Abu Dhabi, UAEMonday 13 July 2020

UK’s financial regulator to investigate NMC Health

Trading of company’s shares remains suspended on London Stock Exchange

An NMC Speciality Hospital in Abu Dhabi. The company, which employs more than 2,000 doctors, owes $6.6bn to more than 80 lenders. Reuters
An NMC Speciality Hospital in Abu Dhabi. The company, which employs more than 2,000 doctors, owes $6.6bn to more than 80 lenders. Reuters

The UK’S Financial Conduct Authority (FCA) commenced investigations into NMC Health, after trading in its shares on the London Stock Exchange was suspended on Thursday.

“NMC will continue to co-operate with the FCA and all other relevant authorities,” the company said in a statement to the London Stock Exchange, where its shares trade. NMC did not provide further details.

The UK regulator on Wednesday agreed to suspend trading of the UAE-based healthcare provider's shares on the London Stock Exchange after a request by the company’s board for suspension to ensure "the smooth operation of the market".

The company also removed its chief executive Prasanth Manghat and granted its finance chief extended sick leave amid investigation into the company's finances.

In an interview with The National, Mr Manghat said he was “unjustifiably” removed from his job and is considering taking legal action.

"The board should have done more analysis before taking that action. This, I believe is not in the interest of the every stakeholder of the company,” he said.

Prasanth Manghat said he was unjustifiably removed as chief executive of NMC Health. Antonie Robertson / The National
Prasanth Manghat said he was unjustifiably removed as chief executive of NMC Health. Antonie Robertson / The National

Mr Manghat has worked with NMC Health in various roles since 2011, including as its deputy chief executive and chief financial officer, overseeing the company's 2012 listing on the London Stock Exchange.

An independent review into the company’s activities “identified potential discrepancies and inconsistencies” in its bank statements and ledger entries, according to a statement from NMC on Wednesday.

Former FBI director Louis Freeh’s company, Freeh Group International Solutions, was hired to investigate claims made by Muddy Waters Research in December that NMC had inflated the prices of companies it acquired and manipulated its balance sheet.

The company denied the claims and commissioned the independent review.

But on Wednesday, the company said the review found “supply chain financing arrangements” entered into were understood to have been used by entities controlled by the company’s founder, BR Shetty, and former vice chairman Khalifa Al Muhairi. Mr Shetty and Mr Al Muhairi resigned from the company earlier this month.

Mr Al Muhairi said in a statement that on Thursday he "categorically rejected" any suggestion he had been involved in "wrongdoing".

"I was surprised and greatly disappointed to read NMC’s statement regarding what is described as the 'independent review, CEO removal and other matters,” he said.

“Despite my obvious and communicated willingness to assist the committee and its advisers, I have not been given a reasonable opportunity to engage with and assist the investigation with the benefit of the key documentation relating to the events in question, as I would have wished," Mr Al Muhairi added.

Updated: February 28, 2020 11:45 AM

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