Dubai: Private health care provider NMC Health, hurt by short-selling by Muddy Waters, said on Friday an independent review committee looking into the matter had hired FBI ex-boss Louis Freeh.
NMC, the United Arab Emirates’ largest private health care provider, launched an independent review of its finances last month after short-seller Muddy Waters questioned the value of its assets and cash balance while announcing a short position.
Since Muddy Waters’ claims were launched on December 17, NMC has lost £2.4 billion (Dh11.5 billion, $3.14 billion) of its share value, or 44 per cent.
Its shares leapt 6.4 per cent on Friday to 1,533 pence, leading London’s blue chip index, after news that Freeh, who probed BP oil spill claims payouts, would take charge of the investigation.
Short-selling involves borrowing an asset and selling it with the aim of buying it back at a cheaper price for profit.
Muddy Waters, founded by American Carson Block, is known in financial markets for declaring short equity positions on the basis of its in-house research.
Muddy Waters also questioned the value of NMC’s reported profits and debts. The short-seller also said in a research note that NMC’s asset purchase prices and capital expenditures were inflated.
NMC has called the report “false and misleading” and has defended its position.
The company suffered another setback after the attack by Muddy Waters as two major shareholders launched a discounted share sale in NMC earlier this month.
The health care firm’s vice-chairman Khaleefa Al Muhairi and its second-largest shareholder Saeed Al Qebaisi together sold NMC shares worth £375 million and a source told Reuters that the sale price factored in context around Muddy Waters.
NMC said the independent committee has also hired Freeh’s risk management firm FGIS to look at the allegations.
“The committee chose Freeh Group to provide a completely independent, unbiased, comprehensive and transparent report that will address all of these allegations,” Jonathan Bomford, chairman of the independent review committee, said.
Freeh, who ran the Federal Bureau of Investigation from 1993 until June 2001, has handled multiple high-profile probes including possible misconduct by a lawyer involved in settlement payments to those affected by the Gulf of Mexico spill in 2010.
The strongest backlash of Freeh’s tenure came from the commission that investigated the September 11, 2001 attacks on the World Trade Center and the Pentagon.
The NMC committee intends to publish findings of its review before NMC reports its 2019 results.
Muddy Waters did not immediately respond to a request for comment outside US business hours.