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| Photo Credit: Twitter account of Abraaj Group |
They can run but they can't hide.
Now, the 3rd top employee of Abraaj has been arrested, Sev Vettivetpillai.
Here is our warning from just last week:
"Arif and most Abraaj employees have left Dubai and resigned from Abraaj but the ghosts of their past misdeeds are definitely not behind them and they will end up being banned, or go to jail or be thrown out of their new jobs wherever in the world they maybe because the investigations are still ongoing in a dozen countries."
Sev Vettivetpillai studied at Imperial College in the UK and then completed his CFA. Now he brings infamy and damage to the reputations of both degrees especially to current charter holders and future students.
All these con men are MBA's and CFA's whose value is deteriorating by the day.
In future, they may deny entry to a jail cell if the individual does not hold a MBA or a CFA degree. ;)
At the moment, Sev seems to have been granted bail for USD 1.3m but the prosecutors are challenging it.
He shall be extradited to the US as time passes by, along with Arif Naqvi.
We had blogged in June 2018 that Sev Vettivetpillai had filed a lawsuit against Abraaj to get $2.92m dues that he believed that the company owed him.
30 Jun 2018: Abraaj: Losing USD 14 Billion & The Unfolding Global Chaos
29 Jun 2018: Former executive files claim against Abraaj Group
However, it appears that he had lost that case.
5 Aug 2018: CFI 046/2018 Sivendran Vettivetpillai vs Abraaj Capital Limited
Sev had left Abraaj in March 2018, joined LGT bank in April 2018 from where he and perhaps his team were apparently fired in Feb 2019, most likely due to this Abraaj fraud saga.
But it is not clear under what circumstances was he and probably his team at LGT were fired.
If anyone knows the details, you may kindly comment below.
This third arrest of Sev who was one of the 3 ex Managing Partners was reported in WSJ first and then it has spread all over the media.
The video in the WSJ article below is a MUST WATCH even though it's 6 months old. Arif Naqvi used to lie with such poise and conviction!
18 Apr 2019: Third Abraaj Executive Arrested
There is a third managing partner in Abraaj whose name has not yet appeared, but we are not sure if he was involved in the fraud because there is no news thus far. Also the CFO, we don't know if he was involved.
There are too many unknowns and loose ends in this saga which will take months and years to unravel.
Dubai authorities were caught by total surprise with the arrests. They are still wondering what has happened and are "communicating" with the US authorities.
US authorities have not even filed the complete chargesheet that shall be filed towards the end of May 2019.
In addition, US authorities have yet to disclose the role of auditors in Dubai in this case which will open a whole new chapter into this fraud in the future.
We expect many more lawsuits from various banks and investors because whoever won't file court cases, will not get their money back whether they are an investor or the lending bank for any deal.
Lehman Brothers and Madoff cases and distributions are still ongoing for 11 years, this case is even more complex because it spans the darkest alleys of the investment world in the emerging markets spread over multiple countries where, as we have said previously, not even a single deal can happen without corruption.
Plus they have Foreign exchange losses, capital controls, Govt approvals etc to worry about because every Govt will assume that some illegal thing may have happened in the deals.
With top company owners, deal makers and signatories in jail, all employees having run away or departed, no investor or bank shall recover even a single penny for years ahead.
Because if any asset is sold, all investors will put a claim to it, hence, no one can be paid until everything is liquidated, cash collected and then distributed by a liquidator.
But we can expect many of their businesses to start shutting down or lose major value since liquidity and management oversight from the owners is necessary to keep any business alive, especially in far away countries.
On top of everything, they have mixed up investor moneys among various entities which is impossible to resolve amicably.
The liquidation will occur over a dozen or more countries with lawsuits filed by everyone against everyone, that too in thoroughly corrupt countries, which means that cases could take decades if not well over a decade for anyone to receive any money back.
We believe more arrests and more damage to Dubai and DIFC's reputation is yet to come.
In one swoop, Abraaj has destroyed the reputation of all the following while losing USD 15 billion:
- Emerging Markets
- DIFC/Dubai
- CFA Charterholders
- MBA's
- Private Equity Companies and their Employees
- Davos World Economic Forum
- CFA and Imperial College, UK (Sev Vettivetpillai)
- Degree Holders from London School of Economics (Arif Naqvi)
- MBA at Georgetown University, USA (Mustafa Abdel-Wadood)
- Damaged the credibility of Pakistani, Egyptian and Sri Lankan professionals
And, single handedly, brought the Private Equity investments into the entire Emerging Markets to a halt since early last year.
Meanwhile, another Davos attendee has now gone all the way from the mountains of Davos and landed straight into a jail cell.
I'm sure you will like this: Turkey is a hard country to figure out...They are friends with the West shoot down a russian plane, then friends with russia and defy nato orders and purchase S-4s, then want to rule the middle east etc...they seem to have no affiliation and no long term plan.
ReplyDeletehttps://www.zerohedge.com/news/2019-04-19/turkey-announces-arrest-uae-spies-possible-links-khashoggi-killing
Hello,
DeleteThank you for visiting and for your comment and for following the blog.
Turkey is one of the MOST important countries in the region, not only because it's population is one of the largest around 80m but because it's influence spans in both East and the West, for centuries and lastly, because the gas pipelines of Russia or Qatar need to pass through Turkey to reach Europe which is why the war in Syria is also being fought.
