Dubai: A Sharjah court will hear a bounced cheque case against Arif Naqvi, founder of the beleaguered private equity firm Abraaj, on Tuesday.
This is second such case against Naqvi to be heard in a court in the UAE.
The new case relates to a cheque worth $217 million (Dh798 million) issued by Naqvi to Sharjah-based Crescent Group founder Hamid Jafar.
The new case comes after a similar case relating to a cheque bounce of $300 million was settled out of court on July 15.
Last month, the public prosecutor’s office in Sharjah had issued an arrest warrant against Naqvi and the case was heard by a Sharjah court before it was dismissed following an ‘agreement’ reached by both parties to settle it out of court.
While Naqvi is out of the country, he is represented by Dr Habib Al Mulla, executive chairman at Baker McKenzie Habib Al Mulla, Hamid Jafar is represented by Essam Al Tamimi, senior partner at Al Tamimi & Co.
The latest case comes following disputes on the terms of settlement agreed by both parties.
“The accused has already reneged on what was promised. There has been no settlement, and now the matter is for the criminal court under the UAE,” Al Tamimi said in a statement last week.
In the event of the court finding Naqvi guilty of willfully not honouring the cheques, he could face a jail term as cheque bounce is a criminal offence in the UAE.
Faced with liquidity crunch and court cases from investors and lenders, Abraaj, once the Middle East and North Africa region’s largest private equity company is in the process of liquidating its fund management business. The group is also in the process of selling some of its assets.
While Abraaj has an estimated debt burden of close to $1 billion, UAE based companies have disclosed an estimated exposure of S2 billion in terms of loans to Abraaj and investments in Abraaj managed funds.
Abraaj’s troubles began with investors including the Bill & Melinda Gates Foundation and the International Finance Corp making allegations of comingling and mishandling of their money in a $1 billion healthcare fund. Abraaj denies misuse of funds.
Although audits by Deloitte did not find evidence of embezzlement or misappropriation, it highlighted a lack of adequate governance.