NMC temporarily suspends share trading after chief executive’s dismissal

Exclusive: Prasanth Manghat tells The National his dismissal is 'not in the interest of the company'

The UK’s regulator, the Financial Conduct Authority, agreed to NMC's suspension on the London Stock Exchange request on Thursday. Reuters

NMC Health suspended trading of its shares on the London Stock Exchange on Thursday, a day after the UAE company removed its chief executive and granted its finance chief extended sick leave.

The UK's financial regulator, the Financial Conduct Authority, agreed to the suspension after a request by NMC’s board to ensure "the smooth operation of the market", NMC said in a statement to LSE.

The former chief executive of NMC Health, Prasanth Manghat, said he was "unjustifiably" removed from his job as investigations continue into the company's finances.

"The action is unjustifiable," Mr Manghat told The National in reference to his dismissal. "The board should have done more analysis before taking that action. This, I believe is not in the interest of the every stakeholder of the company."

NMC Health removed Mr Manghat as its chief executive on Wednesday and granted extended sick leave to its chief financial officer, Prashanth Shenoy, amid an ongoing investigation into the company’s finances.

An independent review into the company’s activities “identified potential discrepancies and inconsistencies” in its bank statements and ledger entries, according to a Wednesday statement from NMC on London Stock Exchange, where its shares trade.

Mr Manghat, however, said he does not accept the accusations and is considering legal action.

“I have the full right … I will definitely take legal action against the board and the company," he said. "I am currently working with my legal counsels."

Mr Manghat has worked with NMC Health in various roles since 2011, including as its deputy chief executive and chief financial officer, overseeing the company's 2012 listing on the London Stock Exchange.

“Even now, I strongly believe the NMC platform is one of the strongest platforms anybody can dream about," he said. “Operating in multiple countries, multiple continents, the Saudi joint venture, the NMC Royal Hospital, Al Zahra hospital in Sharjah, they are all cream assets in a platform where we have around 8 million people being treated.”

NMC Health owns and manages more than 200 facilities, including hospitals, medical centres, day surgery centres and home health clinics across the UAE, UK and Europe. It treats more than 8.5 million patients a year, according to its website.

The company bought Al Zahra hospital in Sharjah in 2017 for $560 million (Dh2.05 billion) and opened its $200m NMC Royal Hospital in Abu Dhabi in 2016 as part of its expansion plans. In 2019, it finalised a joint venture agreement with Saudi Arabia’s General Organisation for Social Insurance that includes up to 6bn riyals (Dh5.87bn) of investments in the kingdom over a five-year period.

“It was only limited to one or two emirates before I came to the company," said Mr Manghat. "Today it is a global institution, doctors and employees are a key integral part of the success of NMC.

“Their emotions have to be considered; that emotion is what helps the patients who come in, and if that is not going to be taken care of well, the business will not flourish. Such platforms are very rare in the world.”

Meanwhile, the company did not disclose when trading of its shares would resume on the LSE following its Thursday suspension.

“The company is focused on providing additional clarity to the market as to its financial position and to restoring its admission to trading. The company will continue to be bound by listing transparency and disclosure rules,” NMC Health said.

The independent review into the company’s activities, which was commissioned last month, “identified potential discrepancies and inconsistencies” in its bank statements and ledger entries."As a result of these issues and a belief that the independent review has been obstructed, one member of the company's treasury team has been suspended pending completion of the independent review," the company added.

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

Mr Al Muhairi said in a statement on Thursday that he "categorically rejected" any suggestion he had been involved in "wrongdoing".

"I was surprised and greatly disappointed to read NMC’s statement regarding what is described as the 'independent review, CEO removal and other matters'. Despite my obvious and communicated willingness to assist the committee and its advisers, I have not been given a reasonable opportunity to engage with and assist the investigation with the benefit of the key documentation relating to the events in question, as I would have wished," Mr Al Muhairi said.

"I am immediately investigating the allegation of improper or improperly disclosed supply chain arrangements involving NMC. I invite the company to make all of the necessary information available to me without delay to assist that process."

In 2019, NMC reported lower net profit for the first half of the year of $138.1m while revenue climbed 33 per cent year-on-year to $1.24bn.

Earlier this month, Mr Shetty said he resigned from the board of directors of the company to allow it to fully execute its governance and other responsibilities, in "as efficient a manner as possible".