Abraaj Former Managing Partner Fined $1.9 Million by DFSA

Abraaj Former Managing Partner Fined $1.9 Million by DFSA

The former managing partner of Abraaj has been fined $1.92 million by the Dubai Financial Services Authority (DFSA) for his involvement in fraud.

The DFSA published a notice on Wednesday imposing the penalty on Mustafa Abdel-Wadood. He is also prohibited and restricted from performing any function in connection with the provision of financial services in or from the Dubai International Financial Centre (DIFC).

“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 authorized by the DFSA. AIML carried out unauthorized financial service activities in or from the DIFC and actively misled and deceived investors in Abraaj funds,” the authority said in a statement. “In particular, Abdel-Wadood was involved in the misuse of investor funds, the withholding of sale proceeds and reports from investors, providing false explanations to investors, and the cover of a $200 million shortfall in a fund at its financial reporting date,” it added.

One of the most senior figures at the Abraaj Group for more than a decade – from July 2006 to February 2018 – where he held various roles including the roles of managing partner, global head of Private Equity and board member, Abdel-Wadood also served as the senior executive officer of Abraaj Capital Limited – the DFSA authorized firm of the Abraaj Group – from April 2010. Abdel-Wadood has already pleaded guilty to all criminal charges brought by the US Department of Justice. He stated in his guilty plea that he “stood by silently while Abraaj’s track record was overstated and its financial health falsely portrayed”.

Abraaj, which was one of the biggest private equity firms in the MENA region, went into liquidation in 2019 following a massive fraud that was discovered when investors including the Bill & Melinda Gates Foundation ordered a probe into the use of money from Abraaj’s healthcare fund.

In its statement, the DFSA also said that Abdel-Wadood was involved in AIML’s unauthorized financial service activities through his actions in managing the Abraaj funds from the DIFC and his role as a permanent member of the AIML global investment committee.

“The fine imposed reflects the seriousness of the offenses and is based on Abdel-Wadood’s earnings from the Abraaj Group,” the authority stated.

“In setting the fine amount, the DFSA has given due consideration to the significant level of cooperation that Abdel-Wadood has provided and continues to provide to the DFSA and the US authorities and there is no evidence to suggest that he received a direct economic benefit as a result of his actions,” it added.

Christopher Calabia, CEO of the DFSA, said: “Abdel-Wadood was one of the most senior and influential persons at the Abraaj Group. His position within the group and his reputation with investors allowed the Abraaj Group to mask its true financial position and the extent of its misuse of investor funds.

“Over the past two years, Abdel-Wadood has been cooperating with the US authorities and the DFSA, which is reflected in the reduction of his fine. The DFSA aims to prevent wrong-doing from taking place, but when instances are discovered, the DFSA expects full, open, and honest cooperation from individuals and will take this into account when setting penalties.”

He added: “We continue our actions against other individuals who were involved in Abraaj’s misconduct, and we will make any further public announcements at the appropriate time.”

The latest notice comes after the DFSA imposed a fine of $1.7 million on former Abraaj CFO Ashish Bhrugu Dave in July this year for his involvement in the scandal.

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