Abraaj's former partner fined, banned by Dubai regulator

LONDON: The Dubai Financial Services Authority (DFSA) has imposed a fine of $1.9 million on former Abraaj managing partner Mustafa Abdel-Wadood for breaching its rules and deceiving investors while working for the multi-million dollars equity firm.

The DFSA confirmed in a statement that it has also banned Wadood from conducting any financial services-related business in or from the Dubai International Financial Centre.

Abdel-Wadood is out on a $10m bail in New York as he awaits sentencing. Nearly three years ago, he was arrested and put on bail as he was visiting New York to look for a college where he could get his son admitted. At the same time, Arif Naqvi, the Abraaj founder, was arrested in London. Arif Naqvi is on a £15 million bail and lives with his family in Knightsbridge while he fights the US bid to extradite him.

He has denied each and every allegation levelled by the US authorities against him.

The Dubai authorities sanctioned Mustafa Abdel-Wadood a few weeks after another former Abraaj managing partner, Sivendran Vettivetpillai pleaded guilty to nine counts of criminal activities said to have been committed between 2014 and 2018 that could carry a total of 115 years in jail and a fine of up to $11.5 million.

Sri Lankan born and British national Sivendran Vettivetpillai – also known as Sev Vettivetpillai - pleaded guilty from the UK via a remote hearing before Magistrate Judge Sarah Netburn at the US District Court, Southern District of New York.

"The DFSA has taken enforcement action against Abdel-Wadood for his involvement in breaches of DIFC legislation by Abraaj Investment Management Limited (AIML), a Cayman entity not authorised by the DFSA. AIML carried out unauthorised financial service activities in or from the DIFC and actively misled and deceived investors in Abraaj funds," the regulator said.

A New York court postponed the sentencing of Abdel-Wadood last year at the request of the US Attorney for the Southern District of New York, pending the outcome of a request for the extradition of the company’s founder, Arif Naqvi.

The Westminster Magistrates’ Court had last year ordered the extradition of Arif Naqvi to the US but the Pakistani national has appealed the ruling and plans to take the matter to superior English court within a few days.

Abdel-Wadood is one of six former Abraaj executives facing extortion and securities fraud charges following an investigation by New York prosecutors into the collapse of what was once the largest private equity firm in the Middle East.

Abdel-Wadood pleaded guilty to conspiracy charges and agreed in June 2019 to co-operate with the US inquiry into a fundraising scheme that helped lead to Abraaj's collapse.

As ACLD CEO, Abdel-Wadood had significant responsibility for ACLD’s activities but "he failed to take reasonable care to ensure that ACLD complied with legislation applicable in the DIFC," the DFSA said.

Abdel-Wadood "failed to identify that ACLD’s prudential returns and financial statements, which he signed, contained false and misleading information. He took no steps to stop ACLD resources from being used by AIML to conduct unauthorised activity in or from the DIFC", it added.

The fine imposed "reflects the seriousness of the offences" and is based on Abdel-Wadood’s earnings from the Abraaj Group, the DFSA said.