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Preparation – Habi
The Dubai Financial Services Authority (DFSA) has issued a lengthy decision imposing a $ 299,330 million fine on AMIL Investment Management Company Limited (AMIL), the first major fine imposed on a group of companies that collapsed last year .
The Dubai authorities also imposed another $ 15.3 million fine on Abraaj Capital, which is regulated by the Financial Services Authority.
The fine for unlicensed activities was calculated on the basis of 20% of the management fees from April 2007 to January 2018.
The fine, signed by Abraaj Investment Management Company Limited – registered in the Cayman Islands – included two violations, the first of a value of $ 115.4 million intended to engage in "unauthorized activity" "in violation of Article 41 of the Regulatory Law. January 2018, and the second amount of $ 183.9 million due to misbehavior and disappointment since August 21, 2014.
The value of the misleading "fine" is calculated based on the estimated total deficit of APEF IV and IGCF funds by the end of March 2018.
The note indicated that the value of the fine for misleading behavior and investor deception was calculated on the basis of 100% of the approximate deficit of the APEF IV and IGCF funds at the end of March 2018.
The memorandum listed the reasoning behind the DFSA's decision that AIML had undertaken activities within or away from the DIFC, in violation of market regulations and regulations, which included several facts dating back several years.
The memorandum states that Abraaj Investment Management Company Limited has violated Article 41 of the Regulatory Law from April 2007 to January 2018 through a financial service activity consisting of managing a collective investment or badet management funds within or from the DIFC.
Consideration of wrongdoing since the application of the legal article on August 21, 2014 until the appointment of the liquidators in June 2018
He also reported that from August 21, 2014 until the appointment of the temporary liquidators participating on June 18, 2018, the company had misbehaved with respect to the funds under its management. as well as financial services provided by AIML within or from the DIFC.
Structure of the tower:
The note stated that Abraaj Investment Management Company Limited (AMIL) is a Cayman Islands-exempt company and part of the Abraaj Group, which is located in Dubai and operates from the Dubai International Financial Center (DIFC), but does not holds no commercial license or a license issued by the Dubai Financial Services Authority. Is a wholly-owned subsidiary of Abraaj Holdings (AH), a Cayman Islands-based company and exempt from the Cayman Islands.
ACLD is the only Towers Group entity established in Dubai Center and licensed by the Financial Services Authority.
The memorandum confirmed that the only entity of the Abraaj Group established at the Dubai International Financial Center (DIFC) and approved by the DFSA was Abraaj Capital Limited (ACLD).
A group of towers with over 300 entities worldwide, including "special" offices and paper offices in the Cayman Islands, but Dubai is considered its headquarters.
The Abraj Group comprises more than 300 entities (including special purpose entities) around the world, including Dubai, the United States, the United Kingdom, India, Singapore, Turkey, Mauritius and elsewhere, as well as than paper offices in the Cayman Islands.
However, the Abraaj group was considered its "headquarters" or head office in Dubai, resulting in a group of Dubai towers and the DIFC sign to attract investors.
AIML, the leading investment advisor and private equity fund manager of the Abraaj Group, has been known since January 28, 2008 as Abraaj Capital (Cayman) Limited. Although headquartered in the Cayman Islands, it has not been licensed to carry on business as an exempt corporation. From its headquarters, it did not operate and operated from Dubai and operated primarily from the Abraaj Group offices located in the Dubai International Financial Center.
AIML has obtained a "foreign company branch" license for feasibility studies and management consulting services, but does not include the provision of fund management services.
The memorandum stated that AIML had obtained the "foreign company branch" license issued by the Dubai Ministry of Economic Development to carry out feasibility studies and management consulting services, but that this license does not include a license for "foreign company branch". did not include the provision of private equity fund management services, expiring on September 28, 2018, The company has never obtained a license from the DFSA allowing it to continue to provide financial services in or from the DIFC.
ACLD is a subsidiary of AIML, established at DIFC on March 19, 2006 and authorized on March 20, 2006 by the Dubai Financial Services Authority (DFSA) to provide services to or from DIFC, including advice on financial products, transaction management. In the areas of credit investments, arranging and advising, badet management and fund management, noting that the scope of his license did not include the management of a mutual fund.
In accordance with the memorandum, the definition of financial service "management of the mutual fund" includes the legal responsibility of owners of fund documents for the management of property held by or in the fund under the fund's regulations, as well as the right create, manage, terminate a mutual fund. .
The memorandum confirmed that A Holding, AMIL Investment Management Company Limited and ACLD Capital Limited had a common management, where all AIML officers sit on AH and ACLD, and all senior management members of AIML have a common management. AIML held senior positions in ACLD. , With one exception, all of these, and AIML senior management in the DIFC Towers Group office.
