Words: Will
When a great white shark stops moving, it dies. Something to do with ‘ram obligate breathing’, apparently, and a distinct lack of buccal muscles, and the flow of oxygenated water into the old gills. But in short: the poor beast has to swim constantly onwards, striving forever forward, never ceasing or relaxing or sleeping or pausing for thought — or the game’s up. Dead meat. Fish food. The big sleep. Or, if you’re a certain kind of shark: six consecutive life sentences in federal custody and a few billion dollars in the hole.
Arif Naqvi was a big fish in a moderate-sized pond. There were larger funds in the private equity game; funds with more impressive returns; funds with more prestigious names and locations and legacies. But none that were quite as splashy and drooled over, for a period, as Abraaj — the Dubai-based firm which promoted a brand of have-your-cake-and-eat-it capitalism all of its very own. At the head of the company sat Naqvi, a self-made financial guru with the timbre of a Ted Talk regular, the easy charm of a talk show host, and the messianic certainty of a cult leader. His promise to investors and governments around the world was simple: that they could make lots and lots of money and do lots and lots of good at the exact same time. Abraaj, which for a while managed some $14 billion dollars, pledged to buy up and improve struggling companies in emerging or developing markets — and in doing so, apparently, set in motion a series of cosmic dominos which would one day end the existence of global poverty altogether. (And hunger, and disease, and illiteracy, and climate change, and inequality, and just about any other modern-day horseman you care to name.) It was the great win-win in the sky; the Diet Coke of global investment: same great profits, none of that pesky existential guilt.
Abraaj Group HQ in Dubai
If something sounds too good to be true, however, it almost certainly is. By the summer of 2019, Abraaj had become the latest in a series of modern morality plays populated by a memorable cast of clear-eyed, hype-fueled founders: Bernie Madoff’s colossal Ponzi-scheming; the bluster and hippyish vision of Adam Neumann at WeWork; the chilly, polo-necked genius of Elizabeth Holmes’s fraudulent Theranos. Like those before him, Naqvi was blessed with a potent knack for storytelling, showmanship and self-mythology which blinded the smartest people in the room to his company’s inherent flaws. (KPMG, auditors to the firm, said they saw nothing fishy on Abraaj’s books; Freshfields, the London law firm, also deemed everything A-Ok.) Naqvi also displayed a familiarly impressive talent for self-deception. Even while his company had begun haemorrhaging cash, locked in a drastic tailspin towards scandal, ignominy and criminality, the Abraaj posterboy trotted around the world, lecturing governments and luminaries, chumming up to billionaires and the global press. He was the great white shark of global finance: moving ever onward, upping the stakes constantly, doubling down on his rickety ruse, terrified to stop for a single second.
When the going was good, however, it was very, very good. In the nervy, awkward years following the 2008 financial crisis, the idea of ‘impact investing’ was shifting rapidly from CSR buzzword to mainstream policy. And as the unrest of the Arab Spring swelled soon after, the Pakistani-born entrepreneur seemed eerily well-placed to bring a Western-style capitalism to the Middle East and beyond. The cash and the plaudits poured in. For a long time, if you Googled Naqvi’s name, you’d be met only with puffy, fluffy profiles of the businessman from the likes of Forbes and the New York Times.
"He was the great white shark of global finance: moving ever onward, doubling down on his rickety ruse..."
If something sounds too good to be true, however, it almost certainly is. By the summer of 2019, Abraaj had become the latest in a series of modern morality plays populated by a memorable cast of clear-eyed, hype-fueled founders: Bernie Madoff’s colossal Ponzi-scheming; the bluster and hippyish vision of Adam Neumann at WeWork; the chilly, polo-necked genius of Elizabeth Holmes’s fraudulent Theranos. Like those before him, Naqvi was blessed with a potent knack for storytelling, showmanship and self-mythology which blinded the smartest people in the room to his company’s inherent flaws. (KPMG, auditors to the firm, said they saw nothing fishy on Abraaj’s books; Freshfields, the London law firm, also deemed everything A-Ok.) Naqvi also displayed a familiarly impressive talent for self-deception. Even while his company had begun haemorrhaging cash, locked in a drastic tailspin towards scandal, ignominy and criminality, the Abraaj posterboy trotted around the world, lecturing governments and luminaries, chumming up to billionaires and the global press. He was the great white shark of global finance: moving ever onward, upping the stakes constantly, doubling down on his rickety ruse, terrified to stop for a single second.
When the going was good, however, it was very, very good. In the nervy, awkward years following the 2008 financial crisis, the idea of ‘impact investing’ was shifting rapidly from CSR buzzword to mainstream policy. And as the unrest of the Arab Spring swelled soon after, the Pakistani-born entrepreneur seemed eerily well-placed to bring a Western-style capitalism to the Middle East and beyond. The cash and the plaudits poured in. For a long time, if you Googled Naqvi’s name, you’d be met only with puffy, fluffy profiles of the businessman from the likes of Forbes and the New York Times.
