NMC debts rise to $6.6bn as fraud probe widens
Investigation of troubled company’s finances has thrown up further examples of abuse of funds
Allegations of fraud at
NMC Health, one of the UAE’s largest medical providers, are widening as investigators dig into the affairs of the company, whose shares are listed on the London Stock Exchange (LSE).
The company now believes its liabilities are at least $6.6 billion — $1.6 billion more than the previous estimate and more than three times its debts when investigations began in January. It has also identified about $50 million in cheques that it believes were improperly written by group companies.
The probe of the troubled company’s finances — led by former FBI director Louis Freeh — is continuing and could throw up further examples of abuse of company funds, sources close to NMC told Arab News on condition of anonymity.
In a statement to the LSE, NMC said that it was “continuing to work with its advisers to understand the exact nature and quantum of the undisclosed facilities, including the circumstances in which they were obtained.
“The board believes that some of proceeds may have been utilized for non-group purposes and work is commencing on a project to trace such proceeds with a view to considering what actions may be available to the group to recover such monies,” the statement added. The $50 million worth of cheques is the latest alleged example of widespread financial abuse at NMC, which first came to light in a report by American activist investor Muddy Waters last year, causing its London share price to collapse.
“The board has been informed of the presence of cheques (written by group companies), which may have been used as security for financing arrangements for the benefit of third parties. A preliminary view is that the amount of these cheques totals approximately $50 million. The existence of these cheques has only recently been brought to the attention of the board and urgent investigations are ongoing,” NMC said. Prasanth Shenoy, former chief financial officer, has resigned following a period of sick leave. NMC thanked him for his service. The statement also announced the appointment of an experienced accountant, Matthew Wilde, as chief restructuring officer. Wilde has been involved in many big restructuring initiatives in the Middle East, such as Dubai World and Al Jaber group of Abu Dhabi. NMC said that it was continuing to focus on its medical operations and the coronavirus disease outbreak.
The group’s facilities account for about 30 percent of the UAE health industry, but it also does business in many other countries, including Saudi Arabia, where it launched a joint venture last year with the Kingdom’s General Organization for Social Insurance.
“NMC’s operational leadership has taken steps since January to ensure the safety of the group’s workforce during the current COVID-19 crisis and to meet the health and safety needs of the community, especially throughout the extensive network of longterm care facilities, multi-specialty hospitals and clinics across the GCC,” the company said.
“It continues to be fully focused on safeguarding its operational liquidity to continue funding existing operations throughout its various subsidiaries and to protect its employees and patients during this global health crisis.”
NMC was founded in the UAE in the 1970s by Indian entrepreneur BR Shetty and grew rapidly to become the country’s leading health group. After the global financial crisis two new shareholders came into the company — Emirati businessmen Khaleefa
Butti Omair Al-Muhairi and Saeed Mohamed Butti Mohamed Khalfan Al-Qebaisi — who were part of the team that listed its shares in London in 2012.
Authorities in London and the UAE have been contacted by the company with a view to establishing exactly what went wrong at NMC, which was once the most successful UAE company to have listed shares in London. Those shares are now suspended from trading.
Shetty is currently in India attending urgent family business, according to one of his advisers who did not want to be named. Former CEO Prasanth Manghat is also believed to have traveled to India.
FASTFACT
NMC facilities account for about 30 percent of the UAE health industry.