* DFSA says these are its largest financial penalties ever
* Continues to probe individuals, entities linked to Abraaj
* Abraaj collapsed last year after row with investors
* Abraaj executives facing criminal charges in U.S. (Adds analyst quote, more details)
By Saeed Azhar
DUBAI, July 30 (Reuters) - The Dubai Financial Services Authority (DFSA) said on Tuesday it had fined two entities of private equity firm Abraaj $315 million, the largest financial penalties it had ever imposed.
In the first major fines on Abraaj, which collapsed last year, DFSA imposed a penalty of around $300 million on Abraaj Investment Management Ltd (AIML) and $15.3 million on Abraaj Capital Ltd, the regulator said in a statement.
The fines were imposed for “serious wrongdoing by two Abraaj group companies included carrying out unauthorised activities in the DIFC and misusing investors’ monies,” the regulator said.
Abraaj, which filed for provisional liquidation in June 2018 in the Cayman Islands, was the largest buyout fund in the Middle East and North Africa until a row with investors over the use of money in a $1 billion healthcare fund.
“The size of these fines reflects the seriousness with which the DFSA views AIML’s and ACLD’s (Abraaj Capital Ltd’s) contraventions,” DFSA Chief Executive Bryan Stirewalt said.
“We will pursue the persons or entities who perpetrated this activity, including those who allowed this to happen through major corporate governance breaches, to the full extent of our powers,” Stirewalt said in a statement.
Liquidators of Abraaj did not immediately respond to a request for comment.
U.S. prosecutors have charged several senior executives of Abraaj, including its founder Arif Naqvi, with criminal charges, accusing them of taking part in a massive international scheme to defraud investors.
Naqvi, who is in London and on bail, will face a court hearing for an extradition to the United States next year. Naqvi has denied any wrongdoing through a public relations firm that represents him.
The Dubai regulator said AIML, which is now under provisional liquidation in the Cayman Islands, carried out unauthorised financial services including fund management, within and from the Dubai International Financial Centre.
It “actively misled and deceived investors” in Abraaj funds over an extended period and misused investors’ monies in various funds, DFSA said.
The Dubai regulator said Abraaj Capital Ltd failed to maintain adequate capital resources, deceived the regulator about its compliance with various rules and was “knowingly concerned in AIML’s unauthorised financial services activities.”
Sabah al-Binali, chief executive officer at Universal Strategy and a financial commentator, said a headline number of a fine for a company that is already in receivership does nothing for regulatory governance.
“The DFSA should outline the allegations, the framework of its inquiry, and what the findings were. That is what builds investor confidence,” he said.
The Dubai regulator said its investigation commenced in January 2018, was complex and spanned multiple jurisdictions.
“The DFSA continues to investigate individuals and entities connected with this matter, in respect of their culpability, to the full extent of its powers and considering all sanctions available to it,” it said. (Reporting by Saeed Azhar, editing by Louise Heavens, Alexander Smith and Alexandra Hudson)