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The DFSA hammers the final nail in the coffin for Abraaj

The Abraaj Group has been put through the ringer in past months. Controversy followed controversy, and now, a Dubai government body might have just hammered the final nail in Abraaj’s coffin.

And end to Abraaj business

The Dubai Financial Services Authority (DFSA) has stopped Abraaj Capital from taking on new business or moving money to Abraaj Investment Management (AIML), its related entity, as part of an investigation into the group, Reuters reports.

DFSA is Dubai’s financial services regulator, and this is the first time they have publicly disclosed that they are investigating the private equity firm.

“Given the onset of financial difficulties of the wider Abraaj Group, the DFSA has been closely monitoring the activities of its regulated entity ACL,” Dubai Financial Services Authority said in a statement on Thursday.

According to Reuters, Abraaj Capital is the only entity in the Abraaj Group regulated by DFSA, which issued its statement after two individuals from Deloitte were appointed as joint provisional liquidators by the Dubai International Financial Centre (DIFC) Courts to oversee the winding up of the private equity group.

It seems Abraaj isn’t going to be able to dig itself out of this problem, as the company has already been trying to liquidate its assets. With the DFSA putting a damper on their activities, Abraaj is going to have trouble paying back its creditors, such as in the infamous bounced cheque case(s).

DFSA, which has the power to fine or ban individuals or companies from working in financial services within the DIFC, made no reference to potential penalties Abraaj might face.

READ: Abraaj founder faces second bounced cheque case

Abraaj founder faces criminal charges

Back in June, Abraaj founder Arif Naqvi faced criminal charges following an instance of a bounced cheque worth $48 million.

Abraaj had been loaned a sum of $300 million by Hamid Jafar, the founder of Crescent Group, late last year. When Jafar attempted to cash in one of the three cheques issued to him by Naqvi as a payment of his debt, the cheque bounced, triggering this entire incident.

The first case was reported to have been resolved out-of-court, however, and we were led to believe that the two parties had reached an amicable agreement. Early August, though, news broke that Naqvi was being held liable by Jafar once more, most likely after talks ended unfavorably.

The second case relates to a bounced cheque worth $217 million.

“The accused has already reneged on what was promised,” Essam al Tamimi, Jafar’s lawyer, said in a statement. “There has been no settlement, and the matter is for the criminal court under UAE law.”

A UAE court will issue judgment on the case on August 26.

TIMELINE: The rise and fall of Abraaj Group

Habib Al-Mulla, Naqvi’s lawyer, said, “Negotiations are still ongoing between the parties and hopefully they will reach a settlement before the next hearing.” Whether the talks will end the same way the previous ones did, it is left to be seen.

Abraaj’s troubles all began earlier this year. Following two investigations, stakeholders discovered that the private equity firm had mishandled a $1 billion healthcare fund. While there was no evidence of foul play, signs of negligence were evident.

Abraaj has been having a rough time ever since.

Citing a finance source, Reuters recently reported that potential buyers are being sought for Abraaj’s investment management business, with a partnership of Kuwait’s Agility and United States-based Centerbridge Partners among the interested bidders. York Capital Management and Abu Dhabi Financial Group are another two interested parties.

READ: Who’s owed what, and 7 things you need to know about Abraaj