NMC Health founder BR Shetty’s fraud trial begins

• $5.4bn claim brought by administrator
• BR Shetty and former CEO accused
• India’s Bank of Baroda also named

A multi-billion dollar fraud trial against the founder of collapsed Abu Dhabi-based NMC Health, its former chief executive and one of India’s biggest banks began this week. 

The $5.4 billion claim is brought by Alvarez & Marsal, administrator of the former FTSE100 company, which at its peak in 2018 was valued at £8.6 billion on the London Stock Exchange and had operations across 19 countries. 

It was the UAE’s largest private healthcare company and the first Abu Dhabi company to list on the LSE in 2012. 

A&M alleges that NMC’s founder, Indian-born BR Shetty, and its former chief executive, Prasanth Manghat, committed fraud against the company, and majority state-owned Bank of Baroda knowingly facilitated it. 

The trial began on Monday in ADGM (Abu Dhabi Global Market) Courts, but is being heard remotely because of the Iran conflict. The claim also seeks interests and costs. Shetty is in the UAE to contest the case. 

Earlier this year, A&M reached a confidential settlement with NMC’s former auditor, “Big Four” accountancy firm EY, in a £2 billion negligence case at London’s High Court. 

The administrator had argued EY failed in its professional duties by failing to spot a complex fraud and that those failures led to significant financial loss, according to court documents seen by AGBI. It led to calls for tougher oversight of local auditors.

A&M was appointed as administrator in 2020 after NMC unravelled following a report by US short seller Muddy Waters, which raised accounting and governance issues. 

A subsequent investigation by risk management firm Freeh Group, commissioned by NMC, led to the discovery of a $6.6 billion debt. 

NMC’s collapse hit investors including its biggest lender, Abu Dhabi Commercial Bank (ADCB), whose fraud claim against Manghat also started in ADGM Courts on Monday and is being heard concurrently by the same judge, Sir Andrew Smith. 

Other lawsuits have been brought in the UK and UAE against the collapsed company, its former leadership and/or connected banks by NMC’s creditors in the years since 2020, but this is the first time the founder has been brought to trial. 

Further reading:

• DIFC judge rejects Indian bank’s cost claim in BR Shetty case
• Dubai judge says NMC’s founder Shetty ‘lied’ under oath
• Secret records found of alleged NMC fraud, court told

The case was originally filed in London’s Commercial Court, but a jurisdiction hearing concluded in 2023 that it should be heard in the UAE. The same thing happened for the ADCB case, in 2022. 

Related fraud claims in the UK against Shetty, Manghat and Baroda have been stayed until the outcome of the Abu Dhabi trial. 

A&M, ADCB and their legal representatives declined to comment.

Shetty has previously claimed he is the “victim of a large-scale” fraud and denies all culpability. Manghat has denied any wrongdoing and Bank of Baroda has previously declined to comment. 

The defendants are scheduled to give evidence at the trial in April and May.

NMC’s core operations – its network of hospitals and clinics across the UAE – exited administration in 2022 and continue to operate as subsidiaries of a company called NMC OpCo.