The Abraaj Group has been fined by the Dubai Financial Services Authority (DFSA) for 315 million USD. The fine was imposed on two branches of the Abraaj Equity Group for unauthorized activities and funds’ misusage. The total fine is split into two halves, 299.3 million USD fine is imposed on Abraaj Investment Management and Abraaj Capital Limited has been fined with 15.3 million USD.
The company was founded in 2002 by a Pakistani businessman Arif Naqvi, and it became the leading private equity firm with almost 14 billion USD worth assets under management. Later then, the company lost its reputation over charges of misusing funds, and eventually entered into liquidation a year ago. The company also had investments from affiliates of World Bank, The Bill and Melinda Gates Foundation had invested 1 billion USD in healthcare funds. The compliance department of the company had identified the misconducts earlier in 2009, but the higher management of the company ignored the cautionary.
DFSA took the bold action after a stretched investigation in which the company was found guilty of using invested money for their own operating expenses and to meet the cash shortages. The authority said in a statement that it will “pursue the persons or entities who perpetrated this activity, including those who allowed this to happen through major corporate governance breaches, to the full extent of our powers,”. Several employees of the company including former Managing Partner Mustafa Abdel Wadood and former CEO Arif Naqvi have also been charged in the US for conspiracies.
The group owns multiple ventures, widely spread around the globe. K-Electric also took over by Abraaj group earlier in 2009, and Abraaj Group & Aljomaih/NIG have a 66.4% share in K-Electric. Other ventures include Big Basket – India, Hepsiburada – Turkey, Netlog – Turkey, Indorama Fertilizers – Sub-Saharan Africa, etc.