There was a time when Arif Naqvi was the darling of the economic world. Jet-setting between Davos and Dubai, his name and that of his multibillion-dollar equity firm The Abraaj Group became synonymous with impact investing in emerging markets the rest of the world had long ignored.
That is until, as some would say, he flew too close to the sun. In a series of exposés, the Wall Street Journal portrayed Abraaj as an elaborate Ponzi scheme designed to defraud the richest people in the world. Naqvi himself was painted as a ‘criminal genius’, the ‘key man’ in this grand global criminal conspiracy.
For at least one independent researcher, there is more than meets the eye to what befell the global private equity firm and the man behind it. In his book ‘Icarus: The Life and Death of The Abraaj Group’, contemporary historian Dr Brian Brivati uses extensive research and interviews with key figures to argue there is actually no money missing in this case of alleged fraud.
Abraaj, he suggests, was wiped out in a series of ‘economic precision strikes’ after being caught in the US-China geopolitical war. As for Naqvi himself, his cardinal may have more to do with his race and national background than his supposed mistakes.
The Express Tribune reached out to Dr Brivati to discuss the findings he reveals in his thrilling new book. In an in-depth exclusive interview, he discusses how he developed a keen interest in the case and why the Abraaj founder was ultimately a victim of prejudice.
ET: How did you discover and what sparked your interest in Arif Naqvi’s case? What was that journey like in personal terms?
BB: Most of the work that I do is international and usually entails trainings in countries like Iraq, Lebanon and Jordan. But when Covid-19 hit, I couldn’t travel and so I decided to look for a book to write.
My initial idea was to work around the theme of stasis. The idea that we were globally in this in two ways – a stasis of lockdown but also this civil conflict between rationalism and irrationalism, between democracy and rule of law, and populism and Trump. It was in that process that I came across the Naqvi case.
Now, in the UK, for someone to be under house arrest is very unusual, especially when that someone is also fighting extradition and there is no coverage whatsoever of it. I was writing a series of portraits of people in stasis and found this fascinating. I thought I’d write one of my blogs about this man under house arrest – the prisoner in South Kensington.
I wrote to his lawyers initially, but they ignored me. I spent a day at the magistrate’s court and that piqued my interest further. Leaving the court, I walked to the bus stop with one of these WSJ journalists and he was so path dependent that Naqvi was guilty.
It reminded me of Truman Capote and his famous book ‘In Cold Blood’. Capote was desperate for this one guy to be executed so he could finish his book. The moral ambiguity of that is just stunning. I thought this [WSJ] journalist was in the same boat – he wants Naqvi to be extradited so he can finish his own book.
So I became intrigued and started digging. I read the indictment and I felt there was a new thread there. And then I met Naqvi’s son at the court, and he agreed to have a coffee with me. He’s a lovely guy. He said to me “well, write something and send it to me.” I did and I got the interview [with Naqvi].
Once I had the interviews, the documents fell into my hands from a young journalist from the Gulf and there is a vast amount of stuff online – frankly I could still be researching. But then the other book on Naqvi (‘The Key Man’ by Simon Clark and Will Louch) was coming out in July so my publisher said lets get it out at the same time so that we can have our side of the story alongside it.
In some ways, me and the authors of The Key Man are not far apart. Let’s be clear, I’m not saying that Naqvi did nothing wrong and there shouldn’t be a court case, but I’m much more interested in what took this company down.
Three things interest me in particular: one, Karachi Electric and the part that played in the overall geopolitical story; two, the part identity and race play in how this all unfolded; and three, the part the media and especially WSJ play as actors in the destruction of Abraaj.
ET: In your book, you make the suggestion that what happened to Arif Naqvi may have been coloured by prejudice from a Western lens and that the narrative around him may have been influenced by stereotypes.
BB: The picture of the story that was out there that made a kind of sense, but we need to question it very hard. Because from a white Western perspective one part of it is that Mr Naqvi is Pakistani and therefore the narrative of corruption seemed to ‘fit’.