AIML and AH voluntarily announced their bankruptcy in June 2018. On January 18, the Grand Court of Cayman Islands ordered the designation of common temporary facilities for the two companies, as the two entities could not pay their fees. mature bonds.
On August 15, 2018, the ACLD was placed in temporary liquidation by the Supreme Court Court of Dubai on August 15, 2018. The memorandum added that, the ACLD appealing to AH and the AH was AIML to finance themselves, both in liquidation, they were also unable to repay their debts because they were expiring and requested their closure. World
Tower boxes:
The Dubai Financial Services Authority's (DFSA) Memorandum of Understanding states that AIML, as lead manager of the Abraaj Group, is responsible for managing the majority of the group's private equity funds. These funds generally consist of limited partnerships with sponsored partners that designate a fund manager (in most cases, as well as limited limited partners representing investors.
Whereas, since March 2007, AIML has delegated some of the functions it held to ACLD for seven specific funds in the latest financial statements, but the functions relating to up to five funds have been delegated at a time.
The memorandum indicates that the structure of the Abraaj Group and its funds is complex and includes limited partnerships whose limited partnership is limited to the Abraj Fund, which includes both limited partners representing Abraj Holding and SPVs. Investment Management Limited (AIML), which in turn has entered into a delegation agreement with Abraaj Capital Limited (ACLD) and a management agreement with a third party.
The memorandum stated that, in accordance with the licensing agreements and services between AIML and ACLD since March 2007, AIML had delegated to the ACLD the performance of the investment management and fund management functions for more than five funds at the same time. time.
The Investment and Level of Service Agreement (IASLA) signed between AH and ACLD in October 2011 was intended to replace these licensing agreements but did not substantially modify the delegation agreements established under pre-existing licensing agreements.
The principal participants are the limited partners, the investors who have committed to contribute to the Fund upon the issuance of the withdrawal notices and the general partner, who generally belongs to the fund manager and who is also invested in the capital of the fund. Tax, judicial, regulatory or investment.
The rights and obligations of the limited partnerships and the general partner are governed by the limited partnership agreement (LPP) of each fund, which also designates a fund manager designated under an investment management agreement, which is responsible for the management and operations of the fund, including the implementation of the investments and the liquidation.
The Director may delegate some of his duties to another entity, generally referred to as a secondary manager or investment advisor, and AIML has delegated certain services to a limited number of funds to the ACLD under the 2007 and 2009 Delegation Agreements. , while AIML has also delegated certain services. The functions of the fund manager towards third party providers under the fund management agreements.
Unauthorized activities:
The memorandum includes nine main lines adopted by the Dubai Financial Services Authority (DFSA) to reinforce the practice of unauthorized business activities, including the practice of prohibited financial services and the management of collective investment funds, as well as the conclusion of employment contracts as a fund manager, In addition, AIML allocates only limited activities to ACLD, the division of tasks between them, and the investment and liquidation decisions taken by the DIFC, based on sponsors, as well as badet management.
AIML has been appointed manager of 13 funds of the Al-Abraj group without authorization from ACLD, in exchange for the delegation of only four funds to the latter, according to the financial statements from June 2012 to June 2017. For the avoidance of doubt, the DFSA does not Not considering delegating activities to ACLD actually the manager of these funds.
Make decisions on the management of badets in the funds, including investment decisions, market the funds, direct withdrawals, pay the contributions of the limited partners and make decisions on the valuation of the badets within the funds. funds.
Mix of funds and proactive behavior:
The memorandum states that the article on the general prohibition of misconduct of the regulatory law came into effect on August 21, 2014 and that, as a result, the time limit for violation of this provision is extends from this date until the appointment of the co-liquidator AIML on June 18, 2018.
After August 21, 2014, AIML transferred funds from the Abraaj funds to its operating accounts, and then used them for its own operational needs or funds of other tricks, concealing the fact of these practices by providing misleading financial information to investors and misstatement of Reasons for delays in investments and distributions.
Between August 21, 2014 and the appointment of the liquidators in June 2018, the Abraj Group companies, AIML and AH, in particular, faced significant liquidity problems, their investment commitments and their burdens. of exploitation far exceeding the products.
The Abraaj group's high investment costs and operating expenses are the result of four main factors, which are attributable to the significant contribution required by Abraaj Holding AH, noting that to ensure that the Abraaj funds have achieved their objectives in terms of the size of the fund, In their own boxes. In addition to these commitments, and have often been dominated by the actions of investors in default.
As a result, Abraaj Group held a significantly larger stake in its equity than the normally expected 1% to 8% range as GP's contribution to private equity funds.
For example, AH committed $ 394.5 million, or about 19.7% of the $ 2 billion infrastructure and growth fund, and did not always have the funds to pay contributions required for withdrawal requests.
The second factor was the Abraj Group's working capital, including salaries and bonuses, including remittances and employee loans from AIML and related entities, in the amount of several hundred million dollars.
