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U.S. Investigating Whether Private-Equity Chief Bribed Pakistani Politicians
U.S. prosecutors probing Abraaj Group’s founder Arif Naqvi over alleged bribery
Pakistan’s then-Prime Minister Nawaz Sharif, center dressed in white, and Arif Naqvi, to his left, at a 2016 meeting with Shanghai Electric Power Co. officials. PHOTO: PRIME MINISTER'S OFFICE/ISLAMIC REPUBLIC OF PAKISTAN
By
Simon Clark in London and
William Louch in New York
Updated Oct. 24, 2019 10:07 am ET
U.S. prosecutors are investigating whether the founder of the bankrupt private-equity firm Abraaj Group bribed senior politicians in Pakistan, according to people familiar with the matter.
Arif Naqvi was arrested by U.K. police in London in April after U.S. prosecutors indicted him on charges of fraud. Dubai-based Abraaj was the largest private-equity firm based in emerging markets before it collapsed in 2018. Mr. Naqvi was freed on bail and placed under a 24-hour curfew in his London apartment awaiting a trial to decide whether to extradite him to the U.S.
Arif Naqvi is currently living under a 24-hour curfew in his London apartment. PHOTO: LUKE MACGREGOR/BLOOMBERG NEWS
U.S. prosecutors have since indicted Mr. Naqvi for racketeering and accused him of paying bribes to Pakistani politicians. Part of their current investigation focuses on an alleged bribe they suspect may have been paid via an intermediary to former Pakistani Prime Minister Nawaz Sharif and his brother Shehbaz in 2016, the people said. Mr. Sharif was prime minister at the time and Mr. Naqvi was seeking government approval for the sale of Abraaj’s stake in the power distributor K-Electric Ltd. to a Chinese company. Shehbaz Sharif now leads the opposition in Pakistan’s parliament.
Mr. Naqvi founded Abraaj in 2002 and expanded the firm across Asia, Africa and Latin America to manage almost $14 billion, making Mr. Naqvi one of the most influential Pakistanis in the world. He was on the board of the fundraising foundation of Interpol, the global police agency, and his investors included the U.S., British and French governments, The Bill and Melinda Gates Foundation and Bank of America Corp.
Mr. Naqvi has repeatedly denied wrongdoing.
Pakistan’s current Prime Minister Imran Khan, above, also had contact with Arif Naqvi. PHOTO: AAMIR QURESHI/AGENCE FRANCE-PRESSE/GETTY IMAGES
A lawyer for the Sharif brothers said that they haven’t had any financial dealings of any kind with Mr. Naqvi or Abraaj and that they haven’t been contacted by U.S. prosecutors.
The financier cultivated contacts with politicians from various Pakistani parties, including current Prime Minister Imran Khan, who won power in 2018. When Mr. Naqvi was arrested in April, he gave British police a list of telephone numbers of people he was close to, including Mr. Khan, lawyers representing the U.S. government wrote in a court filing. Mr. Naqvi described Mr. Khan as a “very old friend” with whom he “goes back a long way,” the filing said.
Reham Khan, the divorced second wife of the prime minister, said in an interview with The Wall Street Journal that Mr. Naqvi was a donor to Mr. Khan’s unsuccessful attempt to become prime minister in 2013. She wrote in her autobiography that Mr. Khan told her Mr. Naqvi funded two-thirds of the 2013 campaign.
A spokesman for Mr. Khan declined to comment on Mr. Naqvi and said he wouldn’t comment on Ms. Khan as a matter of policy.
Pakistan’s former Prime Minister Nawaz Sharif arriving at a court in Lahore, Pakistan, earlier this month. PHOTO: K.M. CHAUDARY/ASSOCIATED PRESS
Pakistan’s electoral commission is investigating whether Mr. Khan’s political party received illegal funding from overseas. Mr. Khan’s spokesman said the party raised funds according to the law. He declined to comment on the investigation because it is continuing.