I do a lot of work in Iraq, conducting trainings and capacity building, and advising the government, and I get the same all the time. There’s a natural assumption that if you’re in Iraq, you must be corrupt. But how can anyone who lived through the Trump administration say that Western governments or Western individuals are by definition not corrupt compared to Pakistanis or Iraqis? We’ve got to throw out these assumptions, prejudices and categories and take each case on its merits.
I’m not saying Arif Naqvi didn’t have faults. He was a driven, egotistical, loquacious dealmaker and capitalist. If he were all of those things and white, he would not in my opinion be under house arrest in South Kensington today. He would have been fined or he would have faced a civil case.
Certainly he made mistakes; things went wrong, there were flaws with that company. But I bet you all the money in my pocket against all the money in your pocket that he wouldn’t be in the position he is in now if he was white.
ET: That is certainly the impression one gets from your book. Many of these qualities are not crimes. They may be personality flaws to some, but they are also qualities certain corporate cultures ask you to cultivate. In fact, if listed in a book about someone white and American, they may even be framed as ‘heroic virtues’.
BB: I agree they would be seen as virtues and signs of risk-taking. If Naqvi were American we would be celebrating him.
One of Naqvi’s oldest friends in one of the interviews described him as blindly optimistic. He was taking these huge risks; like that Karachi Electric would be sold, $550 million would come into his company and he would have closed the global fund APEF VI (Abraaj Private Equity Fund VI) and taken a step up in terms of scale. He would have $20 billion, a mind-blowing number, under management and a single global fund. He would have sold KE to Shanghai Electric like he promised as part of a long-term investment programme to keep up the progress they had started. Abraaj would have $120 million coming in as management fees and they would have kind of gotten to a point where they were stable. It would have been written up, like other things they did were written up, by the Harvard Business School.
Naqvi made a bet but the real question is did the bet fail because he lost the race or did it fail because there was a ‘fix in’ and he was never going to win. In the view of Simon Clark and Will Louch who wrote The Key Man – I saw there’s a review of it in an Indian newspaper by a member of the Indian intelligence – Naqvi was a crook and the bet he made failed because the things he did were wrong.
I agree that he did things wrong and made mistakes; I agree he was a flawed individual. But he never stood a chance, in my view, because there was a ‘fix in’ against him and his horse was never going to win.
ET: For someone from Karachi, there is a personal stake in who runs KE and how. But reading your book, you develop some sympathy for Naqvi. You emphasise that beyond ambition, he did seem to be driven by patriotism and a desire to turn greed into good.
BB: What you say is interesting. You suffer from outages in Karachi and how well KE is run matters to you hugely. But what came across to me when I interviewed Naqvi was that one bit of this guy is still a kid from Karachi and the pride of ownership was definitely there.
Of course there were huge potential political benefits [from the KE sale]. His company was going to make a lot of money. But in the end there is almost a kind of boyishness about the fact that he pulled that off. Making a difference mattered to him a huge amount and I don’t think it’s an accident that KE was one of their big deals.
But yes, it was also feeding his ambition. He wanted to be finance minister in Imran Khan’s government. If that deal had come off, who knows? There are layers to it.
One may ask: why not stay in Karachi and go into business there? But Naqvi felt he had to get out. There is a driven ambition and as with so many other people, a feeling that the only way to realise it is by getting out.
He went to Dubai. He was quite successful in his early career in American Express and bringing franchises to Dubai. He then had his first huge win with Inchcape, which was a real coup. In making that deal he made enemies right at that first point.
One of the quotes I use in the book goes exactly to this point. In the Gulf you have 50 per cent local ownership. When Naqvi bought Inchcape he ended up owning 49 per cent of these companies owned by Arabs. An Arab owner of one of these companies was told “your partner who owns 49 per cent of your company now is Arif Naqvi,” and he replies “A Pakistani cannot be my partner, a Pakistani brings me the tea.”
