Nirav Modi extradition case: outcome of appeal to also affect Pakistani-origin global financier Arif Naqvi

Nirav Modi was spotted in London in March 2019 by 'The Telegraph' reporters. Modi's appeal against extradition will be heard in the high court in London in December 2021.

Content warning: This article contains mention of suicide.

In a strange twist of fate, the outcome of Nirav Modi’s appeal against his extradition will decide not just the future of the beleaguered diamantaire but also that of a Pakistani-origin global financier who is fighting his extradition to the US. Arif Naqvi, who established the now-collapsed Abraaj Group, faces 16 counts of fraud and money laundering, and like Modi’s case, the Westminster Magistrates Court in the UK had found no bars to his extradition too.

Naqvi launched the appeal process in the high court, and after being turned down at the first instance, renewed the application to appeal. On Wednesday, Justice Philippa Whipple said that Naqvi’s application should be adjourned to wait for the divisional court’s decision in the Nirav Modi case which involves a key legal test on suicide. Modi’s appeal will be heard in the high court in London in December 2021.

In August 2021, Justice Martin Chamberlain had granted Nirav Modi permission to appeal after concluding that there was an arguable case that his extradition to India might lead him to commit suicide. This was after the Westminster Magistrates Court had approved Modi’s extradition to India in February 2021.

Among the grounds on which Naqvi has sought to appeal the Westminster Magistrates Court's decision is that the formulation of the “inability to control the suicidal impulse” test is “not justified either by legal principle or psychiatric science”. Simply put, it means that the Westminster Magistrates Court was wrong in concluding in January 2021 that Naqvi’s mental health was such that his extradition would not be unjust or oppressive.

While it is not unusual for a hearing to be adjourned pending the outcome of a case which grapples with a similar point of law, the trajectory of Naqvi’s and Modi’s cases in the UK courts were anything but similar. To begin with, Naqvi’s Abraaj Group, a Dubai-based private equity company, had a wider footprint, than Modi and Vijay Mallya, by virtue of channelling funds from around the world for investments in emerging markets.

The Abraaj Group was founded in 2002, and began by focusing in the Middle East and North Africa. Very soon it had various equity funds which became vehicles for investments which were as varied as solar energy in India, fertiliser manufacturing in Africa, logistics in Turkey, cancer treatment centres in Morocco, and much more. At one point, Abraaj managed assets of over $10 billion in 2017.

The jet-setting Naqvi had opened offices in London and Manhattan, and was wooing institutions and individuals with deep pockets and deeper conscience into investing for the greater good of the developing world. From 2013, Naqvi turned his focus to America for investors and very soon had the Bill and Melinda Gates Foundation, pension funds and asset management firms on board and eager to park their funds with Abraaj Group.

Arif Naqvi (May 2008 photo via Wikimedia Commons 2.0)

The fraud allegedly started in 2014, when Abraaj Group faced a liquidity crunch. It was then that investors’ money was used to fund cash shortfalls. In September 2017, the Gates Foundation raised concerns about a $200 million fund which was not deployed in the proper way by Abraaj. Meanwhile, Naqvi continued to make the most of his position as the uncrowned king of stakeholder capitalism, sitting on the boards of Interpol and the United Nations.

But continuing to show a healthy balance sheet, while allegedly misappropriating funds for personal benefit, can’t go on for long. Returns promised to investors were delayed by giving incongruous excuses and pressure was building up. Employees were leaking shocking details of mismanagement. Naqvi stepped down as CEO in March 2018. In her last ruling dated 28 January 2021 as chief magistrate, Judge Emma Arbuthnot, who was promoted to the high court three days later, noted that “funds were also said to have been used to bribe a politician in Pakistan to obtain approval for the sale of Abraaj’s stake in an electrical energy utility company”.

Also read: Why rich people in need of financial wizardry often flock to the UK and its outposts including British Virgin Islands

Naqvi was nabbed on 10 April 2019 at Heathrow airport, and instead of a flight to Dubai, he was brought to the Westminster Magistrates Court on an extradition request made by the US. Perhaps his arrest was as dramatic as that of Modi, who was arrested in March 2019 after a tip-off by a bank officer, when he went to open an account in central London. Mallya’s arrest was comparatively tame, but his every move was doggedly followed by the Indian and British press. The UK Telegraph famously splashed Nirav Modi's photo, but it is Naqvi who has been the subject of two major books with competing narratives.

Mallya managed to get bail by depositing £650,000 on the first appearance, but Naqvi had to put up a mind-boggling UK record of £15 million as security to avoid staying in prison. It was such a challenge to source the money – the sheer logistics – that Naqvi remained in jail for close to a month after his bail order in the first week of May 2019. He only walked out on May 28, 2019, once the court clerks and jail wardens tallied the figure. Modi of course remains behind bars but his security – £4 million on his seventh and last attempt – was much lower than Naqvi’s.

The National reported that in September 2020, Naqvi sold his country estate in Oxfordshire for £12.25 million. Strict bail conditions stipulated that he could only live at his Kensington house in London, making Oxfordshire out of bounds. Undoubtedly, the sale must have improved his liquidity; quite a bit of which will be needed to fund his ongoing legal battle. Naqvi also owns homes in St Kitts, France and Pakistan.

Mallya’s property on a small French island was sold, with the proceeds lodged in the UK court; but it is remarkable that so far he has managed to keep creditors away from his townhouse in London and a palatial mansion in Tewin village on the outskirts of London. Both Mallya and Naqvi made their presence felt in their local communities by indulging in philanthropy, and providing, alongside, some dollops of glamour.

Mallya generously presented a Christmas tree to the village when it was damaged in an accident, while Naqvi’s wife ran a curry supper club in their village hall. Mallya and Naqvi loved their machines – yacht, fancy cars and private jets – with the special ones sporting personalised number plates. And like Modi, Naqvi was a regular at Davos.

In convincing the court of Naqvi’s ties with the UK, his lawyers spoke about his considerable philanthropic endeavours over the years. Both Naqvi and Modi failed to make the cut. Mallya, on the other hand, by virtue of his old money and legacy business had less trouble on that front, which was reflected in a simpler and easier bail. Naqvi’s lawyers also unsuccessfully tried to invoke the principle of Forum, which stipulates that extradition can be barred if, in the interest of justice, the requested person can be tried in England itself. Charges faced by Modi and Mallya are heavily India-focused, and they did not even attempt to use the Forum bar.

Naqvi has now come to be described as the ‘Muslim Waldorf’, but comes nowhere close to being the poster boy of bad capitalism in Pakistan, as Mallya and Modi are in India. They could live with any moniker, though, as long as they win the legal battle to prevent their removal from England.

Also read: US court dismisses plea filed by Nirav Modi, associates