A United Arab Emirates court on Sunday dismissed a criminal case against the founder of private equity firm Abraaj, Arif Naqvi, and another executive for issuing a cheque without sufficient funds, after the claimant dropped the complaint.
The dismissal of the case provides breathing room for Naqvi as Dubai-based Abraaj tries to sell its investment management business after filing for provisional liquidation in the Cayman Islands last month.
Investor confidence in the Middle East's largest private equity fund had already been shaken by a dispute with investors over the use of their money in a $1 billion healthcare fund, which has led to a halt in fund-raising activities and sparked debt repayment problems. Abraaj denies any wrongdoing.
The court case related to a cheque for 177.1 million dirhams ($48 million), signed by Naqvi and fellow executive Muhammad Rafique Lakhani, and written to Hamid Jafar, another founding shareholder in Abraaj, a prosecution document showed.
At a court in Sharjah, Judge Natheer al-Sousi said the case had been dismissed after the claimant had waived his rights to pursue the claim.
Naqvi's lawyer, Habib al-Mulla, told Reuters after the court's announcement that a settlement had been reached last week regarding the cheque in question as well as further debt owed to Jafar for a total settlement of around $300 million.
"As far as we are concerned it's a done deal. We will follow up with the prosecution to lift the arrest order and once that is done there is no restriction on Mr Naqvi returning to the country."
An advisor to Jafar, in response to questions from Reuters, said an interim settlement was reached with Naqvi, but that a final settlement had not yet been agreed. He declined to confirm the $300 million figure.
Abraaj Holdings' provisional liquidators, PwC, listed an unsecured liquidity loan of $300 million as being "assigned by" Jafar in a report dated July 11 and seen by Reuters.
The Sharjah public prosecutor's office had issued arrest warrants last month against Naqvi and Lakhani in relation to the case. Naqvi is currently outside the UAE.
Lakhani could not be reached for comment.
Naqvi in February handed over the running of Abraaj to two co-chief executives, split it into Abraaj Holdings and Abraaj Investment Management Ltd (AIML), and put AIML up for sale. He remains the single largest shareholder in Abraaj Holdings.
U.S.-based Colony offered last month to buy the fund management unit that runs Abraaj's Latin America, Sub Saharan Africa, North Africa and Turkey funds.