DUBAI: Peace talks between representatives of Arif Naqvi, the beleaguered founder and chief executive of the Abraaj Group, and the Sharjah business leader Hamid Jafar have ended without a settlement ahead of a crucial legal hearing in the UAE on Thursday.
Naqvi, who has been accused of writing bad cheques to the value of $300 million, had been seeking more time — up to a year — to pay the owed amount, but Jafar wanted immediate payment in cash or assets to cover the debts, according to a person involved in the talks.
Meetings involving legal representatives took place in London since last weekend, but foundered on the request for immediate repayment of the debts, incurred last December to bridge a financial hole at Abraaj.
“The parties cannot find common ground, there is too much distance between them,” the person said.
He did not want to be named because of the sensitivity of the matter.
An adviser to Jafar said there were no ongoing negotiations.
A Sharjah court is due to meet on Thursday to resume the hearing adjourned last week on a charge of issuing dishonored cheques against Naqvi.
The cheques were issued as repayment of loans to Naqvi and Abraaj last December, but when they were presented by Jafar in February there was insufficient funds to meet them.
Pakistan-born Naqvi has said he will not return to the UAE, where he has a residence visa, while under threat of criminal action.
Naqvi has substantial assets in the UK and elsewhere, in addition to his share stake in Abraaj. The exact number of shares he owns has not been revealed, but it is said by people familiar with the situation to be less than 30 percent, following disposals in the past year.
The Dubai Financial Services Authority (DFSA), which regulates the Dubai International Financial Center where some parts of Abraaj are regulated, declined to comment on a report that it was investigating allegations of financial mismanagement at the firm, once the leading light in the emerging markets private equity industry but now in deep financial and regulatory trouble.
The DFSA has in the past said it was “aware” of developments at Abraaj but does not confirm or deny investigations in progress.
However, one legal source said that DFSA executives had traveled to London to interview Naqvi.
The aborted London peace talks are believed to have involved Habib Al-Mulla, executive chairman of the Dubai law firm Baker & McKenzie Habib Al Mulla, who is advising Naqvi, and lawyers from the firm Gibson Dunn, advising Jafar.
The week ahead is crucial for Abraaj, In addition to the Sharjah court hearing, next week legal authorities in the Cayman Islands, where the Abraaj holding company is registered, will decide on the terms of restructuring proposals for Abraaj which could involve the sale of investment assets for around $230 million.
Al-Mulla said: “Arif is fully committed to Abraaj and wants to help the restructuring process.”