Arif Naqvi, founder of the Abraaj Group, is facing criminal investigation in the UAE for issuing bad cheques.
The new development is expected to jeopardise the prospects the company’s efforts to resolve its issues with investors and creditors through liquidation.
Naqvi is facing arrest in the UAE relating to a bounced cheque case. According to sources, the bounced cheque was used as partial security for approximately $300 million in loans from Hamid Jafar, the founder of the Sharjah-based Crescent Group to Abraaj and Naqvi. In the UAE, a bounced cheque is treated as a criminal offence that could result in arrest and jail terms.
On Thursday, a Sharjah court is slated to determine whether Naqvi and a colleague, Muhammed Rafique Lakhani, will face charges on issuing cheques without sufficient funds in the account. Naqvi is not in the country.
Abraaj confirmed the ongoing legal proceedings against Naqvi in absentia. “Abraaj can confirm that a loan was granted and security provided in a pure commercial transaction. Partial repayment of the loan has been made and settlement discussions are ongoing with the intent to arrive at a satisfactory solution for all parties,” Abraaj said in an emailed statement.
Naqvi is represented in this case by Dr. Habib Al Mulla, Executive Chairman, Baker McKenzie Habib Al Mulla.
Al Mulla maintained that the cheques were provided as security for the loans. The presenting of the cheques and subsequent criminal charges are seen as a pressure tactic. “It should be noted that the cheques were provided as part of a security package and as such should not have been submitted to a criminal court,” the company said in an statement.
Earlier this month, Al Jafar family had handed over their debt claims on Abraaj to Auctus Fund, a little-known Saint Vincent-based fund that filed a petition against Abraaj in Cayman Islands for liquidation to recover their loans.
Sources close to the case said that with the liquidation process under way in Cayman Islands, Auctus’ claims that includes the claims of Al Jaffar family are now covered under the liquidation and should ‘stand still’ until the [liquidation] process is completed. Sources said the criminal charges against Naqvi is a pressure tactic.