The Wall Street Journal claimed in a report published by in October 2018 that Arif Naqvi, the embattled founder of Dubai-based Abraaj Group, allegedly paid $20 million to businessman Navaid Malik for his assistance in securing cooperation of Sharif brothers for K-Electric sale.
The article alleged that Malik was tasked with securing cooperation from Nawaz Sharif – former prime minister – and Shahbaz Sharif – former chief minister Punjab and now prime minister – to help Naqvi sell Abraaj’s stake in K-Electric.
According to WSJ report which was reproduced by Pakistani media, after reviewing company documents and emails, the WSJ claimed that Omar Lodhi – partner at Abraaj – in October 2015 informed Naqvi of Malik’s assurance that
former chief minister Shahbaz Sharif was “willing to give a strong endorsement” of the K-Electric deal to Chinese bidders.
Abraaj’s undoing began in February when an article from WSJ reported that investors were questioning the use of their investments destined for company’s healthcare fund. Naqvi set up a healthcare fund by securing commitments from Bill and Melinda Gates Foundation and other Western Institutions. The fund’s investments include Islamabad Diagnostic Centre in Pakistan and hospital chain Quality Care India. The article claimed that, “documents from liquidators, auditors and investors show that Abraaj moved investor money meant for hospitals and companies into accounts that paid its own expenses, salaries and loans. Abraaj founder Arif Naqvi denies any wrongdoing and says the transfers were appropriate.”
The article which highlights some of the known details of the fund’s collapse include using investor’s money to pay for its own expenses, borrowing money against its own stakes in its funds and a highly unstable business model. The article alleges that, “Abraaj has defaulted on more than $1 billion of debt.” The firm also allegedly cooked its books when Gates Foundation asked Abraaj for bank statements of the accounts that held money for the healthcare fund. Following the request on Nov 30, 2017, Abraaj borrowed $140m from Air Arabia and transferred $29m from its own treasury in to the healthcare fund’s account on Dec 5, 2017.
