London's High Court placed a worldwide freezing order on the assets of the principal shareholders and former executives of NMC Health, the company founded by BR Shetty.
The order was secured by Abu Dhabi Commercial Bank, which is the group's biggest creditor with exposure of more than $1bn to the company, following a private hearing held in December last year without prior notice to avoid the risk that alleged fraudsters would be "tipped off", judge Justice Bryan said in his ruling on the order.
The order freezes the assets of Mr Shetty and NMC's other principal shareholders – as well as those of former chief executive Prasanth Manghat and other former company executives.
The bank's case included a witness statement by NMC's acting chief executive Michael Davis, which said that evidence uncovered by a forensic team shows "fraud was perpetrated against [the bank] and other companies in the NMC Group by the principal shareholders, their vehicle companies and other family business, Mr Manghat, certain members of senior management" and other institutions.
Fraud was carried out at the company "from at least 2012 to February 2020", according to the statements presented to the court.
Mr Shetty, NMC's other principal shareholders and Mr Manghat all denied wrongdoing through their legal advisers. None of them were immediately available to comment when contacted by The National. ADCB declined to comment.
NMC Health was founded by Mr Shetty in 1975 and grew to be the UAE's biggest privately-owned healthcare operator. The company's shares were listed on the London Stock Exchange and at its peak in 2018 it was valued at £8.58 billion ($11.93bn).
However, the business collapsed last year after a report from short seller Muddy Waters in December 2019 alleged the company had inflated the value of its assets and understated its debt. That led to the appointment of Freeh Group as independent investigators, who uncovered more than $4bn of previously unreported debt, bringing the total above $6.6bn.
Mr Davis's witness statement used in the bank's case said former chief executive Mr Manghat's temperament "had become increasingly strained and unsettled" in the months leading up to the publication of the Muddy Waters report, and that Mr Manghat and another employee "were obstructing the Freeh Group from accessing information", after which a board of directors' meeting was held to remove him from his role.
It also said that around this time, "multiple employees" in the company's treasury department boarded flights to India without giving prior notice to the company of their departure.
Mr Davis's statement said that by February last year it was clear that "certain employees and senior management were engaged in fabricating records, amending account balances and in the deletion of financial documents and records in order to conceal the fraud”.
The judge ruled that the bank "has a good, arguable case that each of the defendants has been engaged in a major fraud" lasting for several years, while acknowledging the denials put forward by a number of defendants.
If a fraud were to have been committed, there is also a risk that defendants "can be expected to have used, and be in the process of using" expertise to dissipate assets, he added.
The judge also said he was aware of existing freezing orders, but these only appear to be "in a specific jurisdiction and not for anywhere near the amount of money as is sought in relation to this worldwide freezing order".
Both NMC Health and Mr Shetty have faced legal challenges in a number of jurisdictions. A freezing order was secured by Credit Europe Bank in the DIFC Courts in June last year over shares, property and other assets held by Mr Shetty in the UAE.
Claims were also filed against several of NMC Health's UAE subsidiaries. That led to the group placing its main local operating business, NMC Healthcare and more than 30 other local companies into administration in Abu Dhabi Global Market Courts in September last year.
In an update to lenders last week, the company said that the ADGM Courts administration had been recognised by the DIFC Courts, meaning cases filed in that jurisdiction have now been stayed, but that it is facing 15 other claims from lenders in onshore courts.