B.R. Shetty and Prashant Manghat held liable in NMC case

According to a report by The National (UAE), an Abu Dhabi court has held NMC Healthcare founder Dr. B.R. Shetty and former Chief Executive Officer Prashant Manghat liable for fraud. This case is related to the fraud committed between the year 2012 and the year 2020. The court noted that these two individuals knowingly participated in fraudulent activities, which led to the collapse of the group. The Commercial and Civil Division of the Abu Dhabi Global Market Court of First Instance determined that both had a dishonest participation in the fraud against the NMC Group between 2 April 2012 and 9 April 2020.

In a judgment issued on 5 November, Justice Sir Andrew Smith found both of them liable for fraudulent trading and wrongful trading practices. The court identified $5.39 billion as the starting point for determining the amount of financial contribution they must make to replenish NMC Healthcare's assets. However, this is neither a final award nor an order for each individual to pay this amount. Apart from this, the judgment has also been delivered in favor of Abu Dhabi Commercial Bank, which had filed a separate case regarding damages against Mr. Manghat.

The bank has succeeded in its claims against Mr. Manghat, which includes damages of over $1.19 billion subject to certain adjustments. This entire case is related to the diversion of huge amounts of money from the NMC Group. This scam involved the misuse of NMC Group's assets and attempts to conceal its financial position. The court found that the group had a significant amount of borrowings that were not properly disclosed. Due to misleading financial matters, its financial position appeared different from reality.

After this scam came to light, the condition of NMC Healthcare deteriorated. In December 2019, a report by a short seller named Muddy Waters claimed that the company had inflated the value of its assets and understated its debt. Following this report, the company collapsed. NMC Healthcare once had a peak value of $10.5 billion, which is 8.58 billion pounds, and it collapsed after an investigation revealed previously unknown debt of over $4.4 billion.

As background, NMC Healthcare was founded by Dr. B.R. Shetty in the year 1975. This company grew from a small clinic into the UAE's largest private healthcare operator and employed thousands of people. The company's shares were listed on the London Stock Exchange in the year 2012 and it reached its peak in the year 2018.