WSJ accuses Abraaj founder Arif Naqvi of ‘heavy embezzlement’


—Naqvi denies reports, says it’s based on isolated extracts from illegally obtained documents

Abraaj Group founder Arif Naqvi paid $20 million to influence the then prime minister Nawaz Sharif and his brother Shehbaz Sharif for the sale of Abraaj’s stakes in K-Electric, claimed the Wall Street Journal (WSJ).

According to the report published by WSJ, Naqvi paid the $20 million to businessman Navaid Malik for his assistance in securing the cooperation of Sharif brothers for the sale, for which government’s approval was required.

The WSJ report cited company emails and people familiar with the situation as the source of information.

Shehbaz was “willing to give a strong endorsement” of the deal to Chinese bidders, Navaid Malik said, according to an October 2015 email to Arif Naqvi from Abraaj partner Omar Lodhi. Malik said that it was “important for him to share every detail with the brothers and get their blessings as well as their instructions as to how this money should be distributed,” such as “a portion to charity” or “a portion to the election fund kitty,” Lodhi wrote in the email.

When Arif Naqvi emailed Lodhi about the $20 million contracts for Malik in June 2016, he wrote, “This document is explosive in the wrong hands.” Abraaj and K-Electric shouldn’t be named in the document, he wrote: “Keep it generic.”

“Noted,” Lodhi responded, according to WSJ.

In October 2016, Abraaj announced the sale of the majority stake it controls in K-Electric to China’s state-controlled Shanghai Electric Power Co. for $1.77 billion. However, completion of the sale was delayed by regulatory hurdles, noted the journal.

K-Electric still hasn’t been sold. A lawyer for the Sharif family said the brothers deny any discussions took place with Navaid Malik as described in the emails.

According to former executives and investors, Abraaj Group moved investor funds into its own accounts.  At least $660 million of investor money was moved without the knowledge of most investors into bank accounts that forensic accountants call the Abraaj treasury, according to documents and people familiar with the situation.

More than $200 million of these funds were transferred into Naqvi’s personal accounts and those close to him.

Arif Naqvi, however, denied media reports that he was involved in corruption surrounding the sale of the embattled private equity fund’s stake in Pakistan’s K-Electric and again denied any misuse or appropriation of Abraaj funds.

In a statement, Naqvi said that the allegations “are entirely false”.

“They are premised on isolated extracts from illegally obtained documents that have been taken entirely out of context,” he said.

“It appears that unidentified individuals who are unfairly biased against me and Abraaj are seeking to undermine the sale of K-Electric, damage mine and Abraaj’s reputation and thereby prejudice the creditors of the Abraaj Group.”

Naqvi added that he never “contemplated, directed, authorised or paid any bribes” during the K-Electric sale process, which he said “was and very much remains in the best interest of the country.”

In his statement, Naqvi also said that he “neither misused nor misappropriated any Abraaj funds.”

“There was nothing untoward about my requests for transfers or Abraaj Group funds to me or my family, or for my personal investments or obligations,” he said.

“In drawing down funds from Abraaj, I acted in accordance with the arrangements put in place by the Abraaj Group.”

Naqvi also added that any drawdowns were “properly recorded and accounted for.”

Lastly, Naqvi said that the use of monies from Abraaj’s healthcare fund for general corporate purposes was undertaken only after having “sought and received independent legal advice as to whether it was permissible.”

All un-invested funds were “accounted for and returned to investors in the healthcare fund with interest as of 31 December 2017,” he added.