The Dubai Financial Services Authority (DFSA), the regulatory authority for Dubai International Financial Centre (DIFC) has
imposed a huge penalty of $315 million on two Abraaj group companies for deceiving investors and the regulator.
The DFSA said in a statement on Tuesday that it handed out fines of $299.3 million (1.1 billion dirhams) and $15.2 million
($56 million dirhams) on Abraaj Investment Management Limited (AIML) and Abraaj Capital Limited (ACLD), respectively,
the largest ever it had imposed to date.
Bryan Stirewalt, Chief Executive of the DFSA, said: "The size of these fines reflects the seriousness with which the DFSA views AIML’s and ACLD’s contraventions. Senior management rode roughshod over their compliance function and the misconduct and deceit were pervasive and persistent.
We will pursue the persons or entities who perpetrated this activity, including those who allowed this to happen through major corporate governance breaches, to the full extent of our powers.”
The complex and multi-jurisdictional investigation, which commenced in January 2018, found that AIML, a Cayman
Islands company currently under provisional liquidation, carried out unauthorised financial services, including fund
management, within and from the DIFC, the regulator said in the statement.
AIML was found to have actively misled and deceived investors in Abraaj funds over an extended period; misused investors’
monies in various funds to meet its own operating and other expenses, which included payments to entities connected to
some members of AIML staff, and to meet ever-increasing cash shortfalls, the statement noted.
At the time AIML entered into provisional liquidation, because of the activities referred to above, two funds managed by AIML had a combined shortfall of at least $180 million.
With regard to ACLD, a DIFC company also in provisional liquidation, the DFSA investigation found that it failed to
maintain adequate capital resources; deceived the DFSA about its compliance with various rules, including capital adequacy
requirements and was knowingly concerned in AIML’s unauthorised financial services activities, according to the
The regulator said that it has taken the action to penalise ACLD and AIML so as to deter others and protect investors.
Before taking any further action to enforce payment of the fines, the DFSA will consider the firms’ circumstances at that
time and the corresponding implications of enforcing the fines for fund investors, the statement said.
(Reporting by Seban Scaria, editing by Anoop Menon)
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