Cayman court upholds enforcement in fight over KE

LONDON: The Grand Court of the Cayman Islands has upheld the enforcement of London Court of International Arbitration (LCIA) award requiring disclosure of records relating to a former Abraaj Group investment fund that holds a $1.6 billion stake in a Karachi power utility.

The Grand Court of the Cayman Islands rejected an application by GP IGCF (The General Partner of Infrastructure Growth & Capital Fund) to set aside an order for enforcement of the award. IGCF’s remaining primary asset is a substantial stake in K-Electric, a vertically integrated utility company in Karachi.

IGCF is a $2 billion investment fund whose biggest asset is a $1.6 billion stake in K-Electric, a power utility serving 3.4 million consumers in Karachi and surrounding areas.The fund is managed by IGCF GP, which was formerly owned by Abraaj before the Dubai private equity group collapsed in 2018. Liquidators later sold IGCF GP to a company linked to Pakistani businessman, former Citi banker and Daewoo bus services owner Shaheryar Chishty.

White Crystals, a special purpose vehicle set up by Saudi Arabia’s Al Jomaih Group to invest in IGCF, brought the arbitration against the general partner under an LCIA clause in the deed of limited partnership for IGCF. It said the claim was prompted by serious concerns that Chishty was running IGCF for his own benefit and not that of the limited partners.

The claimant argued that IGCF GP had entered into a loan agreement with one of Chishty’s companies, Asiapak Investments, at an alarming rate of interest of up to 60% per annum compounded monthly and that Asiapak had obtained security over all of IGCF’s remaining assets. It also contended that around $66 million belonging to the fund had been “moved from bank to bank” in Pakistan and had ended up in a bank account in the name of one of Chishty’s companies.

It was alleged in the court that Chishty was exercising his control to prevent KES Power’s board from resolving to appoint solicitors to defend the English litigation, and that the businessman has directed another IGCF entity in the Cayman court for the winding up of KES Power based on the “contrived deadlock” among its board.

Without deciding on the truth of the allegations, the LCIA tribunal was satisfied that White Crystals’ concerns about these matters were genuinely held and ordered that the books and records should be turned over within five days of the award. It rejected IGCF GP’s defence that White Crystals was being used as a “cypher” to obtain information to be used by third parties in separate litigation.