Abu Dhabi, UAEThursday 2 July 2020

NMC Healthcare signed off on cash transfers to firm of founder BR Shetty’s daughter

Documents show two requests for payment to Reema Shetty's Just Falafel from NMC Healthcare account

Reema Shetty, the co-founder of the Foodsters food-truck company. Victor Besa for The National
Reema Shetty, the co-founder of the Foodsters food-truck company. Victor Besa for The National

NMC Healthcare signed off on payments of Dh2 million to a struggling food business set up by the daughter of founder BR Shetty before the hospitals group collapsed with a mountain of debt, The National can reveal.

Documents seen by this newspaper show that the NMC Health subsidiary asked its bank to transfer two payments of Dh1m in 2015 to the company behind the Just Falafel chain of restaurants that was established by Dr Shetty’s daughter Reema and her husband Mohamad Bitar.

The first of the payments was requested in July, 2015, four months after Just Falafel closed its four outlets in London after an ambitious global expansion of the fast-food franchise crumbled amid financial problems.

NMC Health went into administration in April this year amid allegations of financial wrongdoing that Mr Shetty has blamed on a small group of former and current executives who he claimed had acted without his knowledge.

BR Shetty, founder and chairman of NMC Health. The company has $2bn at its disposal to acquire companies as and when it requires. Victor Besa/The National
BR Shetty, founder and chairman of NMC Health. Victor Besa / The National

He claimed there had been “many fraudulent transfers” that he had no knowledge of before the company was forced into administration by its largest lender, Abu Dhabi Commercial Bank.

But the revelation that at least two transfers were authorised by NMC Health to a company run by a member of his family will raise questions about who signed them off and if Mr Shetty knew about them.

The documents show an unidentified person authorised two money transfers from NMC’s account at Bank of Baroda in Abu Dhabi to “Just Falafel Holdings Limited”.

The first, in July, 2015, was described as an “internal transfer” within the NMC group, suggesting it was part of the healthcare empire.

But accounts for the year ending December, 2015, for the London-listed healthcare group did not include Just Falafel as a subsidiary, nor does it appear among the hospitality interests of BRS Ventures, Dr Shetty’s UAE-based holding company.

The website of Just Falafel from 2015, now shut down, did not make any reference to a connection with NMC.

The two requests for payment were made during a turbulent year for the team behind Just Falafel that had ambitions for a global vegetarian franchise to rival McDonald’s. It had recruited one of the burger chain’s executives as chief operating officer.

A Just Falafel franchise in Covent Garden, London, in 2013. Stephen Lock for The National
A Just Falafel franchise in Covent Garden, London, in 2013. Stephen Lock for The National

It wanted to open 1,000 restaurants, but by the time it pulled out of the UK in 2015 it only had 42 worldwide, mostly in the Middle East, according to contemporary reports. Two years earlier, it had announced plans to open 200 restaurants in the UK.

“It’s safe to say that we made mistakes,” Mr Bitar, the managing director, told The National in 2015 when he announced the chain was being rebranded as JF Street Food.

Mr Bitar and his wife went on that year to launch a pared-down catering and consultancy business, which supplies food trucks for events in the UAE. He is listed on his LinkedIn page as founder and managing director of Just Falafel for nearly nine years until November, 2015.

One of the couple’s current company websites said that chief executive Reema Shetty “hails from an entrepreneurial family with a strong sense of social responsibility”.

In addition to her role at Foodsters Inc, she is a director at BRS Ventures and of the family’s charitable foundation, according to her LinkedIn profile.

She told The National in May, 2017, that she had started Just Falafel in 2006 and 2007 while she was working at NMC. She said she stopped working for four years from 2010 and “in the meantime, Just Falafel changed direction, so we moved on from there”.

The demise of NMC was sparked by US short seller Muddy Waters who raised questions in December, 2019, about its finances and its relationship with a catering company run by another daughter, Seema.

Administrators appointed in April replaced the board of the healthcare company that operates 200 centres in 19 countries and employs 2,200 medical staff and doctors.

In a statement in April, Mr Shetty, 77, said: “To see everything that my family and I have strived to build over the past 45 years eroded over the course of a few short months, and mainly due to the misconduct and wrongdoing of people I put so much trust in, saddens me beyond words. It has also left my entire family in a perilous financial position.”

The demise of NMC was sparked by US short seller Muddy Waters. Bloomberg
The demise of NMC was sparked by US short seller Muddy Waters. Bloomberg

He said he stepped back from a front-line executive role in 2017 but remained a joint non-executive chairman.

The sudden collapse of NMC raised questions for its auditors EY, which is under investigation by the UK accounting watchdog.

EY also faces legal action from investors in Wirecard, the payments start-up that became Europe’s biggest FinTech business but filed for insolvency last week in Germany.

Dr Shetty, Mr Bitar and Ms Shetty did not respond to requests for comment. NMC administrator Alvarez & Marsal said it could not comment.

Updated: June 30, 2020 06:12 PM

SHARE

SHARE

Most Popular