UAE regulators ask corporates to declare exposure to Abraaj

Arif Naqvi, founder and group chief executive of Abraaj. (Reuters)
Updated 21 June 2018
0

UAE regulators ask corporates to declare exposure to Abraaj

  • Air Arabia admits $336 million exposure to Abraaj funds.
  • Abraaj sells its Latam, Sub-Saharan Africa, North Africa and Turkey Funds to Colony Capital.

DUBAI: The United Arab Emirates’ top securities regulator has asked UAE-listed companies to declare their exposure to Dubai-based private equity firm Abraaj, which filed for provisional liquidation last week.
The Securities & Commodities Authority sent a letter earlier this week and companies had until Thursday to submit their responses, Obaid Al-Zaabi, chief executive of the regulator, told Reuters.
Air Arabia, a Dubai-listed low-cost carrier, said this week that it had a $336 million exposure to Abraaj, which is the Middle East’s biggest private equity firm. Shares in the airline plunged because of these links.
Al-Zaabi said some companies in the UAE had exposure to Abraaj, without naming them.
A court in the Cayman Islands, where Abraaj Holdings is registered, ordered this week that PwC be appointed as provisional liquidators of the company and Deloitte as liquidators of Abraaj Investment Management Ltd.
Abraaj said that the latest restructuring agreement has received in-principle regulatory approval and is expected to close upon approval from the Cayman Islands court and other customary consents.
On Thursday, the Dubai Financial Services Authority (DFSA), which is the regulator of the Dubai International Financial Center (DIFC), said it would discuss “various matters” with the liquidators and “will continue to work toward safeguarding the interests of investors.”
The DFSA is involved because Abraaj has an entity regulated in DIFC.
Abraaj Group agreed to sell its Latin America, Sub-Saharan Africa, North Africa and Turkey Funds management business to US investment management firm Colony Capital Inc, the companies said on Thursday.
The sale agreement comes after months of turmoil at Abraaj in the wake of its dispute with four of its investors, including the Bill & Melinda Gates Foundation and International Finance Corp. (IFC), over the use of their money in a $1 billion health care fund. The group has denied it misused the funds.
The sale is part of a provisional liquidation and restructuring as set out in a court order. Financial terms of the deal were not disclosed.
Colony Capital has also agreed to oversee, on an interim basis, other Abraaj group funds that are not being acquired so that the group and all its stakeholders have a “comprehensive global solution in place,” the companies said.
The other group funds include the $1 billion health care fund, and some legacy funds of the private equity group.
Sources told Reuters earlier that US buyout firm TPG was in talks with investors in Abraaj’s health care fund to take over management of the assets of the $1 billion fund.
The K-Electric asset, which is being sold in Pakistan and is owned by Abraaj Holdings, is also not part of the transaction.
Colony’s deal comes after other investors such as Cerberus Capital Management had also made offers for the Abraaj business before it filed for provisional liquidation in the Cayman Islands.
A unit of Abu Dhabi Financial Group earlier this week made a conditional offer to buy Abraaj’s management interest in all of its limited partnerships for $50 million, according to a document seen by Reuters.
Since Abraaj’s row with some investors became public early this year, it split its investment management business and holding company, while its founder Arif Naqvi stepped aside from the day-to-day running of its private equity fund unit and the firm halted its investment activities.
Tom Barrack, executive chairman of Colony Capital, said that he hoped that the transaction would enable the process of rebuilding on all sides and also bring an end to the speculation that has swirled around Abraaj over the past months.


Goldman Sachs bankers ‘cheated’ Malaysia over 1MDB — PM Mahathir

Malaysia's Prime Minister Mahathir Mohamad speaks during an interview with Agence France-Presse (AFP) in Putrajaya on November 1, 2018. (AFP)
Updated 42 min 9 sec ago
0

Goldman Sachs bankers ‘cheated’ Malaysia over 1MDB — PM Mahathir

  • Anwar Ibrahim, appointed successor to 93-year-old Mahathir, told parliament on Tuesday that Malaysia needed to take “more aggressive measures” to reclaim the fees and losses due to the harm the scandal had done to the country’s image
  • Critics have said the fees earned by Goldman Sachs were far in excess of the normal 1-2 percent a bank could expect for helping sell bonds

KUALA LUMPUR/SINGAPORE: Malaysian Prime Minister Mahathir Mohamad said bankers at Goldman Sachs Group Inc. “cheated” the country in dealings with state fund 1MDB and that US authorities have promised to help return the fees the Wall Street bank earned from the fund.
The US investment bank has been under scrutiny for its role in helping raise funds through bond offerings for 1Malaysia Development Bhd (1MDB), which is the subject of corruption and money-laundering investigations in at least six countries.
Goldman’s stock fell to a near two-year low on Monday after Malaysian Finance Minister Lim Guan Eng said his country would seek a “full refund” of the around $600 million in fees the bank earned from raising $6.5 billion for the fund. The stock eased 0.5 percent on Tuesday.
A Goldman Sachs spokesman on Monday said in an email to Reuters that the bank denied any wrongdoing.
The US Department of Justice (DOJ) has said about $4.5 billion was misappropriated from 1MDB, including some money that Goldman Sachs helped raise, by high-level officials of the fund and their associates from 2009 through 2014.
US prosecutors filed criminal charges against two former Goldman Sachs bankers earlier this month. One of them, Tim Leissner, pleaded guilty to conspiracy to launder money and conspiracy to violate the Foreign Corrupt Practices Act.
“There is evidence that Goldman Sachs has done things that are wrong,” Mahathir said in an interview with US news channel CNBC aired on Tuesday.
“Obviously we have been cheated through the compliance by Goldman Sachs people,” he said, without specifying details.
The bank’s compliance controls “don’t work very well,” he added.
A second Goldman Sachs spokesman in Hong Kong declined to comment on Mahathir’s comments in the interview.
Asked by reporters later in Singapore if he had officially requested the DOJ to help return money that Goldman earned from 1MDB, Mahathir said: “It takes a little bit of time but they (DOJ) have promised that they will give back the money.” He was speaking on the sidelines of a summit in Singapore.
A DOJ spokeswoman said the United States continued to pursue justice with respect to its 1MDB investigations. Whenever possible, recovered assets would be used to “benefit the people” harmed by corruption and abuse of office, she added.

Anwar Ibrahim, appointed successor to 93-year-old Mahathir, told parliament on Tuesday that Malaysia needed to take “more aggressive measures” to reclaim the fees and losses due to the harm the scandal had done to the country’s image.
Finance Minister Lim told reporters the country would seek consequential losses as well as the return of fees.
“The Malaysian government will want to reclaim all the fees paid, as well as all the losses including the interest rate differential,” Lim told reporters. He said the rate Malaysia had paid was about 100 basis points higher than the market rate.
Critics have said the fees earned by Goldman Sachs were far in excess of the normal 1-2 percent a bank could expect for helping sell bonds.
Goldman has said the outsized fees related to additional risks: it bought the unrated bonds while it sought investors and, in the case of a 2013 bond deal which raised $2.7 billion, 1MDB wanted the funds quickly.
Citing sources, Reuters reported in June that Malaysia was considering asking the DOJ to get Goldman Sachs to return the fees it had earned from the 1MDB deals.
The 1MDB scandal was a major reason for former premier Najib Razak’s shock election loss in May. He has been charged with corruption over the scandal and has pleaded not guilty.
Malaysian financier Low Taek Jho, described by US and Malaysian authorities as central to the 1MDB fraud, was charged by US prosecutors this month. He remains at large.