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| From Arab News, courtesy AFP |
From Kuwaiti Govt to the closest partner/fellow director, many have filed a lawsuit against Abraaj and the CEO. We can also add one ex-employee 2 days ago, on Thu, 28 June 2018, who filed a case in DIFC.
An arrest warrant has been issued but Arif Naqvi’s lawyer has claimed that he cannot return to UAE due to the threat of jail, on Thu, 28 June 2018.
The company has failed and liquidators have been appointed in Cayman, UK and Dubai.
Some of the top most people of Pakistan are involved in this scandal, due to which news is not coming out in detail in the Pakistani media. They are investors at Abraaj and also have a stake through Karachi Electric and shall remain unknown until they file claims or accept to lose hundreds of millions of dollars.
The main electricity supply company in Karachi (one of the largest cities in the world), Karachi Electric, has been owned 50% by Abraaj since Oct 2008, purchased at a total value of USD 400m (price for 100% stake).
In Oct 2016, a deal was signed to sell Karachi Electric to Shanghai Electric for USD 1.77b approx.
Assuming 50% would come to Abraaj, that’s an income of USD 885m on an investment (presumably of USD 200m). 4.42 times return in less than a decade (excluding taxes)!
Files had just been approved by the Cabinet Committee of Pakistan on 31 Mar 2018 , headed by the PM of Pakistan, Abbasi after 1.5 years.
However, Abraaj is now bankrupt and all their private equity deals, investments, money of lenders, employees etc. is in the hands of the courts, subject to sale of their assets over the next few years.
The first employee has now filed a lawsuit against Abraaj who had quit in March 2018 and could see that the Titanic was sinking. His case is for approx. USD 3m that Abraaj does not have. But at least he is now in the long line of creditors of Abraaj.
Losing USD 14b is a very large sum of money by any standards and bulk of it will be lost in legal proceedings, investor claims, fire sale of assets, liquidator fees, margin calls, outstanding interest, employee payments etc.
Guess what, everyone will claim their money as the first right of lien, hence, this entire case will take several years before it gets resolved before any major money gets paid out.
And we have still not heard from Bill Gates, IFC, British Govt, French Govt or anything further from the Kuwait Govt’s Pension Fund.
It is also known that some Sovereign Wealth Funds had investments with Abraaj but being private, their news is not much available and they have also not filed any cases or spoken about it as of yet.
Meanwhile, here are the latest court updates:
Dozens of employees in DIFC have not been paid for several weeks (months?) and all their gratuity amount that is due at end of any job in UAE, is now in the hands of the liquidator who has no cash and is searching for USD 20m. Many of them cannot even leave UAE now due to outstanding debts (if any) and visa issues.
Jobs are impossible to find because hedge funds have shut (ED&F Man, Shuaa/Rasmala Asset Mgt etc), fellow PE companies have shut (MAS Clearsight, United Investment Bank, Istithmaar World Inv. Mgt, Dubai Capital Mgt etc) or are shrinking while banks like Deutsche, ABN, RBS, UBL etc. have fired or closed their corporate side of businesses.
While PE business is completely halted across the region and beyond due to the Abraaj fiasco.
While PE business is completely halted across the region and beyond due to the Abraaj fiasco.
It has also come out in the Sharjah court on 28 June 2018 that Arif Naqvi was looking for USD 300m loan from his closest partner, director and friend, Hamad and son Badr Jafar who are owners of Crescent Petroleum as well as Chairman and Directors at Dana Gas (a listed company in the UAE on ADX). Dana Gas itself is going through a restructuring of it’s USD 700m sukuk.
On 28 June 2018, Abraaj Chairman finally called it quits as well.
Aside from Pakistan, UAE, Kenya, Nigeria, UK, France, Kuwait, Cayman Islands etc., the impact may be felt in Egypt too. So far, all 15 Egyptian companies are denying any links to Abraaj so only time will tell if they lent or invested with Abraaj.
However, Abraaj did sell it’s stake in Orascom Construction of Egypt on 14 June 2018.
On July 5, 2018, is the next next court date for hearing the petition to arrest Arif Naqvi on the case filed by Hamad and Badr Jafar. Most likely, the arrest warrant will remain (since the cheque has bounced) unless USD 50m and MORE is paid to Jafar family which is not happening since liquidators are in control now and regulators as well as a number of courts are watching everything with a hawk’s eye.
We expect an Interpol notice to be issued against Arif Naqvi and his associate Muhammad Lakhani (next week or two).
What is ironical here is that Arif Naqvi had received the recognition of sitting on the global board of Interpol in Lyon, France and now he himself is expected to be wanted by Interpol.
Business had started leaving Abraaj since Mar 2018 itself just like it’s employees.
A project with French giant Engie was gutted for India.
The number of ongoing cases and questions so far are staggering:
1. Abraaj itself filed for liquidation.
2. Kuwait pension fund case in Cayman.
3. Employee case in DIFC.
4. Jafar family case for bounced cheque in Sharjah.
5. Wonder why Air Arabia has not yet filed a case?
6. What about all the other creditors and investors?
7. Biggest question of them all, has Bill Gates Foundation been paid? Why are they silent?
8. What about the IFC, French and British Govt development agencies (Proparco and CDC)? Why are they silent so far?
Many loose ends and many more cases to come due to the acute cash crunch facing Abraaj since March 2018 and previously in 2017 that led to the comingling of funds.
Dates to note:
July 5, 2018 - Cheque bouncing case by Jafar family in Sharjah court.
July 11, 2018 - Colony Capital acquisition approval by a court in Cayman Islands.
July 17, 2018 – First Meeting of Creditors and Liquidators in Cayman Islands.
27 June 2018 – Published in the Cayman Islands Gazette, a public notice for ALL creditors to appear before the liquidators with a 3 days advance notice to appear on 17 July 2018.
All details here:
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