The Dubai Financial Services Authority (DFSA) on Tuesday announced that it will fine two Abraaj-affiliated companies 1.15 billion dirhams ($315 million).
Abraaj Investment Management Limited has been fined $299 million by the DFSA, whilst Abraaj Capital Limited was fined $15 million. These are the largest fines that the DFSA has issued to date and are significantly larger than the previous record – an $8.4 million fine levelled at Deutsche Bank in 2015.
The fine from the DFSA is another blow for the now-defunct Abraaj. The company, which had claimed to manage almost $14 billion in funds, was the largest buyout fund in the Middle East and North Africa region but filed for provisional liquidation in June 2018. The firm collapsed in 2019 following an investor row over money mismanagement in a $1 billion healthcare fund. Investors including the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corporation had commissioned an audit on the healthcare fund, which increased scrutiny on the fund and attracted regulatory attention.
US prosecutors have charged several senior Abraaj executives with criminal offenses, accusing them of a massive scheme to defraud investors.
An indictment filed last month by the US Southern District of New York accused Arif Naqvi, the founder Abraaj, of directing others in the company to conceal cash shortfalls and misappropriate cash from investors, concealing the true financial condition of the firm from investors and regulatory authorities.
According to the 78-page charge sheet, the Abraaj Private Equity Fund IV, one of the funds acquired by Actis, was the largest target of the firm’s misappropriation of investor money.