NMC Health censured for misleading market

THE Financial Conduct Authority (FCA) has censured the hospital operator NMC Health for misleading the market by understating its debt.

However, the watchdog stopped short of imposing a financial penalty on the collapsed firm, saying no funds were anticipated to remain after creditors had been paid.

The UAE-based firm, founded by Indian-born businessman Bavaguthu Raghuram Shetty, was listed on the London Stock Exchange in 2017 and became part of the FTSE100 index, enjoying a market capitalisation of £8.6 billion at its peak. The UK’s Aspen Healthcare was part of the company which operated in 19 countries.

NMC, however, plunged into turmoil after the American short-seller Muddy Waters flagged accounting and governance issues in the company. It ultimately went into administration in 2020 after the revelation of financial discrepancies.

According to the findings of the FCA’s three-year investigation published on Friday (17), NMC had been operating “dual sets of accounting records”. The financial statements disclosed publicly misled investors by understating its debts by $4 billion (£3.19 bn).

Material the FCA secured by working with law enforcement agencies abroad during the investigation “made clear that the picture it presented to the market was inaccurate”.

“As it is anticipated that no funds will remain after creditor claims have been met, the FCA has imposed a censure rather than a financial penalty which would reduce the funds available to creditors,” the regulator said.

Its joint executive director of enforcement and market oversight, Steve Smart, said in a statement that the concealment of NMC’s debt position and subsequent collapse “has left creditors including investors out of pocket.”

“While the administrator has sought to recover any value and distribute to creditors, the FCA has sought, through the public censure, to explain how and why investors were misled to ensure that lessons are learnt.”