EVERYONE learns it the hard way and that too at the worst time possible.
Such is the situation of Arif Naqvi today.
From flying in private jets to dining at the fanciest restaurants of Dubai (with a little bird saying some lunches used to run up bills in excess of 100,000 dirhams) and his son’s wedding in romantic Italy and more such salacious details yet to come out including during the court trial.
How the life of 400 employees and a (“fraudstar”) CEO got destroyed in less than 5 months is a fascinating story of greed and intrigue and of breaking the laws during a time of acute financial crisis rippling through UAE since 2015.
Since the previous post of 8 June of this blog, the SCA responded from Abu Dhabi, the closest partner of Arif Naqvi, Badr Jafar, also a director and investor in Abraaj, sued Arif and his company in Cayman (which has all been mysteriously erased from the bowels of the internet), and finally, Abraaj itself filed for liquidation, all within 7 days of the 8thJune blog post.
Now, things are unraveling at the fastest speed possible.
As mentioned in the 8thJune post, the company is going to die, either way.
Which is precisely what is occurring.
Our deadline for Abraaj closure/liquidation was 29thJune 2018, the court date for the first lawsuit by Kuwait pension fund, but everything has happened already prior to that date and Abraaj has accepted liquidation as the only solution.
The company really did not have many options except magically repaying all it’s creditors, bankers and investors a sum of USD 14b after selling ALL it’s assets within a week! That’s an impossible task by any stretch of imagination.
All the worst-case scenarios are now playing out.
11 June 2018
First, the SCA and DFSA made an announcement to comfort investors.
15 June 2018
News of Badr Jafar came out to sue Abraaj and resignation from directorship on 15thJune but it is not to be found any more in detail anywhere.
The title of this news has been changed
Original was: “
Revised one reads: “UAE businessman transferred debt to fund suing Abraaj: sources."
19 June 2018
Nigerian companies are in turmoil, as they should be, unfortunately, as their owner has absconded and bankrupt both.
20 June 2018
Air Arabia stock has been falling in DFM and has dropped approx. 15% this month and is now below 1 dirham at AED 0.99 level.
They have potential losses upto USD 336m of their savings at the worst time when most airlines in the Middle East are having massive losses.
21 June 2018
Abraaj wisely sold it’s non Middle Eastern/African businesses as we had projected that they will have to sell anything at fire sale prices.
25 June 2018
Rumors abound that their custodian might be in trouble as well. But so far so good.
25 June 2018
As soon as the co-CEO’s and Directors saw the FINAL warning, they jumped ship.
25 June 2018
Abraaj also sold Middlesex University at a fire sale price.
25 June 2018
The grand finale in the past 24 hours, besides all the above news of 25thJune, is the final act.
Arif Naqvi is no longer in Dubai.
He is safely in London until further notice.
This case has massive ramifications for DIFC, Middle Eastern Private Equity world and the reputation of Dubai.
Over 95% of the employees will have to leave UAE since their visas will be cancelled but will have a very tough time to cancel them (since the board is dismantled, company filed for liquidation and CEO/main shareholder is absconding and no one will be there to sign immigration papers with DIFC).
Just like what happens to the poor labourers who go unpaid for months/years across the GCC since 2015 with whom nobody sympathises but exactly the same thing has now struck some of the most well paid people in Dubai and they will be in limbo for months ahead.
Just like what happens to the poor labourers who go unpaid for months/years across the GCC since 2015 with whom nobody sympathises but exactly the same thing has now struck some of the most well paid people in Dubai and they will be in limbo for months ahead.
And they will all need to pay their personal loans else they too could end up in jail since all banks will be calling them for their personal borrowings (mortgages, car loans and credit cards etc).
All private equity transactions have already been halted since this news broke out in late Jan 2018. Middle Eastern PE business is down over 95% vis a vis 1H2017.
DFM Index is today at 2,836 level (a 2.5 year low back to Jan 2016), if it drops another 200 points, it will be back to Sept 2013 levels of below 2,600.
There was a slightly similar case of bribery in California that led to the CEO of Calpers going to jail.
It never garnered the global headlines despite being a massive news, a top CEO, that too, from the heart of PE world in California and one of the world's leading PE investors.
We suspect same will be the case for Arif Naqvi, however, we wish him and his employees well.
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