Dubai: The investigations into NMC’s lost billions – upwards of $4 billion – have “identified a number of financiers” who colluded with the previous management in diverting bank funds. Detailed reports have been collected of evidence against all these bankers.
These financiers’ actions are to be “reviewed in detail” in a update on the investigations put by Alvarez and Marsal, the consultancy overseeing NMC’s administration as per a directive from ADGM (Abu Dhabi Global Market).
By end March, the administrators expect to complete all the process that would then set in motion the funds recovery and bringing the guilty to justice. Other “potential defendants” have been identified based on the evidence collected.
"Claims have been identified based on factual evidence, with assessment of merits - including legal merits - now in progress," the report notes. "Further work continues to progress rapidly to further evidence claims including asset assessments and potential quantum."
The update provides a clear roadmap of how NMC, its administrator and local authorities expect to act against the fraud perpetrators, and also, just as important, recover the funds thus looted. What’s particularly galling is that the mechanics of the fraud and systemic looting of company funds did not happen recently.
In fact, “Evidence compiled to date shows that published financial statements were misstated dating back to at least 31 December 2012,” the updates states blandly. “And money and property was misappropriated from NMC; the perpetrators sought to make NMC liable for debt of which it never received the benefit, or sufficient benefit; and NMC’s losses are likely to be in the region of billions of dollars.”
The administrators have identified a number of potential claims and are now in the process of seeking advice on (a) the merits of those claims, and (b) the appropriate forum in which to pursue them.
Clear lines drawn
The investigation has now more or less established a firm understanding of how the fraud was perpetrated and “by whom”. Going forward, it will seek “detailed evidence” that will guide strategy and support the launch of claims”.
According to banking industry sources, the administrators’ use of the word “colluders” comes as a stark warning. “It was somehow presumed by many that the investigations would end with the shareholders/senior executives who were at the helm of NMC when all the bilking of billions happened,” said a banker. “That “financiers” are being talked about as colluders and with the possibility of legal action being taken against them raises the bar on bankers.”
Some in the previous management had gone about destroying much of the evidence and paper trail that would have linked them to the acts. But, the NMC administrators state that “74 terrabytes of electronic and hard copy documentation [has been] secured to the investigation database.
“Evidence [has been] secured from the companies, external advisors, ex-employees and whistleblowers.”
The next steps will involve the preservation, processing and review of data and documents from the UAE, the UK and India.
Turnaround on track
Meanwhile, the administrators confirmed they have put together a consolidated business plan for NMC up to 2022, which should see the company revive itself financially and to reach a position where it can be sold at a reasonable value.
“For the exit from ADGM administration, creditors will have the choice between 1) a plan of re-organisation and owning the company for two-three years before selling with the benefit of improved trading or 2) selling the core business out of the administration to the highest bidder in the circumstances,” the administrators state in the note.
Under the plan, the creditors will hold a combined equity of 60 per cent plus in NMC. "NMC could be fully recapitalised with $203 million of secured debt and between $325 million and $650 million of exit facility depending on what lenders decide to do for their refinancing," the report adds.