Now, in my view, that was their [Arabs’] attitude all the way through. There’s an idea that its difficult because … I don’t want to suggest that it’s the same as with African Americans … there’s an idea of where African Americans pass as white. But then they are black, it’s just that they have pale enough skin to pass in white society.
I think Naqvi passed as an Arab in the sense that he was a technician and his job was to ‘make us money’. While he was making money for all these family offices, they were very happy to hold his hand. While Abraaj was sponsoring Dubai Art Week and making Dubai look good, they embraced him.
Why I say passing is because when it went wrong, where was Dubai? He was no longer one of them then. He was back to being the Pakistani who would bring the tea, not make the money.
ET: One of the things you point out about Abraaj is that unlike other big companies, Naqvi sought not to seek the backing of any particular state. You suggest that was one of the reasons why the company collapsed so dramatically.
BB: What Naqvi did by locating the company in Dubai and registering in the Cayman Islands so that they don’t have to have local partners was separate it effectively from a nation state. Abraaj was located in Dubai’s financial district under the Dubai regulator, and had strong relations with the Dubai state, but they weren’t ‘of Dubai’.
And they consciously pursued that because they consciously, as I say in the book, drank the globalisation Koolaid. Naqvi hired the best people internationally and became a fixture at the World Economic Forum in Davos.
So in the first place he’s passing as Arab in Dubai, but he’s not linked to a nation state. When that goes wrong, they don’t step up for him. Also, Trump is elected by then and the Emirates are hand in glove with him; there are other interests at play.
In the second place he’s passing as a member of the globalised global elite. He’s on stages with Bill Gates and Bono; they all arrive in private jets to talk about world poverty.
From everything I’ve seen, Naqvi was genuinely committed to the idea of impact investing and making a difference in emerging markets. He was genuinely committed to investing in health, education and creating a new middle class, and believed that was something that differentiated his company. It was also the thing that put him on the stage so he passed as a member of the global elite, but notice again, when things go wrong, where are those people?
And then, in the third place, I would say Naqvi was passing as a private equity guy. His company, at its peak, was the 45th largest private equity company in the world and the largest specialising in emerging markets. If he closed APEF VI, he would have had $20 billion under his management. He was a figure on Wall Street, the City of London and other lesser-known stock exchanges around the world.
One of Naqvi’s problems with the global fund was that because there would be fewer regional silos, there would be fewer people at the top getting those big carried interest pay packages. He created internal dissent. There are technical discussions [in my book] about how good Abraaj was and it was mixed record, but this isn’t like Bernie Madoff – massive profits every year – because it’s not a con or a Ponzi scheme. It’s a real company and they lost some, they won some.
What brought him down is that he wasn’t, I use the phrase in the book, ‘one of us’. He wasn’t a white Anglo-Saxon Protestant (WASP). I’m not saying there are no people of colour in private equity firms but not only was Naqvi a person of colour, his firm was also based in Dubai, instead of London or New York. His core team were from the Subcontinent or Africa – there were white guys in it but up until 2012, there are no significant American players in the company.
He was passing in Dubai as an Arab. He was passing on the world stage as a globalist and he was passing in private equity as a private equity guy. If KE sale had been completed, he may have been doing that to this day.
ET: Your book gives the sense that the sale of KE to Shanghai Electric was a crucial point in a grand geopolitical power tussle. In describing what happened to Abraaj, you draw an analogy with ‘precision strikes’.
BB: I wish I had the memo that said “here’s the order, carry it out.” What I’m describing is circumstantial evidence, my reading of that evidence and my interviews with all the key people I could talk to. I tended to talk to people who were more on Naqvi’s side than against him, but I also spoke to some people who were also very critical of him. Also, a lot of the material I’ve used is available online. I put it together and this is my thesis.
