Eyes on Kenya units after arrest of Abraaj top bosses

The recent arrest of collapsed Dubai-based private equity firm Abraaj executives on fraud charges has heightened uncertainty among Kenyan firms where the fund had pumped billions before collapse.

It has stakes in Java coffee chain and Brookside Dairy.

Abraaj chief executive and a managing partner Arif Naqvi is facing prosecution after arrest in the US on charges that he and other executives defrauded investors, including the Bill & Melinda Gates Foundation.

Mr Naqvi was arrested in the UK a fortnight ago while managing partner Mustafa Abdel-Wadood was arrested at a New York hotel, assistant US Attorney Andrea Griswold was reported saying at a hearing in Manhattan federal court.

Kenyan firms where Abraaj has a stake will be following keenly to see what comes out of the arrests. A process to acquire the assets of the insolvent firm is in limbo as potential investors and suitors dither. The fund had in recent years invested billions of shillings in Kenyan companies, signalling a huge bet on the Kenya economy.

The now-defunct Abraaj was forced into liquidation less than six months later after investors, including the Bill & Melinda Gates Foundation, commissioned an audit to investigate the alleged mismanagement of money in its healthcare fund. It emerged that the firm’s main revenues had not covered its operating costs for years.

Mr Naqvi and others are alleged to have secretly diverted investments made to the healthcare and other funds to cover cash flow problems within Abraaj.

Abraaj Holdings had earlier told Business Daily the current challenges would not interfere with the operations of Java.

“The provisional liquidation for Abraaj Holdings is a court supervised restructuring process which will ensure the company can move forward with an orderly restructuring plan,” a company spokesperson then said.