Another Explosive Corruption News

https://www.wsj.com/articles/private-equity-firm-abraaj-raised-billions-pledging-to-do-goodthen-it-fell-apart-1539706575

Accessed 18 October 2018

The Wall Street Journal

(Extracts; highlighting in italics added.)

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Arif Naqvi, founder of Dubai-based private-equity firm Abraaj, said he could make profits by doing good. But investors suspected he was mismanaging their money, allegations Naqvi denies. Photo Illustration: George Downs/The Wall Street Journal

Private-Equity Firm Abraaj Raised Billions Pledging to Do Good—Then It Fell Apart

Western investors poured money into the Dubai-based group, now the world’s largest insolvent private-equity firm

87 COMMENTS

By Simon ClarkNicolas Parasie and William Louch

Oct. 16, 2018 12:16 p.m. ET

In January, the Abraaj Group had $14 billion of assets under management and was trying to raise $6 billion for what would be the world’s largest emerging-markets private-equity fund.

It’s now the world’s largest insolvent private-equity firm. In June, it filed for provisional liquidation.

During its rise, the Dubai-based firm attracted many Western investors. Its founder, Arif Naqvi, promised to make money by doing good in poorer countries, including with a fund that would invest in hospitals serving African and Asian cities.

Abraaj’s fall stands as a warning to those misled in their enthusiasm for the idea behind the firm. One former employee described Abraaj’s work as “inspirational capitalism at its most enlightened.” Signs of trouble went overlooked, with one investor receiving an anonymous email alleging problems at Abraaj.

The collapse has led some investors to question whether Dubai’s regulatory environment is sufficiently safe—and privately, some worry it has damaged trust in the movement to use private capital to solve social problems in emerging markets.

Mr. Naqvi raised billions from the likes of the Bill & Melinda Gates Foundation, Bank of America Corp. and the U.S. government. He made annual appearances at the World Economic Forum in Davos, Switzerland, and sponsored the Clinton Foundation’s 2012 summit in New York. Abraaj marketing documents touted 17% net annual returns.

Mr. Naqvi himself started a $100 million charity in his home country of Pakistan, and funded students attacked by the Taliban. He accumulated estates in England and France, a $20 million yacht, a private jet and Asian and Middle Eastern art.

Some details of the collapse are known: Abraaj used investor funds for its own expenses, according to former executives and investors. The firm further muddied its finances with the “unusual practice” of borrowing money secured against its own stakes in its funds, creating “a highly unstable business model,” liquidators wrote in a report. Abraaj has defaulted on more than $1 billion of debt.

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Documents from liquidators, auditors and investors show that Abraaj moved investor money meant for hospitals and companies into accounts that paid its own expenses, salaries and loans. Abraaj founder Arif Naqvi denies any wrongdoing and says the transfers were appropriate.

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As investigators and investors dig further, more details are emerging that reveal the scope of the problems. At least $660 million of investor money was moved without the knowledge of most investors into bank accounts that forensic accountants call the Abraaj treasury, according to documents and people familiar with the situation.

More than $200 million flowed from those accounts to Mr. Naqvi and people close to him, according to company documents and people familiar with the situation.

In May 2017, after being asked to send payments to one of Mr. Naqvi’s sons and a company run by his former assistant, Abraaj finance executive Rafique Lakhani emailed his concerns about a “cash crunch” to Mr. Naqvi. He wrote: “The tension and stress is unbearable for me and it is affecting my health and my efficiency, and performance at work. I don’t know what else to say.”

“The allegations against me are entirely false and vehemently denied,” Mr. Naqvi, 58 years old, said in a written statement to The Wall Street Journal. “I have neither misused nor misappropriated any Abraaj funds. There was nothing untoward about my requests for transfers of Abraaj Group funds to me or my family, or for my personal investments or obligations. In drawing down funds from Abraaj, I acted in accordance with the arrangements put in place by the Abraaj Group.” All drawdowns were properly recorded and accounted for, he said.

Abraaj’s former chairman, Sean Cleary, said he’s cooperating with the liquidators, who declined to comment. The Grand Court of the Cayman Islands appointed liquidators at PricewaterhouseCoopers LLP and Deloitte LLP in June.

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Mr. Naqvi, center, at a news conference before the World Economic Forum on Latin America in 2014 in Panama City.PHOTO: ARNULFO FRANCO/ASSOCIATED PRESS

Other private-equity firms are looking at taking over Abraaj funds. Regulators in the U.S., U.K. and Singapore have received allegations of wrongdoing at Abraaj, people familiar with the situation said.

A spokeswoman for the Dubai Financial Services Authority said the regulatory agency is aware of allegations and is investigating “a range of matters within the Abraaj Group.” She said it “has a robust enforcement function.”

