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Thursday March 28, 2024

No misuse of funds, but Abraaj still faces the music

By Our Correspondent
June 25, 2018

ISLAMABAD: Despite the fact that three forensic audits have failed to find any wrongdoing in misappropriation of funds, investors and creditors continue to haunt Abraaj Group giving the impression as if they have gaged up.

The KPMG, Ankura Consulting and Deloitte in their separate findings have not found anything that can be termed as misappropriation of funds but unfortunate fact is that the headlines of the US and Western press are playing havoc with the fame earned in 16 years by the Dubai-based private-equity firm being headed by Arif Naqvi. Interestingly, a separate investigation by the World Bank on the same subject also came up with no evidence of wrongdoing.

The onslaught by the international press has the potential to inflict damage to Abraaj knowing the fact that absence of wrongdoing is proven by the three audits. If the ongoing unwarranted reporting continues to hit, the pain at Abraaj will not only surge, it will spread first within the industry and then beyond, with unpredictable consequences.

The findings of the audits say that all the money of the healthcare fund had been either invested, used for management fees and other fund expenses, or returned to investors. Furthermore, there is a receivable of $94.6m between Private Equity Fund IV and Abraaj’s fund management business (AIML). Deloitte report specifically says that all money has been accounted for and there’s no evidence of embezzlement or misappropriation.

The beleaguered Abraaj Group has already filed an application for provisional liquidation in the Grand Court of Cayman Islands, wherein Kuwait’s Social Security Fund on May 22 filed petition seeking to force into bankruptcy proceeding. Abraaj in a strategic decision has filed the application for provisional liquidation in the Grand Court to give it greater control over its restructuring.

By entering into this voluntary process, under the supervision of the court, Abraaj believes that the rights of all stakeholders can be protected through an orderly restructuring enabling the maximum value to be realised and the Group’s obligation met.

In parallel, Abraaj also received strong interest from potential acquirers for the operations of fund management business, Abraaj Investment Management Limited (AIML). “Talks are at an advanced stage and it continues to work together to achieve the most effective outcome for the firm,” top management of Abraaj said.

Arif Naqvi, a proud Pakistani, lifted the Abraaj Group in 2002 from scratch with investment of $60 million to new highs with $13.6 billion deployment in 16 years long journey, but unfortunately in February 2018, the agonies of the Group started when it got embattled by the investors and creditors who showered discontent on the equity firm over alleged misuse of money in $1 billion Healthcare Fund.

Abraaj’s troubles first emerged when four healthcare fund investors, including the World Bank’s International Finance Corporation, questioned Abraaj about money that had been drawn down but not deployed, prompting concerns that their funds were misused. Later on, the audit firms found no misappropriations of funds and the experts say that the global stakeholders should come forward and extend time to Abraaj for safe landing.