NMC founder alleges fraud, forgery ‘on a grand scale’

A UK court placed NMC Health into administration on the application of ADCB last week. (Reuters)
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Updated 30 April 2020

NMC founder alleges fraud, forgery ‘on a grand scale’

  • Billionaire former chairman B.R. Shetty blames small group of aides after probe into debt-wracked UAE health provider
  • NMC is the biggest health provider in the United Arab Emirates

DUBAI: NMC Health, the troubled UAE-based hospitals group, has been the victim of fraud, forgery and impersonation on a multibillion-dollar scale, according to its founder and former chairman B.R. Shetty.

In a strongly worded statement, Shetty detailed what he described as “serious fraud and wrongdoing” at the company and at his other major business venture, the financial services group Finablr, as well as at some of his private companies and against him personally.

NMC is in administration and has asked for its shares to be delisted from the London Stock Exchange after having uncovered total debts of $6