Arif Naqvi attended his first World Economic Forum (WEF) event in June 2003, a few weeks after George W Bush declared the Iraq War over. The 42-year-old Pakistani-born investor went to one of its sessions on the shores of the Dead Sea in Jordan. It was an experience that transformed his life. According to Simon Clark and Will Louch, it opened his eyes to ‘an intoxicating new world of networking opportunities where investors and politicians met … They talked about how companies could help solve Middle Eastern problems like unemployment and chronic water shortages.’
Naqvi became a regular at WEF meetings over the next decade and half, including its showcase annual event in Davos. There he could not only hobnob with members of the global elite but also sell them a dream, seducing them with talk of the power of philanthro-capitalism and ‘impact investing’ to change the world. It was a win-win situation, where investors’ money would be funnelled into worthy enterprises, such as schools and hospitals, that would lift the underprivileged in developing countries out of poverty at the same time as producing impressive returns.
Investors were seduced by Naqvi’s charm. In the early part of the book, he comes across as an ebullient, optimistic salesman adept at winning over the powerful, and sometimes you cannot but admire his chutzpah. What was less apparent to the global ‘great and the good’ who bought into the dream, however, was that Naqvi was also, allegedly, a crook. From 2014 onwards, he and senior colleagues developed a penchant for cooking the books of Abraaj, the sprawling, Dubai-headquartered private equity group he ran. Not only was he exaggerating the impact that projects he funded were having, but he was also rigging asset valuations, inflating returns and siphoning off hundreds of millions of dollars from the supposedly worthy funds he managed to support his own lavish lifestyle.
The fact that Naqvi had created what the authors call a ‘tangled web of more than three hundred companies based mostly in tax havens around the world’ was one reason investors were slow to realise that they might be being taken for a ride. The authors also reveal a side to him that the people he glad-handed at Davos did not see: he could be a bully and a tyrant who treated staff abysmally. ‘Some thought Arif displayed the traits of the dark triad – a combination of narcissism, psychopathy, and Machiavellianism.’
Born in Karachi, Pakistan, in 1960, Naqvi started his career at accountants Arthur Anderson in London before taking various other jobs in business and finance in Pakistan and Saudi Arabia. There were early signs that he might have an elastic relationship with the truth, such as when he failed to tell his second employer, part-owned by Morgan Grenfell, that he hadn’t passed his accountancy exams. After a stint in Saudi Arabia, he moved to the emerging Gulf financial centre of Dubai, where he founded Abraaj in 2002. Naqvi got lucky, leading three well-timed buyouts, which, whether by luck or judgement, all delivered spectacular returns. Other red flags were ignored by his loyal followers. For instance, after a long-serving colleague quit in 2007, Naqvi began surrounding himself with sycophants and yes men, even appointing his own brother-in-law as Abraaj’s head of risk management.
Abraaj seemed to be on a roll. Naqvi bolstered its credibility by buying the London-based Aureos Capital, an emerging-markets private equity firm co-founded by the British and Norwegian governments, in 2012. Three years later, the enlarged Abraaj group seemed like an ultra ‘blue chip’ firm. It boasted three hundred investors, including the Bill and Melinda Gates Foundation, the World Bank’s International Finance Corporation and the UK government’s development finance institution, CDC. At the same time, say the authors, Abraaj was disguising the fact that it was effectively insolvent, lacking legitimate means to pay salaries, electricity bills or rent. They suggest that leading professional services firms that were earning millions in fees from Abraaj, including KPMG, were complicit in hiding its true state from investors and regulators.
Naqvi was eventually found out thanks to the doggedness of one investor, Andrew Farnum, a fund manager at the Bill and Melinda Gates Foundation, who hired forensic accountants to probe Abraaj’s labyrinthine complexity. Whistle-blowers within the firm and investigative reporters such as Clark and Louch also played a major part. After the truth seeped out, Abraaj, which managed nearly $14 billion at its peak, collapsed. It has since been liquidated and Naqvi faces extradition to the United States and the prospect of 291 years in an American jail after being charged with embezzling $385 million from investors and from the Abraaj Group.
This book isn’t just about financial shenanigans, though. It is also very good on the business and economic climate in the places where Abraaj invested. Describing Abraaj’s attempts to turn around Karachi Electric, the authors document the furious reaction of Pakistani trade unions when it emerged that the company’s new owners were planning to sack 4,500 workers: ‘The workers went on the rampage, pelting the building with stones, looting cars and setting them on fire. Security guards couldn’t stop protesters from entering the building. The crowd surged in and took hostages.’ The authors are excellent as well at explaining the racism of Emiratis towards Pakistanis, whom they tend to regard as second-class human beings, more suited to working as labourers on construction sites than managing other people’s money.
To an extent, the book is also about the current state of financial journalism. While working as reporters on the Wall Street Journal, Clark and Louch saw their job as being to expose wrongdoing within firms like Abraaj; other journalists, perhaps out of fear of losing ‘access’, continued to puff up Naqvi’s supposed financial genius. They are also disparaging about the silver-tongued PR advisers whose firms ‘were paid small fortunes to groom Arif’s and Abraaj’s image by aggrandizing the good and obscuring the bad’.
The book has some weaknesses. I had a problem with the use of first names throughout, especially given that it is surnames that appear in the index. The authors criticise corporate governance at Abraaj but fail to provide any details of who chaired the company or sat on its board during its seventeen years of existence. They also claim that CDC is ‘the oldest and most respected development finance institution’ to have invested in Abraaj. In fact, the group is widely regarded as having sacrificed its core values on the altar of greed after it was semi-privatised by Tony Blair’s government in 2004.
Essentially, though, this book is a tragedy. Naqvi set out to change the world and to prove that emerging markets were not as corrupt as many investors like to think. He failed on both counts. Clark and Louch write, ‘He wanted to dispel a negative stereotype about corruption in Pakistan and other developing countries but his actions may have ended up reinforcing it.’
This book review was published in Literary Review in July 2021