The third factor is the financial burden badociated with the commercialization of new funds. The Abraaj Group continues to incur significant costs related to the promotion of new funds, including new appointments, private air travel and sponsorship of conferences.
The fourth is lending: Over the years, a group of tricks has borrowed hundreds of millions of dollars from banks and non-bank entities.
The note indicated that in most cases, all rounds of repayment avoided lengthening the repayment date of principal but paying interest, which in some cases amounted to 10%.
She explained that Sinatra Towers funds generally have a large cash flow, ie funds awaiting investment, which are withdrawn from limited partnerships for an approved investment and are not used for various reasons (political, regulatory, financial). ; Sale of an investment or product of a subsidiary investment before distribution to the limited partners.
Funds transferred from Abraj funds are usually paid into the AIML account and sometimes into a bank account of Abraaj Holding AH, while both companies make payments to meet liquidity demands, including the repayment of withdrawals from other Abraaj funds, Already obtained.
Fund transfers from one fund to another are a common feature of Abraaj Group's overall cash flow management, which over the years has increasingly relied on limited partners in limited partnerships. to provide liquidity to finance and reduce its activities.
Abraaj funds are also an attractive source of cash for the group: its usual practice is not to pay interest on funds raised from funds, compared to the average cost of borrowing from a third party. by more than 6% in 2017, or on non-bank financing at a cost of up to 10%.
However, in November 2012, an agreement between AH and AIML required payment of interest. After being asked about the use of the fund, AIML began calculating interest obligations, first according to the rates of the bank deposit accounts and then according to the AIML.
In June 2017, the City Towers group had more than 400 million US dollars for various tours.
The limited partnerships were not informed that their funds had been transferred and used for working capital purposes in the Towers Group or to offset the deficit of other funds. AIML has actively and deliberately solicited its sponsors through reports and financial statements Discovery of transfers to and from bank accounts.
The Abraaj Group financial team, part of the DIFC, manages cash flow through a series of internal spreadsheets, accounting records and emails with gaps and possible solutions.
Abuse of funds with APEF IV and AGHF funds
The note indicated that as of August 21, 2014, investors misused funds primarily in APEF IV and AGHF funds.
In May 2015, IGCF sold a portion of its holdings in Holdings Diagnostics Holdings for $ 228.9 million.
AMIL received $ 154 million of proceeds from the sale, most of which was used for non-financial purposes, including Abraaj group expenses and transfers to other funds, which prevented the IGCF Fund to fully distribute the HDI product, as required by the limited partnership agreement.
As at December 29, 2015, the net amount owed by AIML to the Fund was approximately $ 103.6 million. Transfers to the IGCF were reviewed on December 30, 2015 for a year-end audit.
A provision of the APEF IV fund stipulates that uninvested funds are held in bank deposits and held by banks whose credit rating is at least BBB, but did not allow AIML to use such funds as working capital.
The provisions also stipulate that the public partner must make reasonable efforts to distribute the product within 45 days of the funds being made available. "
Under AH-AIML, AH guarantees the payment of any amount borrowed to the Fund within three business days of applying for AIML and paying a higher interest rate of at least 0.5% of the cost. AHL's annual fund, while AIML has not disclosed this Agreement to the Limited Partners. Refer them in any way when answering their questions, you have not paid or asked AH to pay interest in accordance with the agreement.
From September to December 2015, APEF IV received funds as part of its fourth withdrawal, amounting to $ 152 million, of which approximately $ 95 million was transferred to AIML, including at least half has been used for at least one series of unrelated commitments. Including compliance with other commitments of the Fund, including allocations from the Intergovernmental Fund, as well as internal and salary financing operations.
At the end of 2015, APEF IV sold its stake in Network International for $ 330 million and made two sales in December 2015 and February 2016. The first $ 135 million was received on the APEF IV account on December 30, 2015. Today, the total amount has been transferred to the bank's AIML account.
Remittances from the AIML account as at December 30, 2015 included approximately $ 7.5 million for a company owned by an AIML executive and approximately $ 92 million for the IGCF Fund.
E-mail excerpts showing misinformation and significant movement of funds between different accounts
The memorandum from the Dubai Financial Services Authority (DFSA) revealed that AIML had discussed internally the importance of receiving $ 92 million for the end-of-year audit of the fund. in an electronic message stating:
"The IGCF fund has a value of $ 67 million as of December 31 and the IGCF Intercompany is set at $ 25 million, so that the IGCF Fund audit can be completed without complications or information. of non-compliance, it is therefore necessary to close the transaction. [الشبكة الدولية] As planned on December 28th. "
As per this email, approximately $ 67 million was used to pay the outstanding HDI allocations. On January 3, 2016 (three days after the year end of the IGCF Fund), $ 23 million was transferred to AIML .
