Dubai's Abraaj said to owe $20m to staff - Gulf Business
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Dubai’s Abraaj said to owe $20m to staff

Dubai’s Abraaj said to owe $20m to staff

A criminal case has been issued against the company’s founder, according to reports

The liquidator of troubled Dubai investment firm Abraaj is reportedly exploring ways to make up to $20m of payments owed to staff.

Bloomberg reports that around 90 employees, including back-office staff, secretaries and receptionists, are concerned that they will not receive their end of service gratuity payments because of the firm’s current financial difficulties.

A source confirmed the amount owed could be as much as $20m.

The company’s founder Arif Naqvi is facing a criminal charge for issuing a cheque without sufficient funds.

Read: Abraaj founder Naqvi faces criminal charges for bounced cheque

The bounced cheque was used as partial security for loans worth around $300m taken by Abraaj from Hamid Jafar, founder of Sharjah’s Crescent Group, a source told the Financial Times.

A lawyer close to the case told Reuters on Thursday that a Sharjah court adjourned its judgement in the case until July 5 having issued arrest warrants earlier this month against Naqvi and fellow executive Muhammad Rafique Lakhani.

A Sharjah court has adjourned until July 5 a judgment against the founder of private equity firm Abraaj and another executive for issuing a cheque without sufficient funds, a lawyer close to the case told Reuters on Thursday.

The current UAE gratuity system pays 21 days of salary for each year of service, up to five years, when the employee leaves their job or retires.

After five years of service this payment increases to 30 days of salary for each year of service.

Read: UAE government encouraged to replace end-of-service gratuity with savings fund

Abraaj provisional liquidator PwC has raised finance “principally in order to fund the company’s payroll costs this week’, the firm’s restructuring partner Mike Jervis was quoted as saying.

“We are in contact with the Deloitte team appointed to Abraaj Investment Management Ltd. to work out how other employee payments can be met.”

Sources told Bloomberg that Abraaj may have unpaid bills to some advisory firms and for rents on its Dubai International Financial Centre headquarters.

The company’s troubles started after a dispute with some of its investors over the use of their money in a $1bn healthcare fund.

The group denied it misused the funds.

On Monday, it was announced that the co-chief executives of Abraaj Investment Management Ltd (AIML) would be stepping down from the board of the unit.

Read more: Abraaj investment management business co-CEOs resign from board

That came after a court in the Cayman Islands appointed provisional liquidators for Abraaj Holdings and AIML last week as the firm tries to restructure its debt.

Abraaj also agreed to sell its Latin America, Sub Saharan Africa, North Africa and Turkey Funds management business to US investment management firm Colony Capital last week.

Read more: Dubai’s Abraaj sells part of its fund business to US firm Colony Capital


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