The Dubai Financial Services Authority (DFSA) has imposed a substantial penalty of USD 1,927,495 (AED 7,078,725) on Mr. Mustafa Abdel-Wadood, a former senior executive at the Abraaj Group, as a result of his involvement in serious breaches of Dubai International Financial Centre (DIFC) legislation. The DFSA has also prohibited and restricted Mr. Abdel-Wadood from engaging in any activities related to the provision of financial services within or from the DIFC.
Mr. Mustafa Abdel-Wadood held prominent positions at the Abraaj Group for over a decade, from July 2006 to February 2018, serving in various roles such as Managing Partner, Global Head of Private Equity, and Board Member. He was also the Senior Executive Officer (SEO) of Abraaj Capital Limited (ACLD), which was an authorized firm of the Abraaj Group under the DFSA.
The enforcement action taken by the DFSA against Mr. Abdel-Wadood stems from his involvement in the misconduct carried out by Abraaj Investment Management Limited (AIML), a Cayman entity not authorized by the DFSA, which conducted unauthorized financial service activities within or from the DIFC. AIML actively deceived and misled investors in Abraaj funds, engaging in the misuse of investor funds, withholding sale proceeds and investor reports, providing false explanations, and concealing a USD 200 million shortfall in a fund during its financial reporting.
Notably, Mr. Mustafa Abdel-Wadood has pleaded guilty to all criminal charges brought by the US Department of Justice. In his guilty plea, he acknowledged that he remained silent while Abraaj's track record was exaggerated and its financial health was falsely portrayed.
Furthermore, Mr. Abdel-Wadood was implicated in AIML's unapproved financial service activities through his management of Abraaj funds from the DIFC and his permanent membership in the AIML Global Investment Committee.
The DFSA, in its statement, emphasized the severity of the offenses and determined the penalty amount based on Mr. Abdel-Wadood's earnings from the Abraaj Group. The authority also acknowledged the level of cooperation provided by Mr. Abdel-Wadood to both the DFSA and the US authorities. It further stated that there was no evidence suggesting that he directly benefited economically from his actions.
Christopher Calabia, the CEO of the DFSA, expressed the significance of Mr. Abdel-Wadood's role within the Abraaj Group, stating that his position and reputation allowed the group to conceal its true financial position and the extent of its misconduct with investor funds. Mr. Calabia also highlighted Mr. Abdel-Wadood's cooperation with the US authorities and the DFSA, which resulted in a reduction of his fine. The DFSA expects full, open, and honest cooperation from individuals when instances of wrongdoing are discovered, and such cooperation is taken into account when determining penalties.
Mr. Calabia assured that the DFSA continues its actions against other individuals involved in Abraaj's misconduct and pledged to make further public announcements at the appropriate time.
This recent penalty announcement by the DFSA follows a previous fine of $1.7 million imposed on former Abraaj CFO Ashish Bhrugu Dave in July, as a consequence of his involvement in the Abraaj scandal.
The DFSA's enforcement actions demonstrate its commitment to maintaining the integrity of the financial services industry in Dubai and ensuring that individuals who engage in misconduct are held accountable. The penalties imposed on Mr. Abdel-Wadood and others involved in the Abraaj scandal send a strong message