Abu Dhabi, Dubai: Abraaj Group, the Middle Eastern investment firm which has been roiled by allegations of misused funds, commingled about $95 million (Dh349 million) after it faced cash shortages, according to the findings of a review by Deloitte.

The accounting firm, which was hired by Abraaj to examine its finances, found that there was commingling of Abraaj’s own money in the health-care fund and its fourth fund, according to a summary of the Deloitte report that was presented to creditors on June 4 and seen by Bloomberg News.

Money from Abraaj’s $1 billion health-care fund was used to pay management fees and other expenses, Deloitte said. Abraaj still owes $94.6 million to its so-called Private Equity Fund IV, but all money has been accounted for and there’s no evidence of embezzlement or misappropriation. Abraaj and Deloitte declined to comment.

Abraaj, once considered to be one of the developing world’s most influential investors, managed almost $14 billion for institutions and supranational agencies from the US, UK and other countries. The buyout firm has been under pressure since February when some of its investors commissioned an audit to investigate the alleged mismanagement of money in its health-care fund. Kuwait’s Public Institution for Social Security last week filed a petition for the liquidation of the holding firm.

‘Lack of governance’

Deloitte said there was a lack of adequate governance at Abraaj and an overall weakness in its control framework. The firm faced a cash shortage when the sale of Pakistani utility K-Electric was delayed, the accounting company said.

Deloitte presented all of its findings to the Dubai Financial Services Authority, but isn’t aware of any action taken by the regulator on the allegations. The DFSA had been in contact with Deloitte almost on a daily basis and receives regular updates from key Abraaj personnel, including a detailed weekly written update from founder Arif Naqvi, according to the review.

Abraaj last week said it expects its creditors to agree to a standstill on debt payments after the June 4 meeting. The potential sale of Abraaj’s fund-management unit was also discussed with shareholders. The DFSA is supportive of any deal to sell the asset management unit as long the investors’ interests in the funds are protected, Deloitte said.

Deloitte was hired by Abraaj after an initial review by KPMG LLP — conducted after four high-profile investors including the Bill & Melinda Gates Foundation alleged that money from the health-care fund was being diverted elsewhere — found that all payments and receipts were in order.

— Bloomberg