UAE court dismisses criminal case against Abraaj equity boss

UAE court dismisses criminal case against Abraaj equity boss
An Emirati court Sunday dismissed a criminal case against the head of embattled Abraaj private equity group over bounced cheques for millions of dollars, lawyers said.
3 min read
16 July, 2018
The prosecution was seeking a jail term of three years for Naqvi [Getty]

criminal case against the head of embattled Dubai-based Abraaj private equity group was dismissed by a UAE court on Sunday over bounced cheques for millions of dollars, lawyers said.

The case centres on bounced cheques issued by Abraaj to UAE businessman Hamid Jaafar and the failure to repay his associate a $300 million (260 million euro) loan. 

"The case has ended. The court today issued a ruling dropping the criminal caseagainst Abraaj founder and defendant Arif Naqvi, defence lawyer Habib al-Mulla told AFP.

A lawyer representing Jaafar confirmed the court had dismissed the criminal case, but said the parties had only reached an interim settlement.

"A final settlement has not been reached," Essam al-Tamimi told AFP in a text message.

The court in Sharjah, one of seven emirates in the UAE, had already delayed its ruling twice to allow time for a settlement.

The prosecution was seeking a jail term of three years for Naqvi for "dishonouring" three cheques worth a combined $300 million, Tamimi 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.

Details of the deal and repayment procedures were not immediately available.

"This is a commercial issue and should have been dealt with on a commercial basis," Mulla said.

The public prosecutor had issued an arrest warrant for Pakistani Financier Naqvi -who set up Abraaj in 2002 and saw the firm grow into the region's largest private equity group - but he is outside the UAE.

Abraaj had nearly $14 billion of assets under management before allegations of misuse of funds provoked a scramble by investors to recover their money.

court in the Cayman Islands  - where Abraaj is registered - appointed liquidators to oversee an "orderly restructuring" of the group last month.

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 last month.

"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) are a criminal offence in the UAE with those convicted facing jail time.