There is this book by John Perkins called ‘Confessions of an Economic Hit Man’ and he’s absolutely adamant that this is how US government supports corporations. He says its more prevalent than ever now and under Trump, there was even more emphasis on “you will do what is necessary to support corporate America.”
There are two ways to read this. Either there was a series of unfortunate events in which, by chance, a huge amount of data fell into the hands of enterprising WSJ journalists who then, by their rugged Bernstein and Woodward-style reporting, managed to write these incredible exclusive stories that expose the whole thing. That indeed could be what happened.
Or we have a combination.
The KE deal is done in October 2016. Trump comes to power in November. Along with Trump, big figures in American private equity come in, with huge donations to his political campaign in 2016 and again in 2020. One of them is appointed the head of the US president’s intelligence commission. US foreign policy was already moving under Obama to take China on much more directly. That massively accelerates under Trump.
And you have within the company [Abraaj] the fundraising led by an American for APEF-VI, their single global fund. A number of senior Abraaj partners know that their time is limited. One of them who ran the African fund knows that they may be on the way out. You’ve got an almost perfect scenario for this kind of precision strike.
The first thing you do is you begin to question the functioning of the company. It could well be that there were problems with the way the company was run and there were issues there to be exposed. But if the KE money had come in, those would have probably gone through.
So you stop the KE deal. You do that by talking to your opposite numbers in Pakistan. The US embassy we know in 2008 took a really strong interest in who owned KE. There is no reason to assume they weren’t watching it incredibly carefully in 2016. And there is no reason to suppose they wouldn’t have said “We do not want this entity sold to the Chinese. We don’t want any of these entities sold to the Chinese. We want CPEC stopped.”
It’s not just KE, but this particular one is important because of Karachi Port and the port that the Chinese have built up the coast [in Gwadar]. That coast is crucial, fits in to the string of pearls, we don’t want the Chinese to get that much influence if we can delay it.
The head of Nepra and the privatisation secretary then delay it. Either that’s Pakistani bureaucracy or a message goes down from the US lobby within the establishment: “we don’t want this to happen so don’t make it happen.” And under three prime ministers, it doesn’t happen, it still hasn’t happened.
So that’s part one. But Naqvi doesn’t give up. He’s still trying to push that deal through. He’s also advising Imran Khan’s incoming government and then he plays a role in talks with the IMF and World Bank.
Now remember, this is the guy in Davos; he’s knows these officials. He’s not saying don’t take an IMF loan, just “take it on terms that are good for Pakistan.” Don’t just take it on this neoliberal basis that has wrecked so many other countries. Take on the basis that we can actually improve our balance of payments situation.
And then, an anonymous email, very sophisticated, written in a sort of odd, very racist English, is circulated to investors saying, “look at what’s going on.”
Now I’ve gone through all the legal documentation I can find. As far as I can see, all this stuff in the WSJ about movements of money, it looks utterly bizarre to me but they were allowed to do it. Under limited partner agreements (LPAs), they were allowed to use cash in those ways. LPAs in private equity are stupid documents. I don’t understand why any limited partner would sign it, but they did.
And if they [Abraaj] were wrong and they shouldn’t have been moving that money, then the competent authority was the Dubai regulator. The Dubai regulator investigated them and later on in the story, fines them $300 million. They would have challenged that.
On this, we go back to your identity thing. If this was Goldman Sachs, that would have been the end of it. They would have paid the fine. Naqvi and his colleagues might have faced a civil procedure. They would’ve been told, “don’t be naughty boys again and go back and carry on making us all a lot of money.”
You could say that they weren’t that, they were Pakistanis and they were still trying to sell KE to the Chinese. I would say it’s a bit of both. But the point is they kept going.
At the end of 2017, they gave all the money back to investors with interest, and they said that when an opportunity to invest in health projects comes up in the future that money would be drawn down again to be invested.
In other words – and the guy inside Abraaj told me this in no uncertain terms – “we had every intention of getting them to invest again in the future. We return the money, wherever it was under the LPAs, within the 90 days if we hadn’t managed to invest it due to external factors.”
