A former managing partner of the scandal-tainted private equity firm Abraaj has been fined $1,927,498 by the Dubai Financial Services Authority (DFSA) for his involvement in a $200 million shortfall cover at the firm.
Mustafa Abdel-Wadood has also been prohibited from performing any function in connection with the provision of financial services in or from the Dubai International Financial Centre (DIFC).
According to DFSA, Abdel-Wadood had been involved in the cover of a $200 million shortfall, by carrying out acts including the misuse of investor funds, the withholding of sale proceeds and reports from investors and providing false explanations to investors.
A statement from the authority said Abdel-Wadood was one of the most senior figures at the Abraaj Group from July 2006 to February 2018, prior to when the Dubai-based company collapsed and filed for provisional liquidation in the Cayman Islands in June of that year.
He held roles including managing partner, global head of private equity and board member, and from 2010 he was the senior executive offer of Abraaj Capital Limited (ACLD), the DFSA authorised firm of Abraaj Group, the authority said.
The authority said it had taken action against him for 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 DFSA statement said.
“In particular, Mr 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,” the authority said.
He pleaded guilty to all criminal charges brought by the US Department of Justice in regard to Abraaj misconduct, staying in a guilty plea that he “stood by silently while Abraaj's track record was overstated and its financial health falsely portrayed”.
Abdel-Wadood was also involved in AIML’s unauthorised 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 DFSA said.
Christopher Calabia, chief executive, DFSA, said: “Mr 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.”
Calabia said Abdel-Wadood had been cooperating with the US authorities and the DFSA, which was reflected in the reduction of the fine imposed.
Abdel-Wadood pleaded guilty to fraud and racketeering charges relating to the firm’s activities in a New York US district court in June 2019.
(Reporting by Imogen Lillywhite; editing by Seban Scaria)
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