“Pakistan suffers an endemic leadership crisis,” said Akbar S. Babar, a founding member of Mr. Khan’s party whose petition to the electoral commission about alleged illegal overseas funding prompted the investigation. “Most political parties are run as individual or family fiefdoms.”
Abraaj’s most significant investment in Pakistan was the purchase in 2008 of a controlling stake in K-Electric, which distributes electricity to Karachi, Pakistan’s largest city. In 2016, Abraaj announced the sale of the stake to China’s state-controlled Shanghai Electric Power Co. for $1.77 billion. However, completion of the sale was delayed by regulatory hurdles and still hasn’t completed.
The Man Behind the World's Biggest Private-Equity Insolvency
Arif Naqvi, founder of Dubai-based private-equity firm Abraaj, said he could make profits by doing good. But investors suspected he was mismanaging their money, allegations Naqvi denies. Photo Illustration: George Downs/The Wall Street Journal
In an updated indictment in June, U.S. prosecutors accused Mr. Naqvi of racketeering and using bribery, alleging that in 2016 he authorized a $20 million payment to an official in Pakistan with connections to “two senior elected officials.” Those officials were the Sharif brothers, according to Abraaj documents reviewed by the Journal. The purpose of the payment was to gain government approval for the sale of Abraaj’s stake in K-Electric, according to the indictment.
“This document is explosive in the wrong hands,” Mr. Naqvi wrote about the contract for the $20 million payment in an email to an Abraaj executive in June 2016.
Abraaj had “executed the agreement to retain a particular entity as an adviser” on the K-Electric transaction in exchange for the $20 million payment by September 2016, according to the indictment. The intermediary between Mr. Naqvi and the Sharif brothers was Pakistani businessman Navaid Malik, according to documents reviewed by the Journal. Mr. Malik didn’t respond to requests for comment.
MORE ON THE COLLAPSE OF ABRAAJ GROUP
Mr. Naqvi also arranged employment for a relative of “Politician-2,” according to the indictment. Politician-2 is one of the Sharif brothers, according to documents reviewed by the Journal. Politician-2 “is a friend (and we ‘look’ after him from time to time),” Mr. Naqvi wrote in a 2016 email to a colleague, according to the June indictment.
In January 2017, Mr. Naqvi hosted a dinner for Nawaz Sharif at the World Economic Forum in Davos, Switzerland. “The single point of pride that I have more than anything else in what I do is that I am a Pakistani,” Mr. Naqvi said as he introduced Mr. Sharif. Mr. Malik helped organize the dinner, which cost Abraaj more than $348,000, according to a document reviewed by the Journal.
Abraaj was a trusted partner of Western governments and investors partly because of Mr. Naqvi’s self-proclaimed policy of zero-tolerance for corruption. When Mr. Naqvi discussed corruption during a 2017 debate, he said he “did everything by the book” when he invested in K-Electric in Pakistan. “We avoided every single point where you would have had to come into contact with the government, even though you were a utility, and have to pay someone something.”
U.S. prosecutors wrote in the June indictment that Mr. Naqvi used Abraaj funds to bribe and “to cover certain dining and travel expenses” for another Pakistani elected official referred to as Politician-4. The identity of this politician couldn’t be determined by the Journal.
U.S. prosecutors accused Mr. Naqvi in the June indictment of taking hundreds of millions of dollars from Abraaj for personal gain. They are investigating where the money went, one of the people familiar with the matter said.
Abraaj’s liquidators accused Mr. Naqvi of transferring $199.5 million from Abraaj to Silverline Holdings Ltd., a Cayman Islands-based company Mr. Naqvi owned, according to a document filed at the Cayman Islands court earlier this month. Neither Silverline nor Mr. Naqvi “had any entitlement” to the money and the liquidators want it back, according to the court filing. A spokesman for Mr. Naqvi declined to comment.
https://www.wsj.com/articles/u-s-in...hief-bribed-pakistani-politicians-11571925875
U.S. prosecutors probing Abraaj Group’s founder Arif Naqvi over alleged bribery
Pakistan’s then-Prime Minister Nawaz Sharif, center dressed in white, and Arif Naqvi, to his left, at a 2016 meeting with Shanghai Electric Power Co. officials. PHOTO: PRIME MINISTER'S OFFICE/ISLAMIC REPUBLIC OF PAKISTAN
By
Simon Clark in London and
William Louch in New York
Updated Oct. 24, 2019 10:07 am ET
U.S. prosecutors are investigating whether the founder of the bankrupt private-equity firm Abraaj Group bribed senior politicians in Pakistan, according to people familiar with the matter.
