NMC files case against founder BR Shetty in $4bn fraud suit

Legal claims have been filed in the UK and Abu Dhabi alleging fraudulent activity

BR Shetty, founder of NMC Healthcare. Ravindranath K / The National

A lawsuit has been filed against NMC Healthcare founder BR Shetty and its former chief executive in a $4 billion case alleging fraud, according to the administrators of the company, which collapsed in 2020.

Legal claims have been filed in the UK and Abu Dhabi against Mr Shetty, Prasanth Manghat and the Bank of Baroda “with regards to the ongoing investigation into fraudulent activity at NMC Healthcare”, Richard Fleming, managing director of Alvarez & Marsal Europe and joint administrator of NMC and NMC Healthcare, told The National.

“This is a significant milestone in the work we have done as administrators on behalf of creditors since NMC was discovered to have more than $4 billion of previously undisclosed debts,” Mr Fleming said.

“These court proceedings are ongoing and we are unable to comment further at this stage.”

Mr Shetty was not immediately available for a comment on his UAE number.

Bank of Baroda has yet to respond to a request for comment from The National.

NMC Healthcare was founded by Mr Shetty in 1975. It grew from a single clinic to become the UAE’s biggest privately owned healthcare operator, employing thousands of people.

The company’s shares were listed on the London Stock Exchange in 2012 and at its peak in 2018, it was valued at £8.58 billion ($10.5 billion).

However, the business crashed after a report from short seller Muddy Waters in December 2019 alleged that the company had inflated the value of its assets and understated its debt.

An independent investigation uncovered more than $4.4 billion of previously unreported debt, leading to the company being placed into administration in April 2020.

Last year, the restructuring process was completed and allowed 34 NMC companies to exit administration and become subsidiaries of a new group.

In December, NMC Healthcare said its board appointed David Hadley, the former chief executive of Mediclinic Middle East, as the group’s new chief executive.

NMC, the largest private healthcare platform in the UAE and the third largest in Oman, operates 85 units including multi-speciality hospitals, fertility specialist Fakih IVF, cosmetic clinic chain Cosmesurge and long-term rehabilitation and home care brand ProVida.

It has more than 13,000 employees and about 5.5 million patient interactions annually, according to its website.

In 2021, Mr Shetty also filed a case in the courts in New York accusing former directors, two banks and the company’s former auditors of conspiring to “artificially inflate the financials of NMC” and other group companies.