NMC says it is committed to investigation after ‘suspected fraud’ discovery

The company earlier this week reported a debt of $5bn, much higher than the amount that was disclosed previously

The demise of NMC was sparked by US short seller Muddy Waters. Bloomberg

Embattled company NMC Health said on Thursday it is fully committed to investigations after a review committee said it "discovered evidence leading to suspected fraudulent behaviour" in some of company’s previous financial activities.

The review committee consists of representatives from the Freeh Group International, the risk management company headed by former FBI director Louis Freeh, that was engaged to investigate allegations against NMC.

“NMC is fully committed to investigating these activities and has notified the relevant authorities in the UK and UAE to determine what action they also consider to be appropriate,” NMC said in a statement to London Stock Exchange, where its shares trade.

The company also said it is “fully focused on the provision of its healthcare services in all communities in which it operates, and on its business performance, as well as safeguarding its operational liquidity to continue funding existing operations throughout its various subsidiaries".

The disclosure on Thursday is the latest in a string of revelations emerging from one of the largest healthcare providers in the UAE, since the publication of a report from activist investor Muddy Waters Research in December. The US company claimed NMC had inflated cash balances, overpaid for its assets and understated its debt.

The healthcare company denied the allegations and in January appointed Freeh Group International Solutions to look into the allegations.

NMC has since reported that some of its principal shareholders had misstated the size of their shareholdings, leading to the departure of the company’s founder and former joint chairman, BR Shetty, and former executive vice chairman Khalifa Al Muhairi.

The company also dismissed its chief executive Prasanth Mangath and placed its chief financial officer on a long sick leave. A member of its treasury team was also suspended.

The UAE-based healthcare company earlier this week reported  debt of about $5 billion (Dh18.4bn), which is more than twice the previously declared amount.

“In addition to $2.1bn group debt reported at June, 30 2019, the company has identified over $2.7bn in facilities that had previously not been disclosed to or approved by the board,” NMC said.

The UK’s Financial Conduct Authority also launched an investigation into NMC's activities, after trading in its shares on the London Stock Exchange was suspended last month.

The company appointed Moelis & Company, PwC and Allen & Overy as independent financial adviser, operational adviser and legal adviser earlier this month.

NMC has also faced cash flow issues, which have led to delays in paying some staff but this week a source told The National that about 80 per cent of its staff have now received salaries, with 20 per cent of workers still waiting for payment.

The company, which owns and manages more than 200 medical facilities, is understood to be in talks with a number of local and international companies lining up potential bids. But on Monday, GKSD Investment Holding, one of Europe’s largest hospital groups, announced it does not intend to proceed with an offer. Private equity company KKR had also previously ruled itself out from making a bid.