With the receipt of the second $ 195 million in the APEF IV Fund account on February 19, 2016, the Fund was facing a severe liquidity crisis as it was unable to meet its investment obligations. stated in the withdrawal notices to the limited partners because AIML had received funds. Withdrawal from the Fund and used for different purposes.
On February 14, 2016, an internal email indicated that the estimated cash deficit of Abraj Group was estimated at $ 104.7 million at the end of February and $ 297.4 million at the end of March, mainly due to commitments planned investments in the APEF IV Fund.
"We can not fund … I do not know what to do," said the memo, citing a $ 71 million investment under the APEF IV program.
وفي 16 فبراير 2016 اقترحت الإدارة العليا لشركة IALM حلا لمشكلة كيفية تمويل المتطلبات النقدية لصندوق APEF IV في فبراير وأوائل مارس قائلة "يمكن استخدام حصة APEF IV من عائدات صفقة بيع [Network International] البالغة 200 مليون دولار لتمويل ما ورد أعلاه من صفقات ".
في حين كان على صندوق APEF IV تمويل الاستثمارات المخططة من الأموال التي سحبتها شركة ابراج من الشركاء المحدودين وليس من عائدات البيع.
وفي أوائل عام 2016 باعت APEF IV حصتها في سهم فاينانس بمبلغ 185 مليون دولار أمريكي, حيث حصلت على حصيلة الخروج في شريحتين في 8 مارس 2016 و 11 مارس 2016 على التوالي, ومن هذا المبلغ, تم تحويل 76 مليون دولار أمريكي إلى شركة IALM لتلبية مختلف التزاماتها, مثل نداءات الهامش على استثمارات صندوق IGCF.
وبلغت عائدات الخروج المدمجة لصفقتي نيتورك إنترناشونال وسهم حوالي 515 مليون دولار, إلا أن شركة IALM قررت الاحتفاظ بحوالي 200 مليون دولار أمريكي بموجب شرط التوزيع القابل للاسترجاع في اتفاقية الشركاء المحدودين.
وتمثل التوزيعات القابلة للاسترجاع الأموال التي يتعين استخدامها في استثمارات أخرى من قبل الصندوق ذي الصلة, بالإضافة إلى أي مبالغ تم سحبها بالفعل من الشركاء المحدودين, ومع ذلك, في حالة صندوق APEF IV استخدمت التوزيعات المستردة لإخفاء النقص في الأموال المسحوبة الناتجة عن عمليات سابقة لأغراض غير متعلقة بالصندوق.
كما ذكرت المذكرة العديد من الأحداث المتتابعة المتعلقة بسوء استخدام أموال الصناديق وكذلك التأخير في إصدار تقارير الاستثمار والتوزيعات على الشركاء المحدودين وكذلك عمليات الاقتراض, وتقديم ردود مضللة لاستفسارات المستثمرين.
كما ذكرت مقتطفات من بعض المراسلات الإلكترونية التي أوضحت أنه مع نمو المشكلات المالية لشركة الاستثمار المباشر, وضعت الإدارة العليا مخططا لونيا للدفع للشركاء المحدودين وفقا لمستوى "الضجيج" الذي أحدثوه, حيث أعطت الشركة الأولوية للمدفوعات "من حيث الأهمية وصانعي الضوضاء وتلك التي ستعود, للمستثمرين القديمين والأصوات سلبية. "وكذلك الاستشهاد ببعض الفقرات من مراسلات داخلية أخرى توضح تعمد التضليل في الرد على استفسارات المستثمرين.
والأخيرة ستنظر قبل اتخاذ ذجراءات استرداده في الآثار المترتبة على
وألزمت سلطة الخدمات المالية بدبي شركة IALM بدفع الغرامة في موعد لا يتجاوز 28 يوما من تاريخ استلامها لهذه المذكرة, وفي حال إذا بقيت جميع أو أي جزء من الغرامة مستحقة السداد في التاريخ الذي يجب دفعه فيه, يجوز لسلطة دبي للخدمات المالية استرداد المبلغ المستحق كدين على AIML مستحق لها.
وقبل اتخاذ أي إجراء لاسترداد أي مبلغ مستحق, أكدت سلطة دبي للخدمات المالية انها ستنظر في ظروف AIML في ذلك الوقت والآثار المترتبة على إنفاذ الغرامة على دائني الشركة.
ويحق لشركة IALM خلال 30 يوما, إحالة مذكرة القرار إلى محكمة الأوراق المالية FMT التي تمثل جهة مستقلة عن سلطة دبي للخدمات المالية, وستحدد FMT (إن وجد) الإجراء المناسب الذي يجب على السلطة الرقابية اتخاذه, وتحويل الأمر إليها لتنفيذ ما صدر من توجيهات.
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