He was honoured with an Oslo Business for Peace Award by a cast of Nobel Prize Laureates. He swanned around on a 154-foot yacht and entertained clients and powerful friends on his private jet. He was an acquaintance of Prince Charles and John Kerry, and a darling of the Davos set. He held legendary, four-day, five-star bacchanals on company retreats, flying in staff members from around the world, drinking them under the table, and emerging bright and early without a hint of a hangover. American academics predicted he had a decent shot, one day, at becoming Prime Minister of Pakistan. Bill Gates helped him build a $1 billion fund to improve healthcare in poverty-stricken countries. The British, American and French governments all invested heartily in his schemes. Naqvi was, in many ways, the ultimate ‘Key Man’ — a term used in private equity circles to describe a firm’s most important player. But the phrase had never been more poignant. It seemed, to so many, for such a long time, that this charismatic, silver-tongued genius might just be able to unlock some of society’s most intractable problems, and make everyone rich in the process. Then, inevitably, the wheels began to wobble.
On a quiet afternoon in January 2018, a mysterious email dropped into the inbox of a reporter at the Wall Street Journal in London. The sender refused to give their name, but they led with an ominous sentiment: “it’s all sad but true.” In the weeks and months to come, the anonymous whistleblower would go on to share a series of damning revelations about Abraaj and its frontman: stories of overvalued funds, systematically manipulated profit and loss sheets, widespread malpractice, and endemic fraud. Within just a few months, as word got out and the vultures circled, Abraaj’s holding company would file for liquidation with debts of over $1 billion. In a little over a year, its brilliant leader would be arrested at Heathrow Airport by UK authorities on charges of securities fraud, wire fraud, money laundering, and bribery. The events in between are tracked, in brilliant detail and high definition, in a remarkable new book by the two journalists at the heart of the story. Here, Will Louch recalls his journey into one of the most outrageous and far-reaching corporate scandals in modern times: a tale that takes in colossal sums, Wolf of Wall Street-grade excess, olympic charm offensives — and a shared delusion that entirely hoodwinked the global financial elite. — Joseph Bullmore
Naqvi with Richard and Sam Branson at the Skoll World Forum, 2014
The story quite literally fell into my inbox. One day in January 2018 I was sent an email from an odd address, which said that a man I’d never heard of, called Sev Vettivetpillai, a senior executive at a firm called Abraaj, was leaving his job. I read it, and thought: ‘that’s not particularly interesting’. It’s not something I’d necessarily even bother checking out. But for some reason that day I did. And then it became clear that there was more to this than met the eye.
I guessed Sev’s email address and asked him why he was leaving — where he was going and what he was doing next. He replied and said: “I’m not leaving. I don’t know who’s told you that. Where’s this come from?” But the next morning, the source emailed again. And they came back with a whole load of information. They said that investors in the firm — including the Gates foundation and some others — were investigating allegations of fraud, and that Abraaj was in $800 million of debt, which is almost unheard of for a private equity firm. They said that money was missing from one of the funds that they managed — a $1 billion dollar healthcare fund that they had set up in conjunction with Bill Gates and the U.S. government, among others.
I shared this information with colleagues, including my co-author Simon who had met Arif before, and we started looking at what Abraaj was and what they did, and who their partners were. If you Googled Arif Naqvi, the CEO of Abraaj, you would get glowing reviews across the board. As much as this wasn’t a huge investment firm, Arif was a very important person in the world of finance, and especially in this growing market of impact investing, where you invest money to make money, but also to do good as well. The Obama administration saw Arif as a key partner in helping bring stability to the Middle East. Bill Gates thought he was capable of transforming healthcare provision to the world’s poorest people. U.S. academics predicted he was going to become Prime Minister of Pakistan.
"What was interesting was the contrast between what was being alleged and what Abraaj said they were doing..."
What was interesting was the contrast between what was being alleged here and what Arif and Abraaj said they were doing. Obviously, it would be very bad for someone to have stolen hundreds of millions of dollars from any investment firm. That in itself would be a big story. But the tension with what Arif was saying publicly and what he was actually doing meant this had the potential to be a huge story.
At the exact same time that we were trying to get the story confirmed, the World Economic Forum at Davos began. You get everyone there, from the President of the US to the President of China; pretty much every single important business leader in the world; and lots of journalists, including, for example, the editor of the Wall Street Journal. One day at Davos in 2018, Arif was sitting on stage with Bill Gates. And we knew, at that precise moment, that tens of millions of dollars were missing from this fund, some of which was the Gates foundation’s money, and that the Gates foundation itself was leading an investigation into where its money had gone. Bill Gates himself was aware, at this point, that there was a big problem. Arif begins to talk about his partnership with Gates, and he’s looking right at him — and the body language that comes back is frosty to say to the least. Arif then starts to lecture Bill Gates at the end of the talk. The balls that he had — to get on stage and do that, whilst he knows he’s misused his money — are astonishing.
The world of private investment is very secretive. Many of the investors whose money was missing were embarrassed that they’d invested in Arif, so at that point very little came out publicly. The really big moment was when Arif got arrested getting off an airplane in London in April 2019. But most people thought he’d just get a slap on the wrist from regulators, and everyone else would quietly think: ‘god, it’s really embarrassing that we spent 15 years building this guy up and now his company’s gone bust.’ But actually the US government had been investigating his firm for quite a long time.
