Abraaj Group’s Arif Naqvi lost a bid to fight his extradition to the US and the decision fell as another blow to the founder of what was once the Middle East’s largest private-equity fund. A London court gave its verdict decreeing that Arif Naqvi should be sent to face American charges of fraud and racketeering. Prosecutors accuse the former executive of concealing the true position of a fund struggling with a liquidity crisis, while siphoning off hundreds of millions of dollars for his own family. The fall of the Abraaj group caused a massive upset in the financial world of the Middle East region and its aftershocks were also experienced in Pakistan where the group had stakes in K-Electric, the largest electric supply company of the country.
The story of Abraaj is yet another story of greed and frivolity that brought misery to many institutions and badly affected many professional careers. Founded in 2002, Abraaj grew to become one of the world’s most influential emerging-market investors but the fund collapsed into liquidation after a group, including the Bill & Melinda Gates Foundation, sought to investigate the alleged mismanagement of money in its health-care fund. Naqvi himself was forced to surrender control after it was revealed that the firm’s main revenues had not covered operating costs for years.
By the time of its collapse in 2018, Abraaj owed creditors over $1 billion. He faces up to 30 years in prison in the US. Naqvi has rejected the American charges, with his lawyer saying at a hearing in June that his unshakable conviction is that he is entirely innocent of these allegations. He can appeal the decision, meaning he’s unlikely to be extradited any time soon. Abraaj, which once managed almost $14 billion, collapsed in part because of a deliberate attack by competitors. Arif Masood Naqvi is accused of 16 counts of fraud and related money-laundering said to have been committed between 2014 and 2018. American government has described him as the leader of a criminal enterprise that quoted Abraaj. While Naqvi, who suffers from poor health, has made his home in the UK since 2018 but the litigation there is ongoing and may ultimately perilous to him.
In his heyday
Naqvi, whose extradition hearing started last year, is among several people charged by US prosecutors with being part of an international scheme to defraud investors including the Bill & Melinda Gates Foundation. Naqvi’s lawyers had argued that US authorities intended to rely extensively on the evidence of his co-accused Sev Vettivettipillai, a former managing director of Abraaj, who was based in the UK. Naqvi’s lawyers had said at the time that the extradition request should be refused as a substantial part of his activity central to the US allegations was based in London, including Abraaj’s investor coverage team, in addition to his family ties to the city. If there were grounds for believing Naqvi might be detained before a US trial.
Senior District Judge Emma Arbuthnot heard the case and after due consideration ordered that the Pakistani national businessman should be extradited to the US and that his safety and rights will not be at risk in the US jail as argued by Naqvi’s lawyer during the extradition hearings. Naqvi expressed no emotions when the decision was read out. His lawyer will appeal against the extradition at the London High Court. The judge noted in her decision that the alleged fraud started unraveling in September 2017 when an anonymous email was sent to some of the investors. Funds were also said to have been used to bribe a politician in Pakistan to obtain approval for the sale of Abraaj’s stake in an electrical energy utility company.
The judge rejected almost all grounds relied on by his legal team and wrote that she was satisfied with the assurances given by the US administration that Naqvi would have the right to a fair trial; his human rights would not be impacted and he would be provided a reasonably safe environment to live in. She ruled that the burden on the defence is less than on the balance of probabilities but the risk must be more than fanciful. The prosecution and defence rely on different authorities but there is “no dispute that the burden of establishing the real risk lays on Arif Naqvi.” She added that she finally accepts that the prison is having the same trouble with COVID-19 that each prison in every country is having, staff are off with COVID-19 or self-isolating which is causing a staff shortage. The judge dismissed Naqvi’s arguments that a large amount of the alleged misconduct took place in the UK.
The judge also noted that she was satisfied that Naqvi will live in a special dormitory reserved not just for federal inmates but for those who are aged 50 and over and have no disciplinary issues. She said she did not accept that the gangs in that unit would be able to threaten Naqvi with impunity or be allowed to flourish. She said US soil is the right forum for Naqvi to stand trial and not London as Naqvi held Abraaj meetings in the US when misrepresentations to the investments were made and harm was caused to the US investors.
Outside the court
In New York, Naqvi might be held in either the Metropolitan Correctional Center (MCC) or the Metropolitan Detention Centre (MDC) where Arif’s defence argued that the conditions would be incompatible with Article 3 of the European Convention on Human Rights. If convicted in the US, Naqvi was most likely to be sentenced to over 30 years’ imprisonment and could begin serving that sentence in a high security institution. His lawyers argued that he was a suicide risk, suffering from severe depression and showing signs of psychotic episodes.
The judge ordered the case to the Secretary of State for her decision and that he can choose to appeal the decision under section 92 of the Extradition Act 2003 once the Home Secretary makes one. The judge ruled that there were no bars to extradition under several articles of Britain’s 2003 Extradition Act. But for human rights considerations, the judge said she would refer the case to the British government for a decision on whether Naqvi should be extradited.
The US Securities and Exchange Commission (SEC) alleges Naqvi and his firm raised money for the Abraaj Growth Markets Health Fund, collecting more than $100 million over three years from US-based charitable organisations and other US investors. According to the SEC’s complaint, Naqvi misappropriated money from the health fund and commingled it with corporate funds of Abraaj Investment Management and its parent company, and used them for purposes unrelated to the health fund. Naqvi was arrested in the United Kingdom in 2019 and was released from custody on bail the same year. It is certain that Naqvi will approach the higher courts in the UK as well as the Home Department. His is a very high-profile case and has raised wide interest in financial sectors. The matter, however, may take a long time to come to a final decisions keeping Naqvi in London in the foreseeable future. TW
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