In politics as well as in geo politics, you may remember that there are no permanent enemies and no permanent friends.
Turkey is going through the same transition that entire Middle East is going through since after 2011 when we had predicted (at the start of the Tunisian revolution) that entire Middle East will go through a very rough patch. Almost a decade later, we have been spot on.
Turkey is like Algeria, Egypt, Sudan, GCC countries, Iraq, Yemen and so many other Middle Eastern countries even though some are technically in Africa but physically closer to Middle East than the African nations of Nigeria or South Africa etc.
Turkey is also going through a major transition which is why they keep changing their stance because so many countries want or have influence in Turkey and need Turkey.
Turkey has handled it admirably, to be fair, despite the deaths and arrests and job losses in Turkey which has a terrible human cost. Because politician of any other nation would have accepted billions in bribes and let the foreign countries influence the outcomes.
Let us see how these arrests play out in the coming weeks because the animosity between Saudi-UAE and Turkey can only worsen more so than after the Khashoggi affair of Oct 2018.
More turmoil, further worsening business with more unemployment causing decline in growth, more ejection of expats, more hikes in fines and fees, worse political ties related to visas, diplomacy and declining trade and political turbulence is ahead, for all of Middle East, unfortunately.
Thank you and best wishes,
Hello,
ReplyDeleteLove your articles.Keep'em coming.
Gives me a relief that times r not only tough for small traders like us but for all.
I believe some of the banks involved with Abraaj group are CBD & Mashreq and as your article says that liquidation is going to be tough whcih means these banks wont b getting back their funds back easily even though they were secured loans.
Mashreq has already started to shut down many of its branches, but claims employees wont be fired (that is really funny)
Whats the update on CBD, how come its still standing strong??
In media out here all is just looking so happy & nice. but on ground level traders r really done & finished.
What more do you think is going to happen?
Hello and Good morning!
DeleteThank you very much for your comment and for visiting.
Abraaj will have more than 100 banks involved if not more. Because each private equity deal needs a bunch of banks to close in various countries.
Times in Middle East are tough for the very best, never mind the smaller old time traders.
You will hear unreal things like auctions of old established hotels, shut downs of businesses, running away of billionaires on a weekly basis.
Banks can handle non payment upto a point and now they have crossed that point. They have bigger losses than in Abraaj, for example in Etihad, or theme parks or almost all Emirati or expat owned businesses etc.
Imagine the bank losses just in mortgages where property prices are well below 80-90% margin mortgages on all real estate? We are talking real estate of more than USD 1.5 trillion just in UAE with losses of hundreds of billions of dollars.
Banks are already showing stress in terms of branch closures, overseas closures and mergers by the dozens.
Banks like Mashreq have laid off hundreds of employees and done outsourcing for years and they have almost shut their Dubai Outsourcing Zone operations and has sent back offices mostly to India just like almost all other banks.
Standard Chartered cannot stop paying billions in fines due to Dubai branch breaking all the laws. DIFC has shut hundreds of financial companies. Now DIFC company Abraaj top people have been arrested in US.
CBD has 2 advantages, it is smaller and is very conservative. So their losses have not been as high as in other aggressive banks. Their profitability has held up well as have their deposits versus loan ratios. They have stress but not as bad as the other larger ones. They are ok.
Traders are really finished and they all must pack up and leave else this year and next year will be more fines and more costs with even lower business.
You can see Wafi Mall or Bur Juman and Bank Street or Lamcy Plaza, all are shut or 95% shut. With Citibank, Barclays, NBAD, RBS, Merrill Lynch, ABN etc shut, Bank street has now turned into "Massage Street" of Dubai. lol
In terms of happening, it is very hard to predict because now the game is Govt vs the People.
Till the time, people pay heavy fines, heavy costs of running businesses, don't ask for Skype/Viber to work and pay Etisalat and submit to every thing like Salik and health insurance etc and empty their pockets, Govt will hold up.
Companies like Etihad could shut, more and more mergers, less and less business while more and more run away businessmen. Real estate won't even sell for free because of the risks and costs of managing it.
Last year, some top billionaires ran away, Abraaj and Schon collapsed, old schools shut, long list of restaurants closed, theme parks are selling tickets for 1 dirham, bank branches are closing everywhere, Etisalat is selling pizza and massage coupons etc. :)
What else is left to happen? :) :) :)
On a serious note, next 6 months are going to be worse than the last 6 months for UAE and Saudi and all GCC in all aspects.
We are hearing more developers and more private equity companies to go bust so let's see who is next.
Hi Manoj,
ReplyDeleteLol at this line "In future, they may deny entry to a jail cell if the individual does not hold a MBA or a CFA degree. ;) " - so true.
Great new articles to catch up on, on your blog.
Best wishes
HI Paul,
DeleteThank you for your comment again.
The facts are that all top bank executives and managers, accounting firms, private equity, hedge funds, sovereign funds, Presidents, Prime Ministers and what not are all going to jail one after another all around the world and almost all of them have an MBA, CA or a CFA degree!
What a tragi-comedy is going on this world!? Don't even need to watch a movie any more because the reality has become so surreal!
Yes, please do read all the blogs, each blog could take an hour to read if not longer because each link offers even more data and facts.
All the best to you too,