Programmable Compliance and Valuation Governance

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Abraaj Group, 2018

Abraaj was one of the largest private-equity firms in emerging markets, managing on the order of 14 billion dollars, and it collapsed in 2018 after investors, including a major foundation, began asking what had happened to money in one of its funds. The SEC alleged that Abraaj and its founder, Arif Naqvi, misappropriated more than 230 million dollars from its health fund and commingled it with corporate money to cover the firm's own cash shortfalls, and US prosecutors alleged that its executives lied about fund performance, inflating value by more than half a billion dollars, the net asset value that told investors what their stakes were worth. Crucially, those valuations were governed by Abraaj itself, with insufficient independent check, so the numbers investors relied on were the firm's own claims about assets the firm controlled.