We all tend to see what we wish to see and to believe what coincides with our pre-existing viewpoints.

We at Ethics Unwrapped hope that impact investing can live up to its promise of helping to solve many of the world’s problems. We are kindly disposed to the practice, and think well of individuals engaged in impact investing. Being located at a business school, we, like Bill Gates, Edgar Bronfman, Reid Hoffman, Thomas Friedman, HBS professor Josh Lerner, and many others want to believe in capitalism’s potential to mitigate poverty and so much more.

Unlike the Gates Foundation, the Overseas Private Investment Corporation (U.S.), the Commonwealth Development Corporation (UK), Deutsche Bank, Citibank, Bank of America, the French Government, the Teachers Retirement System of Texas, the Washington State Pension Fund, the World Bank’s International Finance Corporation and so many others, however, we did not invest with the Abraaj Group, Arif Naqvi’s Dubai-based private equity firm. Whew!

Arif Naqvi was born in Pakistan. Bright and ambitious, he earned a degree from the London School of Economics and worked tirelessly on establishing a network of influential friends and acquaintances. He started a small investment fund and developed a flair for deal-making and fund-raising.

At events like the World Economic Forum, the Global Business Forum, the Clinton Global Initiative, and President Obama’s Presidential Summit on Entrepreneurship, Arif hobnobbed with the Pope, Prince Charles, Bill Gates, Bill Clinton, John Kerry, Colin Powell, Richard Branson, Larry Fink, Michael Bloomberg, Lloyd Blankfein, and many other heavy hitters. His pitch was simple: Stop calling them “emerging markets” and start calling them “global growth markets.” He promised that Abraaj would take investors’ funds and buy businesses (e.g., in health care and clean energy) in Africa, the Middle East and Asia and simultaneously make a profit (a figure of 17% was often touted) while creating the types of jobs that could pull entire economies out of poverty. It was a story that well-meaning investors wanted to believe and by September of 2017, Arif had control over $14 billion that was invested in hundreds of companies around the world and he was seeking $6 billion more. Arif was without question one of the world’s leading and most influential proponents and practitioners of impact investing.

Then the roof fell in. As Simon Clark and Will Louch spell out in agonizing detail in their book The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale, the story Arif told over and over around the world in order to raise that $14 billion was merely a lie well told. Abraaj wasn’t profitable. It lost money. Arif was not the savior of the world’s poor. Almost from the beginning, he began diverting investors’ funds for his own personal use (a private jet, a super yacht, an Oxfordshire estate, a Dubai mansion, etc.) and to pay bribes (to facilitate deal-making, to cultivate political influence, and to hide his own wrongdoing). When the shell game that Arif played to move funds around in order to prevent investors from realizing their money had not been put to the uses promised, Abraaj’s liquidators in 2020 found that in 3,700 transactions, Arif had stolen $780 million from Abraaj. Another $385 million was unaccounted for.

Currently, Arif is confined in the UK, may face extradition to the U.S., faces 291 years in jail, and owes hundreds of millions of dollars in fines to various regulators.

Given our focus on behavioral ethics, we are naturally concerned with the question:  “Why did he do it????” We will never know for sure, but tidbits in The Key Man provide support for competing theories.

One plausible theory is that Arif Naqvi was a psychopath or sociopath. His conduct checks a lot of boxes on any list of common characteristics of such people. Arif lied relentlessly, often to advance his own personal interests. He frequently bullied employees. He spied on them. He lost his temper, yelling and breaking things. He constantly manipulated employees, keeping them under his thumb by alternating threats with rewards. He would inflict verbal abuse on someone, and then do the victim a special kindness. He administered behavioral profile tests to his managers, but never took the test himself.

According to Clark and Louch: “A dozen employees described Arif as having narcissistic personality disorder. Some thought Arif displayed the traits of the dark triad—a combination of narcissism, psychopathy, and Machiavellianism.” (p. 106) They might well have been onto something.

On the other hand, another plausible explanation lies in some of the behavioral influences that we often explore in our behavioral ethics videos at ethicsunwrapped.utexas.edu

Self-serving Bias. This is the tendency we have to gather, process, and even remember information in ways that serve our self-interest. Arif’s self-interest was in acquiring recognition, prestige, mansions, private jets, yachts and more. People who really want those things enough can start believing their own B.S., much as did Adam Neumann at WeWork and Elizabeth Holmes at Theranos (who also shared many of Arif’s narcissistic traits, to be sure).

Overconfidence Bias. The self-serving bias can be pushed beyond all reason by the overconfidence bias, the tendency people have in various settings to be irrationally confident of their own skills and abilities. Arif’s actions again remind us of Neumann and Holmes and their absurd overconfidence in running their companies (into the ground).

