Two separate investigations into Dubai-based private equity firm Abraaj Group found potential irregularities in a $1bn healthcare fund and other vehicles, according to reports.
The new comes amid calls from investors for Abraaj founder Arif Naqvi to further scale backs his involvement in the group, after passing the reins of the fund management arm to two new co-chief executives in February, as controversy over the potential misuse of funds continues.
Bloomberg cited sources as confirming an audit commissioned by the Bill and Melinda Gates Foundation, the World Bank Group’s International Finance Corp and other investors suggested money from the healthcare fund was being diverted elsewhere.
New of the audit prompted Abraaj to conduct a review of its corporate structure, cut staff, put a $6bn fund on hold and return $3bn in commitments to investors.
It also ordered a second review by professional services firm Deloitte last month after investors questioned an initial investigation by KPMG.
Bloomberg said the preliminary findings of this review also suggested potential discrepancies in the accounting at Abraaj’s other investment funds.
Deloitte is said to be discussing its findings with the Dubai Financial Services Authority (DFSA) as the review continues.
The sources said the DFSA has yet to decide on a course of action.
The additional regulatory scrutiny comes at a difficult time for Abraaj as it seeks buyers for its investment unit. Two to three bidders are in acquisition talks including Los Angeles-based Colony Northstar, Reuters reported.
Abraaj has previously stated that any discrepancy between money it collect and amounts investors was due to ”unforeseen political and regulatory developments” in several markets that led to delays.
Ankura Consulting Group, which was hired by high profile investors including the Bill and Melinda Gates Foundation in relation to the $1bn healthcare fund, found instances of funds being diverted to other investments, according to Bloomberg.
The controversy has brought regional private equity deals and fundraising to a halt and further controversy could undermine Dubai’s reputation as a financial hub, sources told the news service.