In this episode of the ACFE’s monthly podcast Fraud Talk, John Warren, Vice President and General Counsel of the ACFE met with the two Wall Street Journal reporters who played a large part in uncovering the fraud in the Arif Naqvi case.
In the excerpt below from episode 112, Will Louch speaks about how the case was brought to his attention, and the difficulty of corroborating reports from an anonymous whistleblower. Download the full transcript in PDF form or listen to the episode at the bottom of this post.
Will: I think it’s probably mid, maybe early January 2018. I wake up in the morning, check my emails as I did every day. Most of them are pretty boring press releases. Then I had one which had a slightly odd email address. The sender, I think it was from a ProtonMail account. It was with moc.liamnotorpnull@jaarbA.w. I was like “this looks kind of interesting”, clicked on it.
The email initially didn’t have a particularly important piece of information, it just told me that someone was leaving the firm. I was like, “Okay, that’s kind of interesting, but not really.” Responded, said, “This person is leaving. Is there anything else going on?” Then I received a, I don’t know, about an 800,000 word email, saying that multiple investors in a $1 billion fund, including the Bill and Melinda Gates Foundation, CDC, Proparco, US government, were investigating where hundreds of millions of dollars of their money had gone.
I read this and I was like, “Well, that’s quite an interesting piece of information, if it is true.” I wasn’t that familiar with Abraaj. I hadn’t really written about them much before. I shared this information with Simon and other colleagues. That was really the beginning of the whole process because a lot of the allegations that been on a source made, that was one– I mean, there was bribing politicians in Pakistan was another.
It was all pretty heavy stuff, but as I didn’t know who the person was, we couldn’t report any of it. It could very easily have just been a pissed off foreign employee, or it could have been a competitor looking to besmirch Abraaj’s name. We basically had to get that information confirmed. The thing that we started with was looking at the healthcare fund.
How we were able to do that was just trying to contact as many different people involved in the case as possible. Employees, investors, advisors, anyone that might be familiar with the information, and yes, that was really how it all began.
John: That’s really interesting. Myself and our audience are not journalists. One of the things that’s interesting to me, or a question I have is, as financial journalists, and you’re working at the Wall Street Journal, right, which is the most, or among the most prestigious financial newspapers in the world. Is it common to get emails like this? Do you get a lot of anonymous things like making allegations against, or was this really unusual when it popped up?
Will: In my albeit brief period at that time, I’d reckon I probably had about four or five other anonymous tips. What the other anonymous tips would typically know when they’re as interesting as this one, they’d normally be stuff about bullying, a firm, or a boss being sexist or something like that. This allegation of theft and fraud for a private equity firm, it’s just something that I’ve never really come across.
It actually took me a while to get my head around what they were alleging. They said that the money had been stolen because the firm was a billion dollars in debt, and private equity firms typically own a huge amount of money from management fees alone. A PE firm in debt almost didn’t make sense to me. Yes, it was pretty extraordinary.