Naqvi then borrows money from [Hamid] Jafar (Crescent Group founder) and Air Arabia; there are a whole slew of deals. Money appears at the right moment in the bank statement. Under the LPAs, investors have no rights to see bank statements. Why would you sign an agreement like that?
But It’s absolutely clear in Freshfield’s advice – Abraaj lawyers looked at it – basically not to show them the bank statements and so, Naqvi and his colleagues didn’t. KPMG did the audit and said it’s all fine, there’s no money missing. Deloittes did an audit and said money has been moved around, but there’s no money missing.
So the anonymous email is then leaked to the WSJ. And at every single stage in the rest of the story, every single major moment or in what I call every single precision strike, something is leaked to WSJ it appears.
I don’t think these journalists were conscious participants in this process but I will say WSJ at that time was a supporter of Donald Trump. Later they fell out.
Still, Naqvi somehow saves the company at the end of 2017. He signs cheques he shouldn’t have signed in order to guarantee loans and those discontented people in the company, before it was all going to go down, are now in a position where again they’re going to lose their place.
Then, in January or maybe earlier – and I don’t know the answer to this – either one of those disgruntled people does a very careful edit of the email server and gives it to WSJ and/or the US Department of Justice. Or an external agency hacks into the server, takes the emails out and gives them to DoJ and WSJ. Either way on February 2, a big piece appears in WSJ and then a more measured calm piece about 10 minutes later in The New York Times. So that’s the second precision strike.
And then there are the creditors forcing liquidation; it’s a sequence of events. Each time Naqvi thinks he’s brought his company out of a mess again, another one of these things come in. It all keeps going, even as Naqvi devises a restructuring package that would have paid all his creditors. All the investors have got their money back with interest. These are bizarre thieves who steal from people and give them their money back with a profit on it.
All the creditors would have been repaid if the restructuring plan had gone through. The unsecured creditors – Kuwait and the Jafars – block that process, particularly the Kuwaitis.
Now Kuwait owes its existence to the US. Again, I can’t show you an email saying do this, but circumstantially if the US let it be known that this what they wanted to happen, I bet you all the money in my pocket that Kuwait would have done what was asked of them. So Kuwait I can understand.
But the Jafars I don’t understand. Unless they were really trying to get control of KE, what they did was very much against their own interest. If you’re an unsecured creditor, you don’t force a liquidation process. By definition, you’d be the last to be paid back.
So it’s liquidated, but still Naqvi keeps going. He’s still advising Imran Khan on the IMF programme but in the background the DoJ has been preparing the indictments and when he lands in London from Islamabad, he’s arrested at Heathrow.
The IMF talks then conclude on terms seen as more favourable to the lender and all Abraaj funds are taken over by the UK or US private equity companies except for one individual who was inside Abraaj, who takes over the Africa fund. Everybody is happy except Naqvi and the other Abraaj executives. And then, all the other executives do deals. The only guy left standing is Naqvi. He refuses to bow down to the US. Most of his money went into trying to pay back Jafar. Whatever he has left, I suspect, has gone to lawyers and accountants. Those are the other big beneficiaries of this botched liquidation process. The funds are still going but the creditors will get very little back because of the way its been done.
The other people who have suffered the most are regular people in emerging market countries. APEF VI was going to invest $6 billion into emerging markets. Their health funds were investing $1 billion. So a lot of people are not going to get an education or access to health or clean energy because this company was taken down.
And Naqvi is still under house arrest in South Kensington, still fighting extradition and he is completely ignored by the UK Human Rights Commission and the UK press. It’s very striking that his case has not been picked up.
ET: You write that the exaggerated coverage of Naqvi’s mistakes should not have been the defining narrative of his life and work.