I’ve only ever had one conversation with Arif in my entire life. Simon and I had a phone call with him which lasted a couple of hours. I read him some details from documents we had obtained. They were pretty clear-cut in demonstrating that there were issues with money missing from funds that Abraaj managed. I didn’t find him particularly compelling — but that said, he did stop us publishing the particular story we wanted to publish, and, with the benefit of hindsight, he did completely bamboozle me. He also tried to charm us. Simon had a pretty weird relationship with him. He was always very friendly and courteous and would promise to meet, only to cancel. He would also never answer our questions. Simon would send him a list of direct queries, and he would send back very grandiose, fluffy emails that said nothing in particular.
"Arif was very much the showman of the company. Everyone that worked there said he was kind of brilliant..."
Arif was very much the showman and the centrepiece of the company. Everyone that worked there said he was kind of brilliant in his own way. Most people also described the firm as being like a cult. Abraaj was effectively insolvent from about 2014 onwards. So to be able to get up on stage, hundreds of times a year, and to speak in front of your employees and investors and say all the things he said — we’re here to do good, to change the world, and change the way the financial system works — all the while allegedly stealing hundreds of millions of dollars, you have to be extraordinarily resilient to keep it up for that long. Or deluded. It takes a complicated guy to be able to say one thing and do the exact opposite. He was conflicted, confused — and very clever.
A big reason behind Abraaj’s success was the financial crisis in 2008, and the sense, suddenly, that maybe capitalism wasn’t all that great. At that point, some people maybe realized the system wasn’t really working for everyone and wanted to do some good with their money. Impact investing was a term allegedly coined at a meeting of the Rockefeller Foundation at around that time, in a villa by Lake Como — which seems like a fitting place for solving the problems of the global poor. The idea was that you use capitalism to make money, but also do good at the same time by improving access to education and healthcare for those who need it, for example. Arif seized on this message. The moral certainty and the conviction with which Arif said things certainly helped his pitch to these people. It was a really seductive story. This was helped by his background. He was from Pakistan, and worked in Saudi Arabia and lived in Dubai. He actually understood these places, much better than some white, Harvard grad who had spent 20 years working on Wall Street.
The Abraaj story is full of the classic Wolf of Wall Street elements. In fact, Arif’s alleged fraud was a lot more impressive than Jordan Belfort’s. Belfort scammed supposedly ‘unsophisticated’ investors who didn’t know much about finance. Arif scammed some of the most intelligent, powerful people and organizations in the world. The firm’s culture was also interesting to say the least. They used to have these town hall meetings which went on for a few days. Every single person in the company, which had offices all around the world, would be flown into Dubai, put up in a five star hotel — and made to get shitfaced for three days. Arif was a big boozer, apparently. He could stay up and drink until really late at night, and get up the next morning and appear absolutely fine. People say he had phenomenal stamina, and he expected everyone to do the same as him. You couldn’t really go to bed — you were expected to indulge yourself to the same extent. He hosted one dinner in Davos that cost $348,000. There was an unbelievable amount of sex going on, too. Arif’s excesses put the firm in an impossible financial situation. And once we ran a few stories, investors and lenders began to get scared and the firm collapsed. It all happened very quickly.
We published our first story in February, and by June the firm filed for bankruptcy. It’s incredibly rare for a private equity firm itself to go bust, as they earn so much money in fees from investors. Arif was spending ludicrous sums. When it collapsed, it was kind of unprecedented.
"We all need to be prepared to ask more difficult questions of rich and powerful people..."
At this moment in time Arif still, maybe, has one appeal left to go and is under house arrest in London. He hasn’t been extradited to the US yet. The response from lawmakers has been mixed. The UK regulator, to my knowledge, did absolutely nothing. The Dubai regulator fined Abraaj $315 million— though I’m not sure what the point is in fining an organisation that’s bankrupt and doesn’t really exist any more. The Department of Justice has been pretty thorough, and now Arif is facing up to 291 years in a US prison. That’s a long time — I think Madoff only got 150 years. Arif’s second in command was arrested in New York and pleaded guilty to a number of charges already. Arif still denies all charges.
The good that could come out of this story is that people can stop something like this happening again. It could be as simple as them doing their jobs, and looking a bit closer at the numbers. So many organisations loved the Abraaj story, but they should have done their diligence checks to make sure that what Arif was saying was true.
There’s one figure we met in New York who’s a consultant, and advises US State pension plans where to put their money. He met Bernie Madoff in the 1990s, and he met Arif Naqvi in 2015. And he didn’t invest with either — because neither of them could really explain how they were able to do something that no-one else could. All he did was ask a few questions that Arif couldn’t answer, and that was enough for him to know that something was seriously wrong. But he’s an outlier. There needs to be more transparency and when there are conversations about solving the problems facing society, they need to be more inclusive. This story shows the danger of letting billionaires and CEOs set the agenda, as sometimes their motives aren’t always altruistic as they seem. We all need to be prepared to ask more difficult questions of rich and powerful people. — Will Louch
Read next: The return of the original rogue trader
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