Court hears claims of EY failures in NMC’s £2 bn fraud trial

THE HIGH COURT in London this week began hearing a £2 billion claim brought by the administrators of NMC Health against auditor EY, with opening submissions focusing on alleged auditing failures and the company’s links to senior figures in the UAE, including Sheikh Mansour bin Zayed al-Nahyan.

NMC Health, once a FTSE 100 company valued at £8.6 bn in 2018, collapsed into administration in 2020 after disclosing more than £3 bn in hidden debt. Alvarez & Marsal, appointed administrators in April 2020, filed the claim against EY three years ago for breach of contract, duty of care and negligence, reported The Times.

NMC’s administrators are seeking damages over audits from 2012 to 2018, when EY issued unqualified opinions on NMC’s accounts. Their lawyer, Simon Salzedo, said in court that the audits were among the “most fundamentally flawed examples of big-firm auditing that have disgraced a courtroom in this jurisdiction.”

EY denies negligence and argues it was itself a victim of fraud committed by NMC executives and major shareholders.

EY stated the alleged fraud was carried out by founder BR Shetty, and shareholders Saeed Bin Butti and his nephew Khalifa Bin Butti. In its defence, EY referred to evidence suggesting Sheikh Mansour stood behind the Bin Buttis “in some informal way”, making him “effectively a shadow owner of NMC”, reported The Times.

The firm said this alleged link influenced lending decisions by banks. EY cited a witness statement by Lord Clanwilliam, former audit committee chairman at NMC, and a letter from Shetty to Sheikh Mansour in 2016 requesting support for a new venture.

It also referenced claims involving Dubai Islamic Bank and Canara Bank, which were allegedly influenced by the perception of royal connections.

EY argued NMC’s own senior management concealed the fraud. The administrators denied they had gone “soft” on the Bin Buttis and said a 2022 settlement had led to the return of many assets.

The hearing continues.