Abu Dhabi, UAEMonday 23 November 2020

NMC Health removes chief executive

Review finds company has guaranteed supply chain financing agreements to the tune of $335m

Prasanth Manghat's removal came after an independent review into the company’s activities “identified potential discrepancies and inconsistencies” in its bank statements and ledger entries.
Prasanth Manghat's removal came after an independent review into the company’s activities “identified potential discrepancies and inconsistencies” in its bank statements and ledger entries.

Update: NMC temporarily suspends share trading after chief executive’s dismissal

NMC Health removed its chief executive, Prasanth Manghat, and granted extended sick leave to its chief financial officer, Prashanth Shenoy.

The moves came after an independent review into the company’s activities “identified potential discrepancies and inconsistencies” in its bank statements and ledger entries.

A member of the company’s treasury team has been suspended pending completion of the review as a result of the issues discovered “and a belief that the independent review has been obstructed”, the company said.

NMC made the announcements in a statement to the London Stock Exchange, where its shares trade, after the market closed on Wednesday.

“The board is reviewing whether other individuals have been involved and will take action as appropriate,” it said.

The independent review was commissioned last month.

Former FBI director Louis Freeh’s company, Freeh Group International Solutions, was hired to investigate claims made by Muddy Waters 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” were entered into, which were understood to have been used by entities controlled by the company’s founder, BR Shetty, and former vice chairman Khaleefa Al Muhairi.

Mr Shetty and Mr Al Muhairi resigned from the company this month.

Suppliers to companies owned by the two men were paid by credit facility providers, and although their companies were responsible for their repayment, NMC incurred contractual obligations and guaranteed the loans.

About $335m (Dh1.23bn) had been drawn down from these facilities as at December 31, the statement said.

NMC Health said on Thursday it is fully committed to investigations after discovery of suspected fraud in its prior financial activities. Reuters
An NMC specialty hospital in Abu Dhabi. The company removed its chief executive, Prasanth Mangath, on Wednesday after an independent review "identified potential discrepancies" in its bank statements and the company's ledgers. Reuters

NMC’s share price closed up 6.6 per cent at £9.38 before the statement was issued on Wednesday, but its price has dropped 63 per cent since the Muddy Waters report was issued in December.

Stock market filings in the past few weeks have disclosed the shareholdings of Mr Shetty, Mr Al Muhairi and Saeed Al Qebaisi had been “incorrectly reported” to the market.

Some of the shares held in Mr Shetty’s name and in the name of one of his privately owned companies had been pledged as security against loans, some of which may have been later sold by the lenders.

NMC Health said in its statement on Wednesday that chief operating officer Michael Davis has been appointed as interim chief executive.

The review is not expected to conclude for “several weeks”, the company said, so it does not expect to publish its full-year accounts for 2019 before the end of April.

Updated: February 27, 2020 06:43 PM

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