The Dubai Financial Services Authority (DFSA) said Arif Masood Naqvi, of the now defunct Abraaj Group, together with another former senior manager of the group, Waqar Siddique, were responsible for “serious failings” at the group.
The regulator announced that it had decided to fine Naqvi $135,566,183 (AED 497,866,807) and Siddique $1,150,000 (AED 4,223,375), as well as to prohibit and restrict both men “from performing any function in or from the DIFC”. However, Naqvi – who was the largest shareholder, the chief executive and executive vice chairman of the Abraaj Group – and Siddique – who held senior finance and operations roles within Abraaj companies – dispute the DFSA’s findings and have referred the regulator’s decision for review before an appeals body, the Financial Markets Tribunal (FMT).
“The DFSA’s decisions are therefore provisional and reflect the DFSA’s belief as to what occurred and how it considers their conduct should be characterised,” the DFSA said in a statement.
“The FMT will determine what, if any, is the appropriate action for the DFSA to take and remit the matter to the DFSA with such directions as the FMT considers appropriate to give effect to its determination. The DFSA’s decisions may be confirmed, varied or overturned as a result of the FMT’s review,” it said.
In 2019, the DFSA imposed fines worth a combined $315 million on two Abraaj Group companies – Abraaj Investment Management Limited (AIML), a Cayman Islands company not authorised to operate in the DIFC, and Abraaj Capital Limited (ACLD), a company based in the DIFC. The regulator considered that the companies had "actively misled and deceived" investors and it.
Last summer, the DFSA imposed a $1.7m fine on Abraaj Group’s former chief financial officer, Ashish Bhrugu Dave, and banned him from performing regulated financial activities in the DIFC. Now it has announced enforcement action against Naqvi and Siddique.
The DFSA described Naqvi as “the face and personality of the Abraaj Group”, as someone who built his profile and reputation globally “on the purported success of the Group’s impact investing strategy”, and as “by far the single most influential person within the Abraaj Group and the ultimate decision maker on material or disputed matters”. However, it has alleged that Naqvi “was knowingly involved in misleading investors over the misuse of their funds” by AIML and “personally proposed, orchestrated, authorised, and executed actions that directly or indirectly misled and deceived the investors”.
In its statement, the DFSA listed examples of Naqvi’s alleged actions, claiming that he had “instructed the use of investor monies to fund the Abraaj Group’s working capital and other commitments”, “approved and personally drafted false and misleading statements to investors to cover up the misuse of their funds” and been involved in covering up fund shortfalls running into hundreds of millions of US dollars.
Naqvi also stands accused by the DFSA of encouraging misleading and deceitful behaviour by other senior managers at Abraaj and of knowingly being involved in unauthorised financial services activities carried out by AIML in or from the DIFC.
The DFSA said Siddique was also “knowingly involved” in some regulatory breaches, including in relation to capital requirements and concealing fund shortfalls.
According to the DFSA, Naqvi and Siddique have failed in a bid to have their FMT hearings held in private.
Last year a UK court ordered Naqvi be extradited to the US to face criminal charges there.