NMC Health censured by UK financial authority

Reuters/Satish Kumar

• Debt understated by $4bn
• Dual sets of accounting records
• Entrepreneur denies wrongdoing

UAE healthcare operator NMC has been censured by the UK Financial Conduct Authority (FCA) for misleading the market to the tune of $4 billion.

Founded by Indian businessman BR Shetty in the mid-1970s, NMC ran into difficulties after short-seller Muddy Waters called into question its financial reporting and doubts emerged over the size of stakes owned by its biggest shareholders.

NMC had listed on London’s FTSE100 in 2017, but, according to Friday’s announcement from the FCA, the company was guilty of publishing a “series of financial statements and several clarification announcements which contained materially inaccurate information about its debt position”, between March 2019 and February 2020.

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Abu Dhabi-headquartered NMC Health was placed in administration in April 2020.

The FCA’s investigation found that NMC had been operating dual sets of accounting records. 

“The financial statements disclosed publicly misled investors by understating its debts by as much as $4 billion,” the FCA statement said.

“The FCA, with co-operation from NMC’s administrators and international partners, secured material which made clear that the picture it presented to the market was inaccurate,” it added.

Richard Fleming and Ben Cairns of Alvarez & Marsal were appointed joint administrators for NMC in September 2022.

It was agreed by the FCA to censure the company rather than impose a financial penalty “which would reduce the funds available to creditors”.

A censure is a statement by the regulator making the misconduct of a firm public without necessarily issuing a penalty.

Mighty fall

NMC Health was the UAE’s biggest privately-owned healthcare operator, boasting a vast number of clinics and hospitals, as well as specialised maternity and fertility clinics and long-term care homes in 19 countries.

In July it was revealed that administrators had filed a $4 billion lawsuit against Shetty, former chief executive Prasanth Manghat and the Bank of Baroda, related to allegations of fraud which led to the company’s demise.

Shetty’s wealth was estimated by Forbes to be around $4 billion in 2019. He was once famous for his “100, Burj Khalifa, Dubai” address and lavish Bollywood star-studded parties.

He continues to deny any wrongdoing and maintains that he has been the victim of fraud.

The Indian entrepreneur has sued former top executives of his companies, banks and auditor EY, claiming that they were responsible for the alleged complex multi-billion-dollar fraud. He is seeking $8 billion in damages.