Indian tycoon BR Shetty liable in over Rs 50,000 cr UAE’s NMC fraud

Abu Dhabi: Indian businessman and NMC Healthcare founder Dr BR Shetty and the group’s former chief executive, Prasanth Manghat, have been found liable for knowingly participating in fraudulent activities that contributed to the collapse of one of the UAE’s largest private healthcare groups, according to media reports.

The Abu Dhabi Global Market (ADGM) Court of First Instance’s Commercial and Civil Division ruled that both men were involved in fraudulent and wrongful trading between April 2012 and April 2020.

In a judgment issued on Thursday, November 5, Justice Sir Andrew Smith identified USD 5.397 billion (approximately Rs 50,683.50 crore) as the starting point for assessing the financial contributions the two men must make towards NMC’s assets. The figure is not a final repayment order, and their individual liabilities will be determined in further proceedings.

Transfers to Shetty’s personal accounts

The judgment examined more than 500 transfers totalling Dh 4.183 billion into Shetty’s personal bank accounts.

After accounting for amounts returned to the NMC Group, the net transfers stood at Dh 2.6 billion.

The court found that Shetty knowingly received funds improperly transferred from the group and used some of the money to acquire personal assets and investments. It also found that he helped conceal the company’s borrowings and allowed misleading financial statements to be published.

Billions in undisclosed debt

By December 2018, NMC had accumulated approximately USD 3.888 billion in undisclosed borrowings, in addition to reported debt of around USD 1.993 billion.

The court examined the use of sham supplier transactions to obtain financing and conceal the group’s actual financial position. Separate accounting records and manipulated ledgers were used to hide liabilities from auditors.

The judge rejected Shetty’s defence that he was unaware of the fraud. Manghat’s argument that he had limited oversight of the company’s financial affairs was also rejected. The court found that he played a leading role in facilitating the diversion of NMC funds for the benefit of Shetty, himself and others.

ADCB wins separate case against Manghat

In a separate action, Abu Dhabi Commercial Bank (ADCB) established claims against Manghat over losses linked to the NMC fraud.

The court assessed the bank’s claims at approximately USD 1.022 billion in outstanding liabilities and USD 168.989 million in lost profits, subject to adjustments and credits for recoveries already received.

NMC’s collapse

Founded by Shetty in Abu Dhabi in 1975, NMC Healthcare grew from a single medical centre into one of the UAE’s largest private healthcare providers.

Its parent company, NMC Health, was listed on the London Stock Exchange in 2012 and reached a valuation of approximately USD 10.5 billion in 2018.

The group’s financial troubles emerged in December 2019 after short seller Muddy Waters raised concerns about its accounts and debt. An independent investigation subsequently uncovered more than USD 4.4 billion in previously undisclosed borrowings.

NMC Health entered administration in April 2020, followed by NMC Healthcare, NMC Holding and other group companies in September that year.

The court will determine the final financial contributions, statutory interest, legal costs and other outstanding matters at a further hearing.

Get the latest updates in Hyderabad City News, Technology, Entertainment, Sports, Politics and Top Stories on WhatsApp & Telegram by subscribing to our channels. You can also download our app for Android and iOS.