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World Bank debars Turkish banker for fraudulent practice in Dubai-based equity group

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The World Bank has debarred a Turkish national for two years for misleading the International Finance Corporation (IFC), which supports a closed-end private equity fund investing in Turkey, according to a statement from the World Bank Group released last Thursday.

The World Bank Group’s decision concerns Selçuk Yorgancıoğlu, the first Turkish banker debarred by the international finance institution. Yorgancıoğlu has been debarred in connection with a fraudulent practice as part of the Abraaj Turkey Fund I Project.

The debarment makes Yorgancıoğlu, who was appointed co-CEO of the Arbraaj Group as part of its restructuring in 2018, and any firms he controls, ineligible to participate in projects and operations financed by institutions of the World Bank Group for a period of 24 months.  It is part of a settlement agreement that was negotiated with Yorgancıoğlu, under which he admits responsibility for the underlying sanctionable practice and agrees to meet specified integrity compliance conditions for release from debarment.

The investment team “omitted to disclose material and relevant facts” about the financial situation of one of the investee companies, which misled the IFC, the World Bank said. This constitutes a fraudulent practice as defined in the IFC’s sanctionable practices.

The settlement agreement provides for a reduced period of debarment in light of Yorgancıoğlu’s cooperation, acceptance of responsibility, corrective action and voluntary restraint from pursuing future opportunities with the World Bank Group. As a condition for release from sanction under the terms of the settlement agreement, Yorgancıoğlu commits to undertaking corporate ethics training that demonstrates a commitment to personal integrity and business ethics; commits that any firms that he controls will implement a corporate ethics training program; and commits to continue to fully cooperate with the World Bank Group Integrity Vice Presidency, the World Bank said.

Yorgancıoğlu previously worked at Deutsche Bank as the country CEO for Turkey.

The Abraaj Group, which was founded in 2002 and claimed to manage about $14 billion in assets at its peak, was the Middle East’s biggest private equity firm and one of the world’s most active emerging market investors, with interests across Africa, Asia, Latin America and the Middle East.

It was forced into liquidation in 2018 after investors commissioned an audit to investigate alleged mismanagement of money in its $1 billion healthcare fund.

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