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Dubai: Abraaj Capital Limited (ACL), the only company belonging to the beleaguered Abraaj Group, regulated by the Dubai Financial Services Authority (DFSA) will be under close regulatory monitoring as the company has applied for liquidation, the regulator said in a statement on Thursday.

DFSA confirmed on Thursday that it received a notice of winding up petition filed by Abraaj Capital with the DIFC Courts pursuant to Article 50 of the DIFC Insolvency Law.

“The application seeks to appoint two individuals from Deloitte LLP as joint provisional liquidators of ACL pursuant to Article 59 of the DIFC Insolvency Law. The application was made by ACL with the authority of Abraaj Investment Management Limited (AIML), as the sole shareholder of ACL,” DFSA said in a statement.

DFSA said on August 15, 2018 it received notice of an order issued by the DIFC Courts appointing the two proposed individuals as joint provisional liquidators to ACL.

Operating from DIFC, ACL was authorised to conduct financial services such as managing assets; providing fund administration (but restricted to Funds established by the firm or members of its group); advising on financial products; arranging deals in investments; arranging credit and advising on credit.

Following the troubles at Abraaj Group, the DFSA has instructed AIML to ensure it does not undertake any unauthorised financial services activities in or from the DIFC. AIML is not authorised to conduct financial services business in or from the DIFC.

Abraaj Group’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.

ACL is part of the Abraaj Group of companies and is a subsidiary of AIML and ultimately Abraaj Holdings Limited (AH). These two entities are both domiciled in the Cayman Islands and are undergoing liquidation under the supervision of Caman Courts.

“The DFSA will engage with the joint provisional liquidators for ACL, and in respect of the Cayman court appointed joint provisional liquidators for AH and AIML, the DFSA will work towards safeguarding investor interests within the remit of its jurisdiction,” the regulator said in a statement.

DFSA has, for some time, been investigating a range of matters within Abraaj Group. Violations of DFSA rules carries hefty penalties. However, in line with usual practice, the regulator said it will not comment on the matters under investigation.

Mounting legal troubles

Abraaj Group’s and its founder Arif Naqvi’s legal troubles are escalating by day as it is in the process of liquidating its holding company and the investment management entity and sell some of its funds.

Miffed by the uncertainty, many investors and creditors have started looking at legal options within the UAE and abroad where Abraaj owes money.

While Abraaj has an estimated debt burden close to $1 billion, UAE based companies have disclosed an estimated exposure of $2 billion in terms of loans to Abraaj and investments in Abraaj managed funds.

Reportedly, banks that have lent money to Abraaj have formed a credit committee to jointly pursue their claims against Abraaj with the liquidators. Analysts say the claims of lenders; investors and a host of other claimants are likely to make the winding up process long drawn and messy.

Criminal charges

Abraaj Founder Naqvi is currently facing a criminal case in the UAE on a bounced cheque case on which a Sharjah court has reserved its judgement to August 26.

This is second such case against Naqvi to be heard in a court in the UAE. The 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.

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.Although Naqvi is out of the country, lawyers say they have the option to bring back Naqvi to the UAE to face justice. “If the judgement is imprisonment, then it’s more than just a piece of paper, there’s a procedure and if he does not show up or appeal, then we will ask for an arrest order not only in the UAE but internationally,” Zafer Oghli, a lawyer with Al Tamimi & Co said. “No one is far from the hands of justice.”