Moral Licensing. Most people keep a running scoreboard in their heads that compares their perception of themselves as ethical people with their actual conduct. If they know they have messed up, sometimes they look for opportunities to do something good to put the scoreboard back in equilibrium. This is called moral compensation. Sometimes when people receive a little too much positive feedback regarding how wonderful they are, they can get to feeling a little entitled, and give themselves permission to not live up to their normal standards. This is called moral licensing. An ANC politician in South Africa who got caught siphoning away $10 million in taxpayer dollars said “I did not join the struggle to be poor.” (Bogdanich & Forsythe, p. 225). Arif may well have felt that all the good his self-serving and overconfident mind told him he was doing justified some small recompense to himself. After all, who deserves a plane, a yacht, and a mansion more than the person who is busy ending world poverty?

Loss Aversion. Loss aversion is people’s tendency to dislike losses more than they enjoy commensurate gains, which can lead them to take chances and make choices to avoid a loss that they would not take in order to garner a similar gain. Early in his time with Abraaj, Arif enjoyed considerable success and his reputation as a wizard of impact investing grew. As Abraaj began to struggle, in part because the businesses it purchased often did not prosper and in part because of Arif’s defalcations, it would have been natural for Arif to wish to avoid losing the great reputation he had developed, by hiding the true state of things. (For a summary of how Arif’s determination to keep his failures a secret led directly to the largest collapse ever of a private equity firm, see pp. 130-131 of The Key Man.)

Incrementalism. This is the slippery slope, and most frauds and embezzlements begin with small numbers that may be relatively easy to rationalize. After all, what’s the harm? You’ll pay the money back soon. This was the case with Arif’s frauds, but, as is often the case, the frauds, like little acorns, grew into mighty oaks…more than a billion dollars’ worth.

Perhaps Arif’s tale is an example of a normal person being diverted from the straight-and-narrow by the sorts of behavioral influences that can impact us all. Perhaps, his story adds evidence to the well-known fact that psychopaths are overrepresented in C-suites around the economy. It’s difficult to know with any certainty. Clark and Louch seem to believe the latter theory, and we suspect they are correct.

What we do know is that Elizabeth Holmes’s Theranos fraud made it more difficult for female entrepreneurs to raise money in Silicon Valley and Arif’s fraud is very likely to create headwinds for those who want to pursue impact investing. Many of the world’s leading proponents of the practice have to be feeling a little reluctant about diving back into that pool, and they’ve been reminded that corruption in these “global growth markets” has not been tamed, as Arif had often and forcefully claimed.



Paul Babiak & Robert Hare, Snakes in Suits: When Psychopaths Go to Work (2006).

Lavina Bhambhani et al., “Psychopathy and Sociopathy: A Modern Understanding of Antisocial Personality Disorder,” Indian Journal of Social Studies and Humanities 1(5): 17-23 (2021).

Walt Bogdanich & Michael Forsythe, When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm (2022).

Eliot Brown & Maureen Farrell, The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion (2021).

John Carreyrou, Bad Blood: Secrets and Lies in a Silicon Valley Startup (2018).

Simon Clark & Will Louch, The Key Man: The True Story of How the Global Elite Was Duped by a Capitalist Fairy Tale (2021).

Sir Ronald Cohen, Impact: Reshaping Capitalism to Drive Real Change (2021).

Andrei Neboian, “These Three Billionaires Believed They Were Too Great to Fail,” at https://entrepreneurshandbook.co/these-3-billionaires-believed-they-were-too-great-to-fail-fdf8bb255ca5.

Chad Perry, “The ‘Dark Traits’ of Sociopathic Leaders: Could They Be a Threat to Universities?” Australian Universities’ Review 57(1): 17-25 (2015).

Judith Rodin, The Power of Impact Investing: Putting Markets to Work for Profit and Global Good (2014).


Blog Posts:

“Elizabeth Holmes’s Conviction: Theranos and Loss Aversion” at https://ethicsunwrapped.utexas.edu/elizabeth-holmess-conviction-theranos-and-loss-aversion.

“What Didn’t Work for WeWork” at https://ethicsunwrapped.utexas.edu/what-didnt-work-for-wework.

“Elizabeth Holmes: Scamming Silicon Valley,” at https://ethicsunwrapped.utexas.edu/elizabeth-holmes-scamming-silicon-valley.



Behavioral Ethics:  https://ethicsunwrapped.utexas.edu/video/intro-to-behavioral-ethics.

Incrementalism: https://ethicsunwrapped.utexas.edu/video/incrementalism.

Loss Aversion: https://ethicsunwrapped.utexas.edu/video/loss-aversion.

Moral Equilibrium: https://ethicsunwrapped.utexas.edu/video/moral-equilibrium.

Overconfidence Bias: https://ethicsunwrapped.utexas.edu/video/overconfidence-bias.

Self-serving Bias: https://ethicsunwrapped.utexas.edu/video/self-serving-bias.