A former executive at Abraaj Group has pleaded guilty to conspiracy charges and agreed to co-operate with a US investigation of a scheme that helped lead to the world’s biggest private-equity insolvency in 2018.
Mustafa Abdel-Wadood, 49, a former managing partner at the Dubai company, appeared in a federal court in Manhattan on Friday to admit he lied to investors across the globe in an attempt to hide losses at Abraaj and raise more money.
He is one of six former Abraaj executives facing racketeering and securities-fraud charges following an investigation by New York prosecutors.
The executive was arrested in April in New York while on a college-shopping trip with his wife and son.
Since then, he has been confined to his home in New York and subject to a $10 million bond. Mr Abdel-Wadood is the only defendant to appear in court in the US.
“I knew at the time that I was participating in conduct that was wrong,” Abdel-Wadood said in court, reading slowly from a prepared statement and at times choking back tears.
“I ended up drifting from who I really am. For that, I am ashamed.”
At the hearing, US Magistrate Judge Gabriel Gorenstein said Mr Abdel-Wadood had agreed to co-operate with prosecutors as part of a plea agreement.
The judge asked Mr Abdel-Wadood if he understood that he could be sentenced to 125 years in prison if all the terms for each charge were served consecutively.
“I do sir, yes sir,” he replied.
Abraaj, which was founded in 2002 and managed almost $14 billion, was the Middle East’s biggest private equity fund and one of the world’s most influential emerging-market investors with stakes in health care, clean energy, lending and real estate across Africa, Asia, Latin America and Turkey.
It was forced into liquidation after investors including the Bill & Melinda Gates Foundation, commissioned an audit.
Mr Abdel-Wadood, who worked at the company from 2006 to 2018, was charged alongside Arif Naqvi, the founder and ex-chief executive.
Four other former executives were also charged – chief financial officer Ashish Dave and managing directors Sivendran Vettivetpillai, Rafique Lakhani and Waqar Siddique.
Mr Naqvi gave up control of the company last year after it was disclosed that revenue had not covered operating costs for years.
During Friday’s hearing, Mr Abdel-Wadood accused Mr Naqvi of pushing the company's executives to take steps that “disadvantaged our investors”.
“Some of us pushed back,” Mr Abdel-Wadood said. “Too often we capitulated.”
Mr Naqvi was detained in London and released on conditional bail of £15m in May while fighting extradition to the US, though it took him about a month to raise the funds.
In a filing in that case, Mr Naqvi called the bond amount “the largest security ever ordered in the UK."
Mr Abdel-Wadood briefly described for the judge several elements of the alleged conspiracy, all of which related to hiding Abraaj’s poor financial condition and convincing new investors to put up more cash.
That included lying to American investors during meetings in Manhattan, Mr Abdel-Wadood said, as they sought to raise $3bn for a new fund in 2016. The money they raised was not spent the way investors were told, he said.
“Put simply, money was co-mingled that should have been separated, and investors were not told the truth,” Mr Abdel-Wadood said.
