UAE issues arrest warrant against Abraaj founder for bad check

The United Arab Emirates has issued arrest warrants for the founder of private equity firm Abraaj and another executive for issuing a check without sufficient funds, Reuters reported, citing a prosecution document.

The public prosecutor’s office in Sharjah issued the warrants against Arif Naqvi, who founded Abraaj in 2002, and fellow executive Rafique Lakhani, according to the document dated June 18.

The warrants relate to a check for AED 177.1 million ($48 million), signed by Naqvi and Lakhani, and written to Hamid Jafar, another founding shareholder in Abraaj, according to a clerk in the prosecutor’s office who confirmed the validity of the document.

Naqvi’s lawyer, Habib al-Mulla, said he was aware of an arrest warrant against Naqvi for a bounced check of around $50 million. The check had been submitted to the police by the Jafar family, he added.

“We were in discussions with the Jafars to discuss repayment and that’s why we are surprised this criminal action is being taken,” Mulla said. “It’s a disruption and we don’t know how creditors will benefit from this.”

Jafar’s lawyer, Essam al-Tamimi, said there were no “ongoing negotiations” to resolve the matter.

Naqvi’s lawyer said neither he nor his client had received any official notification of a legal summons from the Sharjah prosecutor.

The arrest warrants are the latest setback for the Abraaj, which is currently in a dispute with four investors over the use of their money in a $1 billion healthcare fund.

Abraaj has denied misusing funds.

The dispute has affected investor confidence in the Dubai-based private equity firm, halted its fund raising activities and sparked debt repayment problems, forcing Abraaj to file for provisional liquidation in the Cayman Islands.

Last week, a court in the Cayman Islands, where Abraaj is incorporated, appointed provisional liquidators for Abraaj Holdings and Abraaj Investment Management Ltd (AIML), as the firm tries to restructure its debt, the report said.

The warrants relate to a check for 177.1 million dirhams ($48 million), signed by Naqvi and Lakhani, and written to Hamid Jafar, another founding shareholder in Abraaj, according to a clerk in the prosecutor’s office who confirmed the validity of the document.

Neither Naqvi nor Lakhani responded to a Reuters request for comment. Jafar could not be reached for comment.

Naqvi’s lawyer, Habib al-Mulla, said he was aware of an arrest warrant issued in the UAE for Naqvi for a bounced check of around $50 million. He said the check had been submitted to the police by the Jafar family.

“We were in discussions with the Jafars to discuss repayment and that’s why we are surprised this criminal action is being taken,” Mulla told Reuters. “It’s a disruption and we don’t know how creditors will benefit from this.”

Jafar’s lawyer, Essam al-Tamimi, said there were no “ongoing negotiations” to resolve the matter.

“The issue is now a matter for the public prosecutor — the accused has shown bad faith in signing cheques it is now clear he had no intention of honoring and is refusing to appear to face these criminal charges in the UAE,” he said in a statement.

Naqvi’s lawyer said neither he nor his client had received any official notification of a legal summons from the Sharjah prosecutor.