Abu Dhabi court finds NMC founder B. R. Shetty liable for fraud at hospital group

A court in Abu Dhabi has found B. R. Shetty, the Indian businessman who founded the hospital group NMC Health, liable for fraudulent and wrongful trading at the company.

In a judgment issued on 5 November, Justice Sir Andrew Smith of the Abu Dhabi Global Market (ADGM) Court of First Instance found that Mr. Shetty and NMC’s former chief executive, Prasanth Manghat, had dishonestly taken part in a fraud against the NMC Group between April 2012 and April 2020.

The court set $5.39 billion (about ₹47,000 crore) as the starting point for working out how much the two men must contribute to restore NMC’s assets. It is not a final award, and not a sum each man has been ordered to pay. A further hearing will settle the money and other consequences.

What the court found

The court found that Mr. Shetty received large sums wrongly moved out of NMC and used some of them to buy assets. It said he did not disclose securities linked to his personal loans, allowed misleading accounts to be published and helped hide group borrowings from the auditors, Ernst & Young. It found that Mr. Manghat knowingly helped move NMC’s money for the benefit of Mr. Shetty, himself and others.

In a separate case, Abu Dhabi Commercial Bank won damages of more than $1.19 billion against Mr. Manghat, subject to adjustments.

The responses of Mr. Shetty and Mr. Manghat to the judgment were not available.

The background

Mr. Shetty, from Udupi in Karnataka, founded NMC in Abu Dhabi in 1975, and it grew into one of the largest private health care groups in the United Arab Emirates. It was valued at about $10.5 billion at its peak in 2018. After a short-seller’s report in December 2019, an inquiry found more than $4.4 billion of debt that had not been reported, and the company went into administration in April 2020.