Highlights
- Abu Dhabi court finds BR Shetty and former NMC chief executive Prasanth Manghat liable for fraud.
- The case involves a $5.4bn (£4.1bn) claim linked to NMC's collapse.
- Judge finds Shetty knowingly received improperly transferred funds and helped conceal company debts.
- NMC's administrators say the ruling supports their efforts to recover money for creditors.
AN ABU DHABI court has found Indian businessman Bavaguthu Raghuram Shetty (BR Shetty), founder of collapsed healthcare group NMC Health, and its former chief executive Prasanth Manghat liable for knowingly participating in fraud involving billions of dollars.
The ruling follows a $5.4 billion (£4.1bn) claim brought by Alvarez & Marsal, the administrators of the former FTSE 100 company, in a long-running case linked to one of London's biggest corporate scandals.
According to The Times, the Abu Dhabi Global Market court found that Shetty and Manghat had "dishonestly and knowingly participated in the fraud" and held them liable for fraudulent and wrongful trading.
The judgment was delivered after a trial that began in March.
Justice Sir Andrew Smith found that Shetty had knowingly received "substantial sums improperly transferred" from NMC Group and used the money to acquire assets.
He was also found to have failed to disclose securities supporting his personal financial arrangements, allowed misleading financial statements to be published and helped conceal the group's borrowings from its former external auditor, Ernst & Young (EY).
The court ruled that both men must contribute to NMC's assets for wrongful trading. For fraudulent trading, $5.4bn (£4.1bn) was identified as the starting point for deciding the appropriate contributions, according to the judgment summary.
The precise amounts each defendant must pay were not specified in the report.
NMC collapse and investigation
Alvarez & Marsal was appointed administrator in 2020 after NMC was plunged into crisis following allegations of accounting and governance irregularities raised by US short-seller Muddy Waters Research.
An investigation by the Freeh Group, commissioned by NMC, subsequently uncovered $6.6bn (£5bn) in debt.
Founded by Shetty, NMC operated in 19 countries, including the UK, where it owned Aspen Healthcare. At its peak in 2018, the company had a market value of £8.6bn on the London Stock Exchange.
Its collapse caused heavy losses for investors and creditors, including Abu Dhabi Commercial Bank (ADCB).
The court also found that ADCB had established its claims under UAE law against Manghat, including claims for outstanding liabilities and lost profits.
The bank's fraud claim against the former chief executive was heard alongside the administrators' case.
In February, Alvarez & Marsal reached a confidential settlement with EY following a separate £2bn claim at the High Court in London.
The administrators also reached a confidential $600m (£455m) settlement in July with Bank of Baroda, one of India's largest banks, which had been a defendant in the Abu Dhabi proceedings.
Shetty and Manghat consider appeal
Both Shetty and Manghat had denied the allegations.
A spokesman for Shetty, 84, said he was "surprised and disappointed" by the judgment and was considering an appeal.
"Dr Shetty has always maintained that he was not party to the fraud at NMC," the spokesman said.
Manghat's spokesman also said he was considering possible avenues for appeal. He maintained that the two cases brought against him were "disproportionate", both in their scale and in the way they singled him out.
Shetty has previously described himself as the "victim of a large-scale fraud" and denied responsibility for the company's collapse.
Richard Fleming, joint administrator and managing director at Alvarez & Marsal, said the judgment vindicated the efforts made since the firm's appointment.
NMC's operating companies in the UAE exited administration in 2022.
