NMC Royal
Investigations at NMC Health will try to determine whether the previous management had overpaid on certain projects, such as the Royal Hospital in Abu Dhabi. Image Credit: Gulf News Archive

Dubai: NMC Health, confirmed it will pursue legal action against “anyone” involved in “potential fraudulent and criminal actions that led to the company’s current situation”, according to a senior official with the UAE’s largest hospital operator.

And that could include the “former CEO” Prasanth Manghat or “anyone else with knowledge of the matter”.

“The NMC group is actively working with the UAE authorities to bring to justice anyone involved,” the official added.

“Gulf News” tried reaching Prashanth Manghat, but wasn’t able to secure a communication. It is believed that Prashanth Manghat is in India right now.

"Gulf News" has also tried for feedback from Dr. Shetty, who is currently in India. 

This is the first time that NMC is formally talking about “criminal actions” and follows an internal investigation – approved by the Board of Directors – to go over the company’s books and management decisions during the time Prashanth Manghat was CFO and later CEO. It was last month that he was fired after the investigation came across discrepancies in an undisclosed $335m supply chain financing. Audits also “discovered” a further $2.7 billion bank loans to NMC about which none of the current Board of Directors were aware of and which was never reported in the company’s books.

The NMC Board currently has six members after the resignation of founder Dr. B.R. Shetty as chairman and that of two other principal shareholders. Prashanth Manghat was removed after his sacking. 

Prashanth Manghat oversaw a series of acquisitions for NMC Health plus the company's listing on London Stock Exchange. Before it came crashing down, it was one of the stocks making up the FTSE 100. Image Credit: Gulf News Archive

Who else?

The NMC official declined to speculate on who are the others who could come under any criminal charges being filed. He also refused to provide any indication of whether Prashanth Shenoy, NMC Health’s CFO, is still on “extended leave” or not. (Later on Tuesday, NMC confirmed that Shenoy has resigned and that a new CFO will be appointed in due course.)

On whether any charges would only be filed in the UAE, the official said: “The group is actively working with the UK authorities. NMC is listed on London Stock Exchange and governed by its rules. There are clear instances of UK law being broken.” (The NMC shares currently are suspended.)

Who is leading the ‘investigation’?

A US based consultancy headed by a former FBI Director Louis Freeh was roped in to do the investigation. Freeh had also served as a judge.

According to sources at banks who have loaned to NMC, the internal fact-finding work is winding down. It will be based on these that formal charges will be filed against former management.

Market sources say that most of the senior executives have left the company and may be out of the country. Even Prashanth Shenoy, who is on leave, is rumored to be not in the country.


The Louis Freeh fact-finding will have looked closely at two acquisitions that

During Prashanth Manghat’s tenure, NMC had gone in for a series of acquisitions of primary healthcare clinics in the UAE. These include the buyout of Americare and Dr. Sunny Healthcare Group in Sharjah in 2015 and of Premier Healthcare later.

Americare had one clinic at the time and Dr. Sunny Healthcare Group had six. Dr. Sunny’s was bought for $64 million and Americare at $33 million. But concerns are being flagged in the financial community that Dr. Sunny was actually valued at only between Dh20 million to Dh30 million.

There was the recent purchase of a 70 per cent stake in Premier Care Home Medical at $36.4 million in early 2018. This was a healthcare company with only 10 employees at the time.

The NMC official declined to comment on any specific transactions that the independent investigation led by Louis Freeh was looking into.

Another hospital venture of NMC Health was the Royal Women’s Hospital in Abu Dhabi. In December, the US investment firm Muddy Waters had pointed to the redevelopment cost of $107 million, which works out to a cost of $7,700 per square metre as opposed to the industry benchmark of $3,500-$4,000 a square metre.

These do beg the question as to how inflated were these transactions? And who knew about it within the NMC management.

Erosion at Finablr

Meanwhile, at NMC Health’s sister company, Finablr, senior members of the management are reportedly no longer in the country. This comes after Finablr-owned UAE Exchange Centre came under the direct supervision of UAE Central Bank. Among those not believed to be in the UAE any longer include Promoth Manghat, the CEO at Finablr who stepped down just before revelations of up to $100 million being issued as cheques to facilitate third-party transactions.

But it did not stop the Board of Directors at Finablr, which includes Dr. B.R. Shetty and his son, from “thanking” Promoth Manghat for his years of service to the company.

It is not known whether the Finablr Board of Directors will be reconstituted now that the company has its own internal investigations and is also taking advice on possible insolvency proceedings.

Finablr too, like NMC, has its shares suspended on London Stock Exchange. The ongoing investigations will reveal whether the two companies share anything else.

“Justice must be served to shareholders in NMC and Finablr... and to the 20,000 employees in each company,” said a banking source. “Both UAE Exchange and NMC were having leadership positions in their respective categories - mismanagement and greed cannot be allowed to bring them down. There's a lot at stake."