Arif Naqvi was arrested by U.K. police in London in April after U.S. prosecutors indicted him on charges of fraud. Dubai-based Abraaj was the largest private-equity firm based in emerging markets before it collapsed in 2018. Mr. Naqvi was freed on bail and placed under a 24-hour curfew in his London apartment awaiting a trial to decide whether to extradite him to the U.S.
Arif Naqvi is currently living under a 24-hour curfew in his London apartment. PHOTO: LUKE MACGREGOR/BLOOMBERG NEWS
U.S. prosecutors have since indicted Mr. Naqvi for racketeering and accused him of paying bribes to Pakistani politicians. Part of their current investigation focuses on an alleged bribe they suspect may have been paid via an intermediary to former Pakistani Prime Minister Nawaz Sharif and his brother Shehbaz in 2016, the people said. Mr. Sharif was prime minister at the time and Mr. Naqvi was seeking government approval for the sale of Abraaj’s stake in the power distributor K-Electric Ltd. to a Chinese company. Shehbaz Sharif now leads the opposition in Pakistan’s parliament.
Mr. Naqvi founded Abraaj in 2002 and expanded the firm across Asia, Africa and Latin America to manage almost $14 billion, making Mr. Naqvi one of the most influential Pakistanis in the world. He was on the board of the fundraising foundation of Interpol, the global police agency, and his investors included the U.S., British and French governments, The Bill and Melinda Gates Foundation and Bank of America Corp.
Mr. Naqvi has repeatedly denied wrongdoing.
Pakistan’s current Prime Minister Imran Khan, above, also had contact with Arif Naqvi. PHOTO: AAMIR QURESHI/AGENCE FRANCE-PRESSE/GETTY IMAGES
A lawyer for the Sharif brothers said that they haven’t had any financial dealings of any kind with Mr. Naqvi or Abraaj and that they haven’t been contacted by U.S. prosecutors.
The financier cultivated contacts with politicians from various Pakistani parties, including current Prime Minister Imran Khan, who won power in 2018. When Mr. Naqvi was arrested in April, he gave British police a list of telephone numbers of people he was close to, including Mr. Khan, lawyers representing the U.S. government wrote in a court filing. Mr. Naqvi described Mr. Khan as a “very old friend” with whom he “goes back a long way,” the filing said.
Reham Khan, the divorced second wife of the prime minister, said in an interview with The Wall Street Journal that Mr. Naqvi was a donor to Mr. Khan’s unsuccessful attempt to become prime minister in 2013. She wrote in her autobiography that Mr. Khan told her Mr. Naqvi funded two-thirds of the 2013 campaign.
A spokesman for Mr. Khan declined to comment on Mr. Naqvi and said he wouldn’t comment on Ms. Khan as a matter of policy.
Pakistan’s former Prime Minister Nawaz Sharif arriving at a court in Lahore, Pakistan, earlier this month. PHOTO: K.M. CHAUDARY/ASSOCIATED PRESS
Pakistan’s electoral commission is investigating whether Mr. Khan’s political party received illegal funding from overseas. Mr. Khan’s spokesman said the party raised funds according to the law. He declined to comment on the investigation because it is continuing.
“Pakistan suffers an endemic leadership crisis,” said Akbar S. Babar, a founding member of Mr. Khan’s party whose petition to the electoral commission about alleged illegal overseas funding prompted the investigation. “Most political parties are run as individual or family fiefdoms.”
