Dubai: The founder of the Abraaj Group, Arif Naqvi is facing criminal investigation in the UAE for issuing bad cheques, as cheque bouncing is treated as criminal offence in the UAE.
The new development is expected to endanger the prospects the company’s efforts to resolve its issues with investors and creditors through liquidation.
According to sources, Naqvi has been issued an arrest warrant in UAE relating to a cheque bounce case.
According to sources, the bounced cheque was used as partial security for approximately $300 million in loans from Hamid Jafar, the founder of the Sharjah-based Crescent Group to Abraaj and Naqvi.
On Thursday, a Sharjah court is scheduled to determine whether Naqvi and a colleague, Muhammed Rafique Lakhani, will face charges on issuing cheques without sufficient funds in the account.
Abraaj confirmed the ongoing legal proceedings against Naqvi in absentia, since he is not in the country. Furthermore, in an email it is stated, “Abraaj can confirm that a loan was granted and security provided in a pure commercial transaction. Partial repayment of the loan has been made and settlement discussions are ongoing with the intent to arrive at a satisfactory solution for all parties
Naqvi is represented in this case by Dr. Habib Al Mulla, Executive Chairman, Baker McKenzie Habib Al Mulla.
Al Mulla maintained that the cheques were provided as security for the loans. The presenting of the cheques and subsequent criminal charges are seen as a pressure tactic. “It should be noted that the cheques were provided as part of a security package and as such should not have been submitted to a criminal court.”
Last week Abraaj Group announced that it reached an agreement with New York listed Colony Capital, Inc. for the sale of Abraaj’s Latin America, Sub Saharan Africa, North Africa and Turkey Funds management business and the Group’s Limited Partnership (LP) interests in the underlying Funds. As part of the deal, staff in eight offices will be transferred to new owner.
Earlier this month, Al Jafar family had handed over their debt claims on Abraaj to Auctus Fund, a little-known Saint Vincent-based fund that filed a petition against Abraaj in Cayman Islands for liquidation to recover their loans.
