LONDON: The father of the ambulance service in Karachi and one of the top players in the private equity business globally was arrested, if you remember, back in April of 2019 after his company Abraaj had collapsed. He was charged with theft, conspiracy and a host of other things. From that day to this, the media has had only one story about Arif Naqvi.
That story has been told by the US media, most importantly the Wall Street Journal (WSJ). The WSJ journalists have called the Pakistani national “Muslim equivalent of Bernie Madoff” -- the famous crook -- paying old investors in his stockbroker business withproceeds from new investors – died earlier this year in jail. That is where the US government wants to put Arif Naqvi for nearly 300 years.
Now the other side of the argument has been put in this new book coming from Professor Brian Brivati, an English academic, former professor of Human Rights at Kingston University in London and a consultant to the UK government and the UN, who has a dozen or so other books under his belt as writer or editor.
Brian fell into this as an academic focused on human rights by accident he says and he has told the story with evidence he found. He did interview Naqvi and gave a fair and even-handed account.
The book is being described as “balanced and brilliant”. It is balanced and it is fair and most of all it rings true. Abraaj, Brian tells us, was not a criminal conspiracy and Naqvi is not and was not a crook. This is a tale of geopolitics – Abraaj was taken down in what he calls “an economic hit”. Abraaj did not self-destruct, it was, in one of his few more colourful phrases: “murdered” because as he puts it: “These are conspirators who do not conspire.
They have large meetings and discussions about cash flow. These conspirators then throw open their books to multiple investigations in which all transactions are faithfully recorded. There are fraudsters who do not commit fraud. A small number of US investors questioned the management of a fund and, rather than assert their own legal rights, Abraaj returns everyone’s money with interest because it fully intended to carry on working with those investors in the future. There are thieves who do not take their full legal entitlement for salary and carried interest. Thieves who were so good at what they do that investors are still making money from their investments today and no money ever went missing. These racketeers who, at the moment their company was liquidated, had not left a hollowed-out shell but a company with assets that were worth more than the claimed liabilities. All working for an evil genius who used the money he had not already given away through his philanthropy and all his energy and ingenuity to first try to save the company and then get the creditors paid back. The key main thesis falls down quickly. The firm was a model corporate citizen and until the end of 2016 was also successful.”
This is the heart of Brivati’s argument. There was no conspiracy but rather the company was taken down by interests in the United States set against the sale of Karachi Electric to the Chinese and potentially also people inside the firm who opposed that sale for feeling their days were numbered and whose allegiances perhaps could be questioned.
This is the key difference between all previous accounts and this one. The US did not want K-Electric sold to the Chinese and Trump was working hand in glove with elements in the US private equity industry. Abraaj’s new fund was also attracting Chinese investment. Opening emerging markets to Chinese investment. An anonymous email then went to the investors and US investors in the one of Abraaj’s funds which was dedicated to investing in healthcare, questioned the use of funds. This, like everything else according to Brivati, was leaked to the press.
Abraaj borrowed to ensure that all funds were returned to health fund investors by the end of 2017. They also got an opinion from a leading UK law firm Freshfields that validated their actions. Furthermore, they had an exercise done by the big accountants KPMG to verify all of the transactions. Then the same group of investors with a US government institution called OPIC, who were a lender, asked for further audit on the funds by a firm called Ankura – which had very strong links to the US Department of Justice and Security Exchange Commission which investigates financial crime. The funds had been audited and passed by another big accountancy firm Deliottes. This new audit by Ankura was then also leaked to the press. The new fund was halted and the funds returned at the behest of US investors. Borrowing based on those committed funds was then called in by a French bank.
Abraaj was liquidated and everything sold off cheaply. The DOJ secretly opened a file at the immediate outset of the press leaks and eventually Naqvi and his colleagues were arrested without warning or ability to explain their actions.
Naqvi was advising the Government of Pakistan but not even that position could move the KE deal past the privatisation secretary and the head of NEPRA the regulator and five years later that deal has still not been done. To cover up the resulting shortfall in funds, Naqvi and his colleagues borrowed money and moved money around. The WSJ used leaked documents to allege that these movements of funds in fact amounted to fraud but documents show that all of these movements of funds were authorised by the agreements in place between the investors and Abraaj. It is this issue that will one day seal Naqvi’s fate.
Let us lift our eyes up from the nitty gritty and ask the bigger question: Is what the professor describes in this book plausible. He gives other examples one that comes from Africa. As often in this book, Brivati puts some of this best points in the hundreds of footnotes, which, we are told will even get their own website in due course. But hidden in a footnote is a truly remarkable piece of testimony from the US military commander in Africa, Stephen Townsend to the US Congress in April this year: “Thank you, senator. Actually we do see some backlash, as you know – you have famous – heard of the famous debt-trap diplomacy that they – the Chinese have used. That has actually worked against their efforts in a lot of African countries. Our embassies have a very successful program where we now will review any contracts – we have an – a standing offer to review any contracts that these countries are going to undertake with China to point out the inconsistencies, the potential pitfalls. And the difference is often, we find, between the host nation language translation and the Chinese translation. I think this is a great effort by our Department of State to help these countries make informed decisions on their own. The US offers a free review service of China’s contracts across the whole of Africa with the intention of talking them out of signing them.”
Now if that much effort, time and resource is put into a blanket policy. Imagine if something as strategically important as the ownership of Karachi Electric is put into play by its Pakistani owner trying to sell it to the Chinese with Trump in the White House and the resulting influence of China in Karachi, Pakistan’s most populous and strategic city. In the end much of the proof of the truth of this book comes from looking at where we are at now. The K Electric has still not been sold to the Chinese. Naqvi remains under house arrest waiting to be deported to the US and guess what: all the funds that Naqvi owed are still going strong but under new ownership and to the benefit of the US and the UK fund managers.
If you want to read the truth about Arif Naqvi and the Abraaj group then read this book. ‘ICARCUS: The Life and Death of Abraaj Group’ is written by Brian Brivati, Published by Biteback, and will be released on 20th July in the UK and later this month in Pakistan.