This article is based on interviews with dozens of Abraaj employees and investors, as well as legal letters from investors, liquidators’ documents and company documents, emails and bank statements reviewed by the Journal.

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In 2012, Abraaj made a bid for global reach with the purchase of Aureos Capital, a London-based private-equity firm that had raised funds from Western institutions.

Mr. Naqvi recruited former U.S. Secretary of State John Kerry to speak to investors at Abraaj’s annual gathering in Dubai in 2017. Mr. Kerry didn’t respond to requests for comment. Mr. Naqvi hired U.S.-based executives, including Barack Obama’s college roommate Wahid Hamid, who helped persuade the Washington State Investment Board to invest in an Abraaj fund last year. Mr. Hamid declined to comment. The firm expanded to about 350 employees.

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Abraaj’s treasury accounts transferred more than $200 million to Mr. Naqvi’s personal accounts at Deutsche Bank AG and Coutts & Co. and to companies linked to him, his family and a former assistant, according to bank statements and company emails and documents.

Mr. Naqvi said he was “perfectly entitled to direct” funds drawn from Abraaj and that there was nothing untoward about those transfers. Payments were recorded as his personal liability to the company, Mr. Naqvi said.

Mr. Naqvi received $60 million in bonuses between 2015 and 2016, according to people familiar with the situation and a company email.

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The Bin Qasim Power Plant, operated by K-Electric, in Karachi, Pakistan, in 2015. PHOTO: ASIM HAFEEZ/BLOOMBERG NEWS

Around the same time, Abraaj was looking to sell its stake in K-Electric Ltd., the electricity provider to Karachi. Mr. Naqvi tried to secure the cooperation of Pakistan’s then-prime minister, Nawaz Sharif, and his brother Shehbaz, offering a $20 million payment to businessman Navaid Malik for his help in getting it, according to company emails and people familiar with the situation. The government owns a stake in K-Electric and its approval would be required for the sale to go through.

Shehbaz was “willing to give a strong endorsement” of the deal to Chinese bidders, Mr. Malik said, according to an October 2015 email to Mr. Naqvi from Abraaj partner Omar Lodhi. Mr. Malik said it was “important for him to share every detail with the brothers and get their blessings as well as their instructions as to how this money should be distributed,” such as “a portion to charity” or “a portion to the election fund kitty,” Mr. Lodhi wrote in the email.

When Mr. Naqvi emailed Mr. Lodhi about the $20 million contract for Mr. Malik in June 2016, he wrote, “This document is explosive in the wrong hands.” Abraaj and K-Electric shouldn’t be named in the document, he wrote: “Keep it generic.”

“Noted,” Mr. Lodhi responded. Mr. Malik didn’t respond to requests for comment.

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Abraaj’s Omar Lodhi, right, at the 2011 World Economic Forum on East Asia in Jakarta, Indonesia. PHOTO: DIMAS ARDIAN/BLOOMBERG NEWS

In his statement, Mr. Naqvi said that he denies being part of any conversation that involved a payment to anyone in political office to facilitate the sale of K-Electric. He said Mr. Malik was an Abraaj adviser on a variety of activities and that the contract was part of a lengthy discussion about the terms of that role. He said the final agreement “ensured that no conflict of interest would occur.” He said he called it “explosive” due to a reference to the potential sale of K-Electric, which was confidential at the time.

In October 2016, Abraaj announced the sale of the majority stake it controls in K-Electric to China’s state-controlled Shanghai Electric Power Co. for $1.77 billion. However, completion of the sale was delayed by regulatory hurdles.

In July 2017, Pakistan’s Supreme Court removed Prime Minister Sharif from office, and he was convicted of corruption this summer in a case centering on the ownership of London apartments his family used. He is appealing.

K-Electric still hasn’t been sold. A lawyer for the Sharif family said the brothers deny any discussions took place with Mr. Malik as described in the emails.

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Nawaz Sharif, then prime minister of Pakistan, seated center right, with representatives from Shanghai Electric Power Co. on Sept. 2, 2016, after talks to sell K-Electric were announced. Mr. Naqvi is seated at Mr. Sharif’s left. PHOTO: PRIME MINISTER’S OFFICE/ISLAMIC REPUBLIC OF PAKISTAN

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Write to Simon Clark at simon.clark@wsj.com, Nicolas Parasie at nicolas.parasie@wsj.com and William Louch at william.louch@wsj.com

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https://defence.pk/pdf/threads/nawaz-and-shahbaz-sharif-involved-in-20-million-bribe-for-k-electric-sale.582183/

Accessed 18 october 2018

DEFENCE

Nawaz and Shahbaz Sharif Involved in $20 Million Bribe for K-Electric Sale.

This article is based on interviews with dozens of Abraaj employees and investors, as well as legal letters from investors, liquidators’ documents and company documents, emails and bank statements reviewed by the Journal.

