The spectacular rise and fall of an investor darling

The key man. By Simon Clark and Will Louch. Harper’s Company; 352 pages; $ 29.99. Penguin business; £ 20

ATHE HEIGHT of his success, Arif Naqvi liked to remind his colleagues that “the peacock of today is the feather duster of tomorrow”. It ended up being an apt description of his own destiny. As the head of the Abraaj group, the Pakistani-born financier spread his wings and attracted billions of dollars from global investors, only to end up being named by prosecutors as the alleged perpetrator of one of the biggest frauds in the world. business of history – accusations he denies.

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Abraaj never became a household name. At its peak in the mid-2010s, however, it claimed to be the world’s largest private equity group focused on emerging markets. Less than a decade after the company was founded in 2002, Mr. Naqvi had forged a reputation as a swaggering empire builder, propelled by cheeky chords and a knack for self-promotion. he was one of Davos’ most ardent pressers of flesh. He boosted his image with bursts of philanthropy. At one point, he was even nominated as the future prime minister of Pakistan.

For investors who needed to increase Abraaj’s private equity funds, the biggest draw was that Mr. Naqvi appeared to be a master of “impact investing,” according to “The Key Man,” a account of his rise and fall by Simon Clark and Will Louch from the Wall Street newspaper. This more benevolent form of capitalism of trying to make profit and do good at the same time was appropriate at the time. Mr. Naqvi “has been sought after by billionaires and their millennial heirs who have enthusiastically embraced the idea of ​​impact investing and the feel-good veneer it gave to the old game of making money.” Among those who invested in Abraaj’s funds were the Bill & Melinda Gates Foundation, the World Bank, and governments in the West and Middle East.

Academics and journalists have also benefited. A prominent Harvard professor has become a cheerleader for Abraaj. Institutional investor, an industry publication, crowned Mr. Naqvi “the king of the Gulf Redemption.” (The company’s headquarters were in Dubai, a suitable base given the emirate’s reputation as a free-wheeling financial center.)

The seeds of Abraaj’s downfall, the authors say, were the meteoric expansion of the business and the increasingly lavish lifestyle of Mr. Naqvi, which left the business struggling to cover its costs, including including salaries. To get things done, Mr Naqvi and some of his lieutenants reportedly began sweeping more and more free money from Abraaj’s funds into secret bank accounts they controlled, violating a cardinal rule of management. of assets: that investor funds should never be mixed with company money. The more investor money was diverted this way, the book says, the more the additional financial juggling was worked out to make it appear to them and the rest of the outside world as if nothing was going on. The tension appears to have pushed the financial director of Mr Naqvi, a devout Pakistani accountant, to the brink of a nervous breakdown.

The so-called jiggery-pokery began to unravel when the Gates Foundation noticed discrepancies in a healthcare fund it had invested in. Whistleblowers have come forward; investigations have been launched. Abraaj collapsed into liquidation.

US prosecutors have accused Mr. Naqvi of running a criminal enterprise that “corrupted” Abraaj between 2014 and 2018. He faces a lengthy prison sentence if convicted. Having lost his battle against extradition, he is indeed under house arrest in London on bail of 15 million pounds sterling (20.7 million dollars) – a British record – while he appeals. In 2019, a former senior Abraaj executive pleaded guilty in New York to fraud and racketeering. Later that year, Mr Naqvi himself was convicted of fraud in the United Arab Emirates and sentenced to three years in prison for loans from an airline allegedly used to fill a gap in the accounts of ‘Abraaj.

“The Key Man” is impeccably researched and lavish in detail. But sometimes the writers are too eager to share whatever they’ve gleaned, for example in pages and pages about the buyout of an electric utility in Pakistan, or Mr. Naqvi’s bail hearings. . A jump in time for a long description of the Gates Foundation’s early involvement with Abraaj, as things got really tense in 2016, is special. The book would have been better without these diversions, at two-thirds of its length.

For the most part, however, it’s a page turner, built around a captivating portrayal of the key man in the title. Mr. Naqvi comes across as a swarming mass of contradictions: a charming and generous character who inspired great loyalty, but was also intimidating and smug. “He spoke of his love for democracy but his employees lived through a dictatorship,” the authors conclude. He told whoever wanted to hear him that he was on Interpol’s board of directors, when his role was actually in a foundation linked to him. He liked to compare himself to the heroes of history, real and imagined, from Moses to Sinbad.

The book is also a timely reminder that it is when financial firms offer services that seem to be fashionable, and are growing rapidly as a result, that their scrutiny is most needed. The list of those too mesmerized by Abraaj’s profit-with-purpose mantra to ask serious questions is uncomfortably long. With money, like with missiles, trust but verify. â– 

This article appeared in the Books and Arts section of the print edition under the title “All that shines”

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