The Dubai Financial Services Authority (DFSA) has imposed financial penalties of USD 299,300,000 (Dh1,098,431,000) and USD 15,275,925 (Dh56,062,645) on Abraaj Investment Management Limited (AIML) and Abraaj Capital Limited (ACLD), respectively.
The DFSA investigation, which commenced in January 2018, spanned multiple jurisdictions, and found that AIML, a Cayman Islands company now in provisional liquidation:
• carried out unauthorized financial services, including fund management, within and from the DIFC;
• actively misled and deceived investors in Abraaj funds over an extended period;
• misused investors’ monies in various funds to meet its own operating and other expenses, which included payments to entities connected to some members of AIML staff, and to meet ever-increasing cash shortfalls; and
• concealed this by providing misleading financial information to investors and making false statements about the use of money drawn down from investors and distributions.
Among the many methods AIML used to deceive investors were:
1. borrowing money just prior to financial reporting dates to produce temporary bank balances at a level expected by the investors;
2. changing the reporting period for a fund to disguise shortfalls;
3. deflecting demands from various parties to provide updated financial information and bank statements; and
4. lying about delays in making distributions of exit proceeds to investors.
Bryan Stirewalt, Chief Executive of the DFSA, said: “The size of these fines reflects the seriousness with which the DFSA views AIML’s and ACLD’s contraventions. Senior management rode roughshod over their compliance function and the misconduct and deceit were pervasive and persistent. We will pursue the persons or entities who perpetrated this activity, including those who allowed this to happen through major corporate governance breaches, to the full extent of our powers.”
The DFSA continues to investigate individuals and entities connected with this matter, in respect of their culpability, to the full extent of its powers and considering all sanctions available to it.
Source: DFSA
