Top Abraaj executives arrested on US fraud charges

Pedro Gonçalves
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Top Abraaj executives arrested on US fraud charges

The chief executive and a managing partner of the collapsed Dubai private equity firm Abraaj Capital  were arrested on United States charges that they defrauded their investors, including the Bill & Melinda Gates Foundation, a federal prosecutor said.

Abraaj founder and chief executive Arif Naqvi was arrested in the United Kingdom, while managing partner Mustafa Abdel-Wadood was detained after arriving in New York with his wife and son to look at colleges.

Prosecutors claim Naqvi carried out a scheme, beginning in 2014, to defraud investors by hiding the firm's failing financial health and stealing investor money.

In truth, Abraaj was engaged in a massive fraud"

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.

Abdel-Wadood 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.

Prosecutors are seeking to extradite Naqvi, who is charged with the same crimes. He has always denied any wrongdoing related to the collapse.

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

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.

Andrea Griswold, assistant US attorney, 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.

Naqvi was charged in United Arab Emirates in a $217m bounced-check case, which was settled after the court sentenced him to three years in prison. Naqvi was out of the country at the time.