Dubai: A Sharjah court on Tuesday reserved the judgement in the bounced cheque case against Arif Naqvi, founder of the beleaguered private equity firm, 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.
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.
Faced with a 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.
UAE-based companies have disclosed an estimated exposure of $2 billion in loans to Abraaj and investments in Abraaj managed funds. While bouncing a cheque is a criminal offence that carries a possible jail term in the UAE, sources in the financial services industry and legal circles believe that jailing Naqvi in absentia could further delay liquidation of Abraaj assets and hurt the interests of lenders and investors.
“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 & Do said said. “No one is far from the hands of justice.”
Court-appointed liquidators Deloitte and PricewaterhouseCoopers are in the process finding ways to liquidate Abraaj assets and settle more than $1 billion of debt owed by the company.
Abraaj’s troubles began with investors including the Bill & Melinda Gates Foundation and the International Finance Corp making allegations of commingling and mishandling of their money in a $1 billion health care 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.
