indications it deems appropriate to implement its decision. The authority’s decisions can be confirmed, modified or revoked following the authority’s review.

According to the DFSA, Seddiqi and Naqvi have asked the Financial Markets Legal Authority for an order banning the DFSA from publishing decision notices and that authority hearings be held in confidential rather than public.

Arif Naqvi

In January 2022, the Financial Markets Regulator decided that the DFSA could publish decision notices and that hearings would be held public. The Legal Authority for Financial Markets has suspended the application of financial sanctions until the end of its procedures, but remains in force the decision to prevent and restrict Naqvi and Siddiqi from carrying out any work in or from the Dubai International Financial Center.

The DFSA states: “In early June 2021, Naqvi asked the DIFC courts for permission to initiate a judicial review of the DFSA’s decision to take action against him. This application was also rejected and, based accordingly, the authorities began issuing a decision notice against Naqvi, which in turn referred him to the Judicial Authority for Financial Markets.

He added that Naqvi founded the Abraaj Group in 2002, which, under his leadership, has grown into one of the largest companies in private equity in the region, with asset in estimated management in 14 billion dollars. Naqvi was the Group’s majority shareholder, CEO and Vice President of the Abraaj Group, and was seen as the face and personality behind the group creating a worldwide reputation based on the alleged success of the group’s investment strategy. Naqvi was the most influential person within the Abraaj Group and the ultimate decision maker on substantive or controversial issues. “

According to the statement, “The decision notice states that Naqvi has consciously engaged in the inducing process in mistake investors on the misuse of their funds by Abraaj Investment Management Limited (AIML), a company registered in the Cayman Islands and not authorized by the Dubai Financial Services Authority. “, the DFSA found that Naqvi personally proposed, planned and approved the implementation of actions that have led, directly or indirectly, to mislead and deceive investors, since:

• Issue instructions for using investor funds to finance the Abraaj Group’s working capital and other obligations.
• By ranking investors in based on their likelihood of complaining or asking questions and withholding the proceeds of the sale and reporting from investors who were least likely to do so.

• Accepting statements false and misleading investors and formulating them personally in order to cover the misuse of their funds. He also tried to stop employee demand senior who work for investor companies to block their claims.

Play a key role in covering a $ 400 million deficit in two funds by taking temporarily in lending money in order to issue insurance on bank balances and financial statements to mislead auditors and investors.

• Approval of the fund’s fiscal year change to avoid disclosing a $ 200 million deficit.

• Arrange a $ 350 million loan from an individual personally in an attempt to make the Abraaj Group look like in able to satisfy the requests of investors.
In addition, according to the DFSA statement, Naqvi directed and encouraged other members of Abraaj’s senior management to mislead and deceive the investors and shareholders of the funds.

Naqvi has knowingly participated in Abraaj Investment Management Limited’s (AIML) execution of unlicensed financial services business in or from Dubai International Financial Center, leveraging his role as Chairman of the Global Investment Committee at Abraaj Investment Management Limited and through its shares in the management of Abraaj funds.

According to the DFSA, the hefty fine imposed on Naqvi reflects the gravity of the offense and is based on his earnings from the Abraaj group.

The dignity of my friend

The DFSA found that Siddiqi was knowingly involved in violations by Abraaj Investment Management Limited and Abraaj Capital Limited (ACLD), a company authorized by the DFSA.

Siddiqi was a member of the Abraaj Group’s senior management from September 2005 to June 2018. During this period, Mr. Siddiqi held a number of positions in the group, including Chief Operating Officer (February 1, 2011 to February 2012), and Chief Affairs Officer, Finance and Operations (from January 2017 until his resignation in 2018). Siddiqui was also the authorized director of Abraaj Capital Limited. Through these positions, Siddiqui was consciously involved in some of the abuses committed by Abraaj Investment Management Limited and Abraaj Capital Limited.

According to the DFSA, Siddiqui was knowingly involved in Abraaj Investment Management Ltd.’s deception and deception of investors about using their money in Abraaj funds. In particular, Siddiqui was aware that approximately $ 400 million had been withdrawn from two Abraaj funds and used as working capital for the Abraaj Group or to finance other investment commitments. In order to mask this deficiency, Siddiqui has been involved in deceiving auditors and investors about the actual balance of the fund’s bank accounts, including signing loan agreements which have been used to issue misleading claims about bank balances and financial statements. misleading.

According to the DFSA statement, Siddiqui was knowingly involved in the irregularities committed by Abraaj Capital Limited by failing to maintain its capital requirements; Whereas it approved most of the temporary cash transfers during the five-year quarterly reporting period. He also signed two financial reports sent to the Dubai Financial Services Authority in which falsely claim Abraaj Capital Limited’s compliance with capital requirements. In what tale, Siddiqi did not act with integrity while carrying out his authorized employment with Abraaj Capital Limited.

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