Dubai equity firm boss faces jail over alleged bounced cheques

Dubai equity firm boss faces jail over alleged bounced cheques
Arif Naqvi, founder of Abraaj, faces jail after cheques allegedly issued in his name worth millions of dollars bounced.
2 min read
28 June, 2018
Abraaj's founder could face jail time over alleged bounced cheques [AFP]

The boss of one of the Middle East's largest private equity firms faces jail, following a court case in the UAE city of Sharjah over alleged bounced cheques.

Arif Naqvi, founder of embattled Dubai-based group Abraaj, is accused of "dishonouring" three cheques worth a combined $300 million, lawyers told AFP on Thursday.

The Sharjah court will not issue its ruling until 5 July, with Naqvi not attending the hearing, held Thursday, as he was outside the country, his lawyer Habib al-Mulla said.

The UAE public prosecutor has issued a warrant for Naqvi's arrest due to his signature allegedly being on the cheques.

The prosecution was seeking a jail term of three years for Naqvi for "dishonouring" three cheques worth a combined $300 million, Essam al-Tamimi, a lawyer for the plaintiffs said.

Naqvi signed the cheques for short-term loan provided by the plaintiffs six months ago "without which Abraaj would likely have collapsed", Tamimi said in a statement sent to AFP.

The case was sent to court after Naqvi showed "no intention of repaying the debt", Tamimi said.

Mulla, the chief executive of law firm Baker McKenzie Habib al-Mulla, argues that his client is willing to repay the loan.

Naqvi was apparently surprised that creditors took the case to court as negotiations on a settlement were still ongoing, his lawyers told the news agency.

Founded in 2002 by Naqvi - a Pakistani financier - the Abraaj Group had nearly $14 billion of assets under management before being granted a court-supervised restructuring last week in the Cayman Islands, where it is registered, following allegations of the misuse of funds.

The Cayman Islands court appointed liquidators to oversee an "orderly restructuring" due to fears the investment giant could collapse.

Calls for an investigation into the firm by a healthcare fund managed by Abraaj - which included Bill and Melinda Gates - has seen other investors to demands their funds back. 

Abraaj had the funds to repay secured investors but could not repay unsecured investors.

The company had categorically denied any wrongdoing.

Abraaj Holdings chairman Sean Cleary quit his post on Thursday. 

"Following the appointment of the Joint Provisional Liquidators, Sean determined that his role as an independent non-executive director would serve no further legal or fiduciary purpose in the interests of creditors or other stakeholders," read a company statement. 

Bounced cheques worth over 200,000 dirhams ($54,500) is a criminal offence in the UAE with those convicted facing jail time.