Dubai: In a significant twist to recouping its exposure to NMC Health, Abu Dhabi Commercial Bank has secured a 'domestic freezing injunction' against Dr. B.R Shetty, the hospital operator's founder. The injunction was made by ADGM Courts, the Abu Dhabi entity overseeing all of the legal aspects of NMC Health's administration.
This is the first time a court in Abu Dhabi has issued such an order. Earlier, the DIFC Courts had delivered a freeze order, on a submission filed by another bank seeking to recoup some of the money it had lent to Shetty (in a personal capacity.) Courts in India too have weighed in, though, recently, Shetty did win some respite from a court in Bengaluru. There are also legal hearings at a UK court, as well as in the US.
ADCB's total exposure to NMC Healthcare and Finablr - the two companies founded by Shetty - are at $1.5 billion plus. Investigations into the actions of other senior NMC officials/shareholders are also being carried out simultaneously.
Shetty, who founded NMC Healthcare in the mid-1970s, has been in India since early 2020, which was when the revelations started coming out of missing millions... and which turned into billions of dollars of borrowed bank funds that got diverted. The former chairman had always professed he was innocent and that the fund diversion happened at the management level. (Abu Dhabi authorities are investigating these separately.)
Banks have a combined exposure of $5 billion plus with the former management of NMC Healthcare. In addition, Dr. Shetty had taken out loans in his personal and corporate capacity. Plus, there is also the exposures racked up Finablr, the parent company for UAE Exchange House, at one time the country's biggest remittance company.
It remains to be seen whether such restrictions are still in place. Or whether Shetty can fly back to the UAE to press his side of the story in person.
In its appeal with ADGM Courts, ADCB contends the reason for the "Group’s [NMC] insolvency was fraud on a massive scale, and that Mr. Shetty was a participant in the fraud. It claims to have suffered very large losses as a result of the fraud, more specifically as a result of fraudulent misrepresentations made in relation to various lending arrangements that it had with the Group.
"On 2 December 2020, it brought proceedings in the English Commercial Court against Mr. Shetty and five other defendants for damages, and on the same day Mr. Justice Bryan made a worldwide freezing order against Mr. Shetty and the other defendants in respect of assets of each of them to a value of $1 billion."
The order also requires the defendants each provide information about his assets worldwide exceeding $20,000 in value.
In my judgment, ADCB has demonstrated that it has a good arguable case against Mr. Shetty.
Mr. Shetty denies that he was party to any fraud, and told me that he himself was a victim of greed
and fraudulent conduct of others associated with the NMC Group, who arranged for a bogus
account to be opened in his name at the Bank of Baroda and for monies to be transferred into it