Alvarez & Marsal restructuring executive detained in UAE

Alvarez & Marsal restructuring executive detained in UAE

| Tuesday 16 January 2024

Financial Times

Adviser was working on the overhaul of a Nasdaq-listed group that US regulators charged with fraud

An executive from consulting firm Alvarez & Marsal was detained in the United Arab Emirates while working to overhaul a Nasdaq-listed company that US authorities charged with fraud last month, according to people familiar with the matter.

Guy Wall, the managing director of A&M’s restructuring practice in Dubai, last month became a director of Brooge Energy Limited, a UAE oil storage company that had been plagued by financial reporting failings since listing in New York in 2019.

Wall and a colleague became directors after A&M was appointed in November by a Cayman Islands court to oversee the liquidation of BPGIC Holdings, the holding company that is the majority owner of Brooge.

The court appointed A&M as liquidators following a successful legal claim over unpaid debts from Bahrain-based investment firm Asma Capital.

Wall was detained this month by authorities in the UAE, the people said, as he was in the process of working out a plan to stabilise Brooge after the fraud charges from the US Securities and Exchange Commission.

They added that Wall was held in prison in Fujairah, the emirate where Brooge’s oil storage tankers are based, before being released. Wall was detained for allegedly trying to remove documents from Brooge’s Fujairah offices without authorisation, the people added.

A&M, which has its headquarters in New York, declined to comment. Wall did not respond to requests for comment. A lawyer for Brooge declined to provide a comment for publication.

A representative of the Fujairah police said that they “cannot share personal information about people who are detained in our prison”. The UAE government did not provide a comment by the time of publication.

Brooge was part of a wave of companies that capitalised on investors’ appetite for special acquisition companies and was valued at more than $1bn when it went public.

The company had the backing of Middle East investors including Sheikh Mohammed bin Khalifa bin Zayed Al Nahyan, the son of the previous UAE president, who died in 2022.

The sheikh held a minority stake in Brooge through his 24 per cent stake in BPGIC Holdings. A businessman, Salman Dawood Salman al-Ameri, was the majority shareholder in BPGIC Holdings.

Their stakes were set in effect to be stripped from them, however, when Wall and fellow A&M executive Alexander Lawson were appointed as liquidators of BPGIC Holdings.

A&M has significantly expanded its international operations in recent years, including in the Middle East, competing with global advisory firms such as the Big Four professional services groups. It employs about 8,500 people globally. 

The SEC on December 22 charged Brooge and two of its former executives with fraud after it found that the company had “created false invoices to support inflating revenues from its oil facilities in Fujairah, UAE by over $70mn over three years”.

Brooge, which did not admit or deny the SEC’s charges, agreed to pay a $5mn penalty.

The regulator’s probe focused on a related party called Al Brooge International Advisory (BIA), which it said “had no meaningful business operations aside from participating in the misstatements of revenues associated with [Brooge Energy]”.

Both EY and PwC have resigned as auditors of Brooge since the company went public. PwC quit in December 2022, citing “disagreements” on matters of accounting with the company.

Brooge replaced PwC with UAE-based accountancy firm Affiniax AAS Auditors. Last year, Affiniax AAS reclassified $74mn of funds received from BIA between 2018 and 2020 that had previously been booked as revenue as a liability. This meant that the accounts showed that Brooge owed this money to BIA.

Five days after the SEC announced its charges, Brooge said that its main subsidiary had been “served with a court order from a court in the UAE following a case brought forward by Brooge International Advisory”. It added that its legal counsel had determined that it should not impact Brooge’s “ongoing operations”.

BIA did not respond to requests for comment.


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