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April 13, 2019

Scotland Yard confirms Abraaj chief arrested on US request

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April 13, 2019

LONDON: Scotland Yard has confirmed that Pakistani emerging markets business magnate Arif Naqvi was arrested at Heathrow airport on request of American authorities with “alleged fraud” on recommendations by the US Securities and Exchange Commission.

A spokesman of the police told The News & Geo that Arif Naqvi, 58, was arrested at Heathrow Airport on Wednesday, 10 April by officers from the Met’s Extradition Unit on behalf of the US authorities. The police confirmed that Arif Naqvi was remanded in custody and his bail hearing will be held in about a week.

Separately a police source informed that there is no case against Arif Naqvi in Britain, where he lives permanently, and he has not been involved in any wrongdoing here. While arresting Arif Naqvi, the Metropolitan Police acted on behalf of American government. The arrest came after the founder of the collapsed Dubai-based private-equity firm The Abraaj Group was charged with fraud and conspiracy in New York in relation to the collapse of the equity firm he headed.

Assistant US Attorney Andrea Griswold said at a hearing in Manhattan federal court on Thursday that Arif Naqvi, the Pakistani born Abraaj founder and Chief Executive, and managing partner Mustafa Abdel-Wadood were arrested in London and New York respectively and charged with fraud and conspiracy. Both of them have pleaded not guilty, denying each and every charge against them.

Abraaj was the largest private equity player in the Middle East until its collapse last year following a row with investors that included the Gates Foundation over a $1 billion health care fund. American prosecutors have alleged that the Abraaj executives defrauded their investors, including the Bill & Melinda Gates Foundation.

Abdel-Wadood appeared at the hearing in Manhattan and pleaded not guilty to securities fraud, wire fraud and conspiracy charges. American prosecutor said that they would like to have Arif Naqvi extradited toUSA to face charges but it’s understood that lawyers for Mr Naqvi will resist the move since the collapse of the fund has nothing to do with Arif Naqvi in person and there is no personal liability in this case.

Arif Naqvi always denied any wrongdoing related to the collapse. Abraaj, one of the largest emerging-markets private equity investors, claiming $14b of assets under management, was sent into a death spiral last year after investors complained about mishandling of their monies in the group’s healthcare fund.

Arif Naqvi has previously denied reports in some sections of media that he was involved in corruption either at the Abraaj or in the sale of Pakistan’s K-Electric. He had denied any misuse or appropriation of Abraaj funds.

Naqvi maintains that the allegations “are entirely false”. He has strongly maintained that he “neither misused nor misappropriated any Abraaj funds.” “There was nothing untoward about my requests for transfers or Abraaj Group funds to me or my family, or for my personal investments or obligations,” he had said.

“In drawing down funds from Abraaj, I acted in accordance with the arrangements put in place by the Abraaj Group,” he had said when the issue started, adding that any draw downs were “properly recorded and accounted for”.

Naqvi has maintained that the use of monies from Abraaj’s healthcare fund for general corporate purposes was undertaken only after having “sought and received independent legal advice as to whether it was permissible”.

Meanwhile, a European wire service reported that Arif Naqvi was arrested on US charges that they defrauded their investors, including the Bill & Melinda Gates Foundation. Arif Naqvi’s managing partner Mustafa Abdel-Wadood was arrested at a New York hotel on Thursday, Assistant US Attorney Andrea Griswold said at a hearing in Manhattan federal court.

Griswold said prosecutors would seek to have Naqvi, who is charged with the same crimes, extradited. Casey Larsen, a spokesman for Naqvi, could not immediately be reached. A statement from Naqvi’s external PR firm said Naqvi maintained his innocence in relation to the charges.

“Mr Naqvi maintains his innocence, and he fully expects to be cleared of any charges. For almost a year since the commencement of the provisional liquidations, he has been working tirelessly to maximize returns for Abraaj’s creditors,” the statement said. Abdel-Wadood appeared at the Manhattan hearing and pleaded not guilty to securities fraud, wire fraud and conspiracy charges. His lawyer, Benjamin Brafman, did not immediately request bail, saying he needed more time to become familiar with the case.

In brief indictments unsealed on Thursday, US federal prosecutors claimed that from about 2014 until Abraaj’s collapse, Naqvi and Abdel-Wadood lied about the performance of Abraaj’s funds, inflating their value by more than half a billion dollars.

The US prosecutors also said that Naqvi and Abdel-Wadood caused “at least hundreds of millions” of investor funds to be misappropriated, either to disguise liquidity shortfalls or for their personal benefit or that of their associates.

Griswold said that Abraaj had represented itself as a pioneer of “impact investing” that promoted social progress, for example by investing in hospitals in developing countries. “In truth, Abraaj was engaged in a massive fraud,” she said.

The indictments were short on detail, Griswold said, because authorities moved quickly to arrest Abdel-Wadood upon learning he was in the United States with his wife and son to visit colleges. She said prosecutors intended to file more detailed charges by the end of May.

After the hearing, Abdel-Wadood spoke briefly to his wife, who had watched from the courtroom gallery, before US marshals led him away in handcuffs. Naqvi appeared in a court in London on Thursday and was remanded in custody to appear again on April 18 at Westminster Magistrates Court for the extradition case via video link, a court official told the wire service on Friday.

Abraaj and Naqvi face related civil charges filed on Thursday by the US Securities and Exchange Commission (SEC). Naqvi denies these charges. Liquidators of Abraaj could not be immediately reached for a comment.

The SEC alleges that Naqvi and his firm raised money for the Abraaj Growth Markets Health Fund, collecting more than $100 million over three years from US-based charitable organisations and other US investors. According to the SEC’s complaint, Naqvi misappropriated money from the health fund and commingled the assets with corporate funds of Abraaj Investment Management Ltd and its parent company, and used it for purposes unrelated to the health fund.

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