….Around the same time, Abraaj was looking to sell its stake in K-Electric Ltd., the electricity provider to Karachi. Mr. Naqvi tried to secure the cooperation of Pakistan’s then-prime minister, Nawaz Sharif, and his brother Shehbaz, offering a $20 million payment to businessman Navaid Malik for his help in getting it, according to company emails and people familiar with the situation. The government owns a stake in K-Electric and its approval would be required for the sale to go through.

Shehbaz was “willing to give a strong endorsement” of the deal to Chinese bidders, Mr. Malik said, according to an October 2015 email to Mr. Naqvi from Abraaj partner Omar Lodhi. Mr. Malik said it was “important for him to share every detail with the brothers and get their blessings as well as their instructions as to how this money should be distributed,” such as “a portion to charity” or “a portion to the election fund kitty,” Mr. Lodhi wrote in the email.

When Mr. Naqvi emailed Mr. Lodhi about the $20 million contract for Mr. Malik in June 2016, he wrote, “This document is explosive in the wrong hands.” Abraaj and K-Electric shouldn’t be named in the document, he wrote: “Keep it generic.”

“Noted,” Mr. Lodhi responded. Mr. Malik didn’t respond to requests for comment.

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Abraaj’s Omar Lodhi, right, at the 2011 World Economic Forum on East Asia in Jakarta, Indonesia. PHOTO: DIMAS ARDIAN/BLOOMBERG NEWS

In his statement, Mr. Naqvi said that he denies being part of any conversation that involved a payment to anyone in political office to facilitate the sale of K-Electric. He said Mr. Malik was an Abraaj adviser on a variety of activities and that the contract was part of a lengthy discussion about the terms of that role. He said the final agreement “ensured that no conflict of interest would occur.” He said he called it “explosive” due to a reference to the potential sale of K-Electric, which was confidential at the time.

In October 2016, Abraaj announced the sale of the majority stake it controls in K-Electric to China’s state-controlled Shanghai Electric Power Co. for $1.77 billion. However, completion of the sale was delayed by regulatory hurdles.

In July 2017, Pakistan’s Supreme Court removed Prime Minister Sharif from office, and he was convicted of corruption this summer in a case centering on the ownership of London apartments his family used. He is appealing.

K-Electric still hasn’t been sold. A lawyer for the Sharif family said the brothers deny any discussions took place with Mr. Malik as described in the emails.
https://www.wsj.com/articles/privat…dging-to-do-goodthen-it-fell-apart-1539706575

Now many people will understand that why their was such a delay in selling K-Electric when Chinese company was offering money repeatedly. This Bribe money was the issue and the mode in which it was supposed to be paid was not finalized. And before it could be all done Nawaz was disqualified and hence the whole deal fell through. I kept wondering whatever happened to the K-Electric sale. I’m surprised Pakistani media hasn’t picked up this story as this is one of the biggest scandal and Wall Street Journal isn’t joking around. Now I want to see how Patwari’s will link this to a Grand Sazish against their Supreme Leader.
This also explains why western media was supporting Nawaz. If you read the whole article you’ll know this Arif Naqvi guy has his fingers entrenched everywhere and he might have been funding some of that media war.

Private-Equity Firm Abraaj Raised Billions Pledging to Do Good—Then It Fell Apart
If the above provided link doesn’t work for you or asks for membership, you can google this title and click on the WSJ link provided by Google. That way you can read without membership.

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https://timesofislamabad.com/18-Oct-2018/k-electric-corruption-scam-sharif-brothers-held-secret-meetings-over-alleged-20-million-bribe

Accessed 18 October 2018

K Electric corruption scam: Sharif brothers held secret meetings over alleged $20 million bribe

18 Oct, 2018

 

SHARES

WASHINGTON – Wall Street Journal reveals secret meetings reportedly made by Sharif Brothers over a new corruption scandal.

WSJ has exposed another alleged corruption of the Sharif family in the sale of K-Electric.

According to the journal, Abraaj Capital’s founder Arif Naqvi offered bribe to the Sharif brothers in the sale of K-Electric and the deal was struck with a close aide of the Sharifs for US$20 million.

He also secretly held meetings with the Sharif brothers.

WSJ claimed that Arif Naqvi wrote to Abraaj Capital to settle the matter generally.

Later, Arif Naqvi mailed that the matter had gone in the wrong hand. The US paper also published an e-mail in this regard.

According to the revelations made by WSJ, Arif Naqvi had written in the e-mail that the Sharif brothers will tell that how the kickback amount will be distributed.

The amount was to be given to the Sharif brothers in the election fund or a welfare project.

WSJ also claimed that the Sharif brothers and the kickback deal dates back to eight years. It stated that the matters between Abraaj Capital and Sharif brothers were kept secret.

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