Dubai hits Abraaj with record $315m penalty

Published July 31, 2019
The group entered into liquidation over a year ago following allegations of misuse of funds. — Abraaj website/File
The group entered into liquidation over a year ago following allegations of misuse of funds. — Abraaj website/File

DUBAI: Dubai’s financial regulator said on Tuesday it had imposed a record fine of nearly $315 million on two affiliates of the collapsed Abraaj equity group for unauthorised activities and misusing investors’ funds.

The Dubai Financial Services Authority (DFSA) said in a statement that it fined Abraaj Investment Management $299.3m and Abraaj Capital Limited $15.3m.

The two companies are affiliates of the Abraaj Group that once was the leading private equity firm in the Middle East with nearly $14 billion of assets under management.

The group entered into liquidation over a year ago following allegations of misuse of funds that forced investors to recover their money.

Some key investors in an Abraaj $1bn healthcare fund were The Bill and Melinda Gates Foundation and a World Bank affiliate.

The DFSA said that after a complex investigation spanning over 18 months it found Abraaj Investment Management “carried out unauthorised financial services ... [and] actively misled and deceived investors in Abraaj funds over an extended period.” The firm also “misused investors’ monies in various funds to meet operating and other expenses ... and to meet ever-increasing cash shortfalls.” Abraaj Capital breached regulations by failing to “observe minimum standards of integrity and fair dealing” among other violations, according to the DFSA.

In June last year, a court in the Cayman Islands -- where Abraaj is registered -- appointed liquidators to oversee the restructuring of the group.

The company and some of its senior officials are currently facing charges in the United States.

The DFSA said it imposed the penalty to “deter others and protect investors” in Dubai, which has worked in recent decades to draw foreign investments to the oil-rich Gulf nation.

The regulator is continuing to “investigate individuals and entities connected with this matter”, it added.

Published in Dawn, July 31st, 2019

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

In defamation’s name

In defamation’s name

It provides yet more proof that the undergirding logic of public authority in Pakistan is legal and extra-legal coercion rather than legitimised consent.

Editorial

Mercury rising
Updated 27 May, 2024

Mercury rising

Each of the country's leaders is equally responsible for the deep pit Pakistan seems to have fallen into.
Antibiotic overuse
27 May, 2024

Antibiotic overuse

ANTIMICROBIAL resistance is an escalating crisis claiming some 700,000 lives annually in Pakistan. It is the third...
World Cup team
27 May, 2024

World Cup team

PAKISTAN waited until the very end to name their T20 World Cup squad. Even then, there was last-minute drama. Four...
ICJ rebuke
Updated 26 May, 2024

ICJ rebuke

The reason for Israel’s criminal behaviour is that it is protected by its powerful Western friends.
Hot spells
26 May, 2024

Hot spells

WITH Pakistan already dealing with a heatwave that has affected 26 districts since May 21, word from the climate...
Defiant stance
26 May, 2024

Defiant stance

AT a time when the country is in talks with the IMF for a medium-term loan crucial to bolstering the fragile ...