Arif Naqvi was a Karachi boy who made good in the shark infested world of international finance. At least for a while.
After a blue-ribbon education – Karachi Grammar School and the London School of Economics (LSE), he initially worked with Arthur Andersen in London before moving on to set up Abraaj Capital in 2002 and the Abraaj Group in 2012. There followed a spectacular spell of financial and personal achievements. For several years Abraaj was the largest ever private equity fund for emerging economies with about US$14 billion under management.
Arif became one of the great and the good of the planet. He was a regular participant at Davos where he was often talking about his ideas of “impact investing” – investing profitably in sectors such as health care which would make money but also transform lives. Money flowed in from all sides, including top institutions such as the Gates Foundation and the International Financial Corporation – a part of the World Bank Group.
But after a few years things started going wrong. Initially there were rumors which grew into accusations and then into multiple investigations regarding Abraaj’s fund management practices. It all collapsed in March 2018 when Arif stepped down as CEO and the company went into liquidation. In April 2019, Arif was arrested at London’s Heathrow airport following an extradition order to the USA. He has filed an appeal against the order and is currently on bail pending the appeal hearings. If the appeal against the extradition order is rejected, Arif would have to travel to the USA to face the charges against him. If found guilty he could face massive fines and a long jail sentence.
So, what happened? How did he go from being Arif, the darling of Davos to being Arif living in virtual house arrest, facing the prospect of a ruinous trial?
Two books have recently come out about Arif Naqvi. The first is called The Key Man by Simon Clark and Will Louch, two reporters from the Wall Street Journal. Based on various interviews, emails and WhatsApp messages, the authors suggest that Arif managed to seduce big investors, as well as governments and public institutions, into believing that they could make money while doing good. In the meantime, he was diverting investments, mixing funds allocations for different purposes and covering up the fact that earnings were not enough to cover inflated salaries and other administrative expenses. A kind of giant Ponzi scheme where money from new investments were used to give attractive returns to previous investors, thereby attracting yet more money.
The other book is by Brian Brivati, a historian and professor at Kingston University. It is called Icarus, a character from Greek mythology who flew too close to the sun and fell to his death. According to Brivati, Arif flew too high and reached too far. A key operation, the sale of the electricity company supplying electricity to Karachi (K-Electric) to the Shanghai Electricity Company was blocked by the US linked interests who did not want such a key asset to be in Chinese hands. At the same time, a campaign of accusations and unsubstantiated charged undermined confidence in the company and led to its liquidation. In support of his interpretation that this was all a put-up job, Brivati reveals that no money was actually missing, and, in fact, at the time Abraaj went into liquidation, assets were more than sufficient to cover liabilities.
So, which is the real Arif Naqvi? A crook that got caught fiddling the books and stealing investors’ money, or someone who got too big for his boots, got in the way of forces bigger than himself and had to be brought down? The jury is still out – in fact there is still no jury as the substantive case against Arif will only start if and when he is extradited to the US.
In the meantime, my guess is that there will be many who believe him guilty – a thief who got caught and is now getting what he deserves. Others may believe that he is a victim of hubris. Success leading to arrogance and feelings of omnipotence, leading to missteps which led to the downfall. And they may be yet others who enjoy conspiracy theories – especially if they involve the US establishment working to bring down a Muslim and a Pakistani.
I certainly do not have the legal and finance skills to be able to fully understand the case against Arif. But I have had the opportunity to interact with him at crucial times in his life. Enough times to be able to talk about Arif as a person – about his thoughts, aspirations and ambitions. And maybe it is more important to understand the man than trying to understanding the arcana of forensic accounting.
I first met Arif when he was doing his A-levels. Having completed a degree in economics at the LSE, I was teaching at the Grammar School while looking for a job in the finance sector. Arif was one of my students at the time. We remained in touch even after I stopped teaching. Arif and several friends used to often pass by my bachelor flat in Karachi’s Queens Road (now called M.T. Khan Road). We spoke about our plans, about music, about economics and finance, and about studying and living in London. Like any 18-year-old he wanted to change the world, make his mark and win accolades. But these were things we all spoke about and were no signs of a greedy, immoral or unscrupulous personality as claimed in the Clark and Louch book.
We remained in touch during his LSE days when we would meet from time to time when I went down from Oxford to London. Our talks in those days were about economics and finance as well as about poverty and injustice. Maybe it was during these talks that Arif developed some of his initial ideas about impact investment. Like all ideas one develops at this formative age, they were not a smokescreen. He strongly believed in them.
I lost touch with Arif after that and only heard vague rumors from mutual friends about how well he was doing in the Dubai. The next time we were in contact was in 2009. I was training to run the Chicago Marathon and wanted to use this as an occasion for fund raising for The Citizens’ Foundation. He made a very generous contribution to my fund raising. About this time, Arif was also setting up the Aman Foundation and we spoke at length about the need for giving back and his special commitment to create opportunities for poor youth in Pakistan and in particular in Karachi. Again, the passion and commitment were deep. At the time he quoted his father: “If you stand on top of your money, you can be a good man, but if you let your money get on top of you, you will be crushed.”
I want to use my money to do good, he added. His eyes shone when he said this and it would be mean-minded to think he was being insincere – there was no need to do so.
The last time we interacted was in 2015 when he was at the height of his prestige and power. I was doing some consultancy work on agriculture in Europe and Africa and had stopped over in Dubai to talk to him. Unfortunately, he had to miss the meeting as he was held up elsewhere. A few days later there arrived at my home the biggest bunch of flowers and a most luxurious box of chocolates I have ever seen. The accompanying note had on one word: “Sorry!” This was not the gesture of someone mean minded, full of himself and drunk on success.
I realize that none of this amounts to hard evidence and will certainly make no difference in a court of law. However, during my life I have met several very rich people. Some were quite arrogant, obsessed with their own success; others seem to take immense pleasure in talking of their latest deal and of one-upmanship; yet others seemed to surround themselves with sycophants. Arif Naqvi did none of this.
He was head and shoulders above other highly successful finance and business people. And whatever the courts decide, he remains someone from Pakistan who was able to make it to the big league and get them to look seriously at investments in developing countries including in provision of basic services such a health and power.