Abraaj was the emerging world's biggest PE firm — it spent investor money as its own

The Abraaj Group, based in Dubai, was for a time the largest private-equity firm investing in emerging markets, managing roughly $14 billion for investors that included development finance institutions and foundations. Its founder, Arif Naqvi, was a prominent figure in global finance. Behind that success, the Dubai Financial Services Authority later found, the firm had been treating investors' money as its own.

The DFSA found that Naqvi was knowingly involved in misleading and deceiving investors over the misuse of their funds. He had, the regulator said, instructed the use of investor monies to fund the Abraaj Group's own working capital and other commitments. To hide the consequences, the firm covered up an approximately $400 million shortfall across two funds by temporarily borrowing money to produce bank balance confirmations and financial statements that misled auditors and investors, and it changed one fund's financial year-end to avoid disclosing an approximately $201 million shortfall.

To keep the firm appearing solvent, Naqvi personally arranged to borrow $350 million, and he took interest-free personal loans from the group and its funds — at a time, the DFSA noted, when he knew the group was paying heavy interest on its own borrowings. The conduct ran over almost eleven years. When it surfaced in 2018, investors lost confidence and the firm collapsed into liquidation.

The penalties were the largest the DFSA had imposed. In 2019 it fined Abraaj Investment Management $299.3 million for misleading investors and carrying on unauthorised financial services, and it later fined Naqvi $135,566,183 and banned him from the Dubai International Financial Centre — actions a tribunal upheld. Abraaj is the definitive case that a fund manager's most basic duty is to keep investors' money separate from its own.