NMC Health investigation hampered by destruction of 'thousands' of documents, report claims

Witness statement by acting chief executive Michael Davis says fraud at healthcare company allegedly ran for at least eight years

A bankruptcy hearing for NMC Healthcare's UAE operations is set to be held in the ADGM Courts next Sunday. Ravindranath K / The National

The suspected fraud that led to NMC Health being placed into administration allegedly took place over at least eight years and the current management's investigation into it has been hampered by the destruction of documents, according to the company’s acting chief executive, Michael Davis.

Mr Davis added that reconstructing what transpired has been made difficult because thousands of documents have been destroyed by unnamed employees.

His comments were made in a witness statement the company prepared to defend itself against a claim by Credit Europe Bank in the Dubai International Financial Centre Courts, according to The Times newspaper. The defence document is yet to appear on the DIFC Courts' electronic registry and NMC Health's administrators Alvarez & Marsal declined to comment when contacted by The National.

NMC Health was placed into administration in April this year after several months of upheaval that began in December last year after US-based activist investor Muddy Waters alleged the company had inflated its cash balances and understated its debts. This led to the appointment of external investigators including a company led by a former director of the US Federal Bureau of Investigations, Louis Freeh.

Investigations found that NMC Health's debts, at about $6.6 billion (Dh24.2bn), were materially higher than the $2.1bn declared in its accounts. They also highlighted "suspected fraudulent behaviour" at the company.

Mr Davis's witness statement says the company's board "formed the view" that former chief executive Prasanth Manghat was obstructing the Freeh Group from accessing information before he was removed from his post in February, according to The Times. A spokesman for Mr Manghat declined to comment.

NMC’s administrators Alvarez and Marsal set out a three-year turnaround plan with Mr Davis last month, which involves putting its UAE operations into administration through the Abu Dhabi Global Markets Courts to fend off creditor claims and the raising of $300m in additional funding from lenders to allow its UAE and Oman operations to continue to operate.

A hearing to appoint administrators to UAE-based NMC Healthcare and more than 30 associated companies is due on Sunday.

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  The order freezing Mr Shetty's assets limits him to a maximum of $7,000 a week to spend on ordinary living expenses and legal representation Ryan Carter / The National

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  BR Shetty, founder of NMC Group, which consists of NMC Specialty Hospital, UAE Exchange and Neopharma, stands for a portrait in his office. Ryan Carter / The National

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  People walk past a branch of Travelex Currency Exchange in London. Reuters

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  NMC Royal Hospital in Dubai Investments Park. Chris Whiteoak / The National

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  The NMC Pharmacy along the Zayed The First Street, Abu Dhabi. Victor Besa / The National

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  The NMC specialty hospital on Zayed the First street in Abu Dhabi. Pawan Singh / The National

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

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

ADGM Courts is “unable to comment about any case pending before it”, a spokeswoman said.

The administration process will provide protection against further creditor claims, Alvarez & Marsal managing director Maria Simovic told The National last month, adding that it is currently dealing with claims on a "one-by-one" basis.

In a separate call with lenders last month, Alvarez & Marsal managing director Ben Cairns said an investigation into fraudulent activities at the firm has led to it conducting more than 110 interviews with NMC directors, officers, staff and outside parties. It is also working through 70 terabytes of data.