The Dubai Financial Services Authority (DFSA) has imposed a significant penalty of USD 1,927,495 (AED 7,078,725) on Mr Mustafa Abdel-Wadood, a former senior figure at the Abraaj Group. The DFSA has also prohibited and restricted Mr Abdel-Wadood from engaging in any function related to the provision of financial services within or from the Dubai International Financial Centre (DIFC).
Mr Abdel Wadood held various influential positions at the Abraaj Group for over a decade, including Managing Partner, Global Head of Private Equity, and Board Member. Additionally, he served as the Senior Executive Officer (SEO) of Abraaj Capital Limited (ACLD), the DFSA Authorised Firm of the Abraaj Group.
The enforcement action taken by the DFSA against Mr Abdel-Wadood stems from his involvement in the violations of DIFC legislation by Abraaj Investment Management Limited (AIML), a Cayman entity that lacked authorization from the DFSA. AIML engaged in unauthorized financial service activities within or from the DIFC, deceiving and misleading investors in Abraaj funds.
Specifically, Mr Abdel Wadood played a role in the misuse of investor funds, the withholding of sale proceeds and investor reports, providing false explanations to investors, and covering up a USD 200 million shortfall in a fund during its financial reporting period.
Mr Abdel Wadood has pleaded guilty to all criminal charges brought against him by the US Department of Justice. In his guilty plea, he admitted to
“stood by silently while Abraaj's track record was overstated and its financial health falsely portrayed”.
The DFSA’s statement highlights Mr Abdel-Wadood’s involvement in AIML’s unauthorized financial service activities through his management of Abraaj funds from the DIFC and his permanent membership in the AIML Global Investment Committee.
The authority emphasized that the imposed fine reflects the gravity of the offenses and is based on Mr Abdel-Wadood’s earnings from the Abraaj Group. However, the DFSA took into account the significant level of cooperation Mr Abdel-Wadood has provided and continues to provide to both the DFSA and the US authorities. The investigation found no evidence suggesting that he directly benefited economically from his actions.
Christopher Calabia, CEO of the DFSA, commented on the matter, acknowledging Mr Abdel-Wadood’s senior and influential position within the Abraaj Group. He emphasized that this position and his reputation among investors allowed the Abraaj Group to conceal its true financial position and the extent of its misuse of investor funds.
Mr Calabia further stated that over the past two years, Mr Abdel Wadood has cooperated with both the US authorities and the DFSA, which contributed to the reduction of his fine. The DFSA expects individuals involved in wrongdoing to provide full, open, and honest cooperation, and such cooperation is considered when determining penalties.
The DFSA remains committed to taking action against other individuals involved in Abraaj’s misconduct and will make additional public announcements when appropriate.
This recent notice follows the DFSA’s previous fine of $1.7 million imposed on former Abraaj CFO Ashish Bhrugu Dave in July of the same year for his participation in the scandal.
The DFSA’s enforcement actions underscore the commitment of regulatory authorities to maintain the integrity and trustworthiness of the financial services sector. Such actions aim to deter wrongdoing, protect investors, and ensure that individuals who engage in fraudulent activities face appropriate penalties for their actions.
A copy of the DFSA’s Decision Notices can be found in the Regulatory Actions section of the DFSA website.