Arif Naqvi, the founder of collapsed Dubai-based private equity firm Abraaj Group, was sentenced in absentia to three years in prison by a UAE court for a case involving low-cost carrier Air Arabia.
The penalty was handed down over a case involving Sharjah-based low-cost airline Air Arabia, Bloomberg reported, citing people familiar with the situation.
In February, the airline reported a full-year loss after booking impairments to cover its $336m exposure to Abraaj. The buyout firm borrowed money from Air Arabia, on whose board Naqvi sat.
According to US prosecutors, the money was then used to cover shortfalls in one of the Abraaj funds and mislead investors.
It is not certain that Naqvi will serve the sentence, given he is in London awaiting a hearing over his potential extradition to the US.
Naqvi faces fraud allegations in the US, however, in London he was granted conditional bail in May after paying the largest security bond ever ordered in the UK. While he awaits his extradition hearing, he must wear an electronic tag and stay in his London home as part of the bail conditions. The founder of Abraaj maintains his innocence and expects to be cleared of any charges.
Naqvi faced a court case in Sharjah before when he was accused of writing bad cheques. The court sentenced him to three years in prison, but the case was then immediately dropped after he reached a settlement with the plaintiff.