Abraaj’s most significant investment in Pakistan was the purchase in 2008 of a controlling stake in K-Electric, which distributes electricity to Karachi, Pakistan’s largest city. In 2016, Abraaj announced the sale of the stake to China’s state-controlled Shanghai Electric Power Co. for $1.77 billion. However, completion of the sale was delayed by regulatory hurdles and still hasn’t completed.
The Man Behind the World's Biggest Private-Equity Insolvency
Arif Naqvi, founder of Dubai-based private-equity firm Abraaj, said he could make profits by doing good. But investors suspected he was mismanaging their money, allegations Naqvi denies. Photo Illustration: George Downs/The Wall Street Journal
In an updated indictment in June, U.S. prosecutors accused Mr. Naqvi of racketeering and using bribery, alleging that in 2016 he authorized a $20 million payment to an official in Pakistan with connections to “two senior elected officials.” Those officials were the Sharif brothers, according to Abraaj documents reviewed by the Journal. The purpose of the payment was to gain government approval for the sale of Abraaj’s stake in K-Electric, according to the indictment.
“This document is explosive in the wrong hands,” Mr. Naqvi wrote about the contract for the $20 million payment in an email to an Abraaj executive in June 2016.
Abraaj had “executed the agreement to retain a particular entity as an adviser” on the K-Electric transaction in exchange for the $20 million payment by September 2016, according to the indictment. The intermediary between Mr. Naqvi and the Sharif brothers was Pakistani businessman Navaid Malik, according to documents reviewed by the Journal. Mr. Malik didn’t respond to requests for comment.
MORE ON THE COLLAPSE OF ABRAAJ GROUP
- Abraaj Founder Arif Naqvi Accused of Misappropriating More Than $250 Million in New Indictment (June 13)
- Abraaj Founder Charged With Fraud in U.S. (April 11)
- Private-Equity Firm Abraaj Raised Billions Pledging to Do Good—Then It Fell Apart (Oct. 16, 2018)
Mr. Naqvi also arranged employment for a relative of “Politician-2,” according to the indictment. Politician-2 is one of the Sharif brothers, according to documents reviewed by the Journal. Politician-2 “is a friend (and we ‘look’ after him from time to time),” Mr. Naqvi wrote in a 2016 email to a colleague, according to the June indictment.
In January 2017, Mr. Naqvi hosted a dinner for Nawaz Sharif at the World Economic Forum in Davos, Switzerland. “The single point of pride that I have more than anything else in what I do is that I am a Pakistani,” Mr. Naqvi said as he introduced Mr. Sharif. Mr. Malik helped organize the dinner, which cost Abraaj more than $348,000, according to a document reviewed by the Journal.
Abraaj was a trusted partner of Western governments and investors partly because of Mr. Naqvi’s self-proclaimed policy of zero-tolerance for corruption. When Mr. Naqvi discussed corruption during a 2017 debate, he said he “did everything by the book” when he invested in K-Electric in Pakistan. “We avoided every single point where you would have had to come into contact with the government, even though you were a utility, and have to pay someone something.”
U.S. prosecutors wrote in the June indictment that Mr. Naqvi used Abraaj funds to bribe and “to cover certain dining and travel expenses” for another Pakistani elected official referred to as Politician-4. The identity of this politician couldn’t be determined by the Journal.
U.S. prosecutors accused Mr. Naqvi in the June indictment of taking hundreds of millions of dollars from Abraaj for personal gain. They are investigating where the money went, one of the people familiar with the matter said.
Abraaj’s liquidators accused Mr. Naqvi of transferring $199.5 million from Abraaj to Silverline Holdings Ltd., a Cayman Islands-based company Mr. Naqvi owned, according to a document filed at the Cayman Islands court earlier this month. Neither Silverline nor Mr. Naqvi “had any entitlement” to the money and the liquidators want it back, according to the court filing. A spokesman for Mr. Naqvi declined to comment.
https://www.wsj.com/articles/u-s-in...hief-bribed-pakistani-politicians-11571925875
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