Founder won’t appear for bounced cheque case

The founder of Dubai private equity firm Abraaj Group, which is undergoing a court-supervised restructuring in the Cayman Islands, will not attend a hearing in the UAE today over bouncing a cheque because he could be arrested if he did, his lawyer said.

UAE authorities have issued an arrest warrant for Arif Naqvi for issuing a cheque without sufficient funds, Habib Al Mulla, executive chairman of law firm Habib Al Mulla Baker Mackenzie, confirmed to The National.

The warrant relates to a cheque for Dh177.1 million ($48m) signed by Naqvi and Abraaj executive Rafique Lakhani, and written to Hamid Jafar, another founding shareholder in Abraaj.

A judge in Sharjah is scheduled to rule today whether Mr Naqvi, who is a Dubai resident but in the UK, and Mr Lakhani issued the cheque without the necessary funds.

When asked if Mr Naqvi would attend the hearing, Mr Al Mulla wrote in a text message: “No, since there is an arrest order against him.” The lawyer said in an earlier telephone call yesterday that he had not seen a copy of the warrant or criminal complaint.

The hearing is a further twist in the unravelling of Abraaj, which at its peak had more than $13.6 billion of assets under management but has been left reeling over investor claims this year that it misused funds in a $1bn healthcare investment vehicle. Abraaj denies any wrongdoing.

The bounced cheque that is the centre of today’s hearing was used as partial security for about $300m of loans made to Abraaj by Mr Jafar, who claims Mr Naqvi had no intention of repaying.

“The accused has signed cheques it is now clear he had no intention of honouring and is refusing to appear to face these criminal charges in the UAE,” Essam Al Tamimi, managing partner of law firm Al Tamimi & Co, acting for Mr Jafar, told The National. “The cheques were not a guarantee and were part of documentation which confirms the accused’s liability to repay the debt on the due date of the cheques. There are no ongoing negotiations to resolve the matter.”

Mr Al Mulla denied the allegations. “There was a loan given by the Jafars to Abraaj Group and to Arif – $200m to Abraaj and $100m to Arif – against which they took cheques as security,” he said.

“Both parties knew there were no funds for these cheques, otherwise why should he take $300m if he [already] has $300m?”

There have been ongoing discussions and several drafts of a proposed settlement between the two parties, and Mr Naqvi has so far paid $33m of the total $100m to Mr Jafar, Mr Al Mulla said.

“So to say there has been no discussion is absolutely incorrect.

“Filing a criminal complaint puts the defendant under pressure to negotiate on position,” he said. “I can say categorically this is not going to work. Whatever the outcome of the hearing we are prepared – even if the court issues a sentence, we will deal with it accordingly.”

A spokeswoman for Abraaj Group said the group had no further statement to make beyond that which it sent to The

National on Monday night. “Abraaj can confirm that a loan was granted and security provided in a pure commercial transaction.”

“Partial repayment has been made and settlement discussions are ongoing with the intent to arrive at a satisfactory solution for all parties.

“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,” the statement said.

Mr Al Tamimi said the statement “is misleading and does not contain the accurate information”.

Mr Al Mulla said Mr Jafar’s lawyers should detail those inaccuracies.