BB: Look, Naqvi likes money and he liked a nice life. But one thing that struck me is that normally a founder of a private equity company takes 80 or 90 per cent of carried interest. Naqvi, by the end, had taken 20 per cent. Everything else was going back in. Through various foundations $150 million were also given away. Of course many of these things were done for PR purposes, but Naqvi wasn’t only about the money. It’s very hard to see past that.
In this case, we’re a bit mesmerised by other stories. This is also partly where I think the WSJ journalist has gone wrong. They wanted this to be just another billion-dollar whale, another Bernie Madoff. In fact it’s striking isn’t it that they called Naqvi the Muslim Bernie Madoff. I’ve never seen anywhere anyone describe Bernie Madoff as the Jewish Bernie Madoff.
So we’ve got to strip away a lot of that and look into this story afresh, which is what I tried to do in the book. I had to overcome a lot of my own prejudice about these kinds of people and what I see is a guy who was a loudmouth egotist and greedy but he was greedy for life in many ways. He was making very nice money and even his first deal made him enough money for many lifetimes. I don’t think money was it for him. His ambition was much more complicated than that.
In fact, we just have to realise that we’re living in a realpolitik world. Against the trade war between the US and China, this is a cautionary tale for every CEO. Not just a Pakistani one who might be particularly vulnerable for some of the reasons we’ve described but anybody who gets in the way now of the Chinese or the US.
That’s the world we’re now in. Post-Covid the competition is going to be ferocious. They are even using vaccines as a political tool.
We’re in a ferociously competitive time where I say there is a sovereign impunity. States can act with impunity against companies. It’s the equivalent of a drone strike. We kill people all over the world everyday with drones and its hardly ever reported beyond a couple of lines. We take it for granted that this can be done, but under what law?
It’s being done with complete impunity and this is the smallest scale example of it. In the corporate world, I think this is a case study of the future. CEOs everywhere need to take note. Their whole risk matrix needs to change.
ET: Your book also provides a cautionary tale for media and journalists on how to navigate news and developments around this corporate world marked by ferocious competition. What sort of takeaway or lesson do you think is there in terms of how we package and develop media reporting and how we consume it?
BB: Let me be clear again. I’m not accusing WSJ of anything other than not being cynical enough about where their sources were coming from. One of them, Will Louch, said in a podcast that he still doesn’t know the identity of one of their main sources. That would worry me hugely because we live in the era of fake news.
I think from a journalistic perspective, you’ve got to question your prejudices. You’ve got to question your sources. Where is this coming from? Why am I being told this? Verification is obviously key.
In Naqvi’s case, I don’t think the information that was leaked was fake. But I think it was very carefully curated to tell a particular story. So the responsibility of journalists is immense.
Secondly, journalists are at risk as never before. Their ability to report needs to be protected.
The problem with something like this to me is, look I may be proved wrong and they may be proved right, the courts will ultimately decide. But if they are proved wrong then in this day and age that undermines the credibility of the media.
Because the Key Man book is in essence just a re-telling of the prosecution case, it reads like a hyped press release for the district attorney’s office in New York. That’s the last thing we need right now.
The other thing I would say is that after Black Lives Matter, in this age of identity, thinking about those things shouldn’t be confined to cultural analysis. In fact, it permeates everything and all our attitudes are coloured by our prejudices.
When I was teaching about the Holocaust, I came across Victor Klemperer’s Diaries. Klemperer was an assimilated German Jew who writes that he had never thought about his own identity and the idea of passing. That is until anti-Jewish laws were being passed left and right, and he suddenly realised that everyone he personally knew were like him, all assimilated Jews.
I think the same is the case with Naqvi, who was passing until he wasn’t. And deep down, he was a Pakistani nationalist through and through. His biggest mistake was not siting his company in Pakistan. Globalisation is a myth because when the chips are down, it doesn’t exist.
I was very worried what people would think when I sat down to write this book. I worried they would say I was naïve. But I’ve been very struck by how engaged the response has been and that most people who have read it have said that at the very least, it made them stop and rethink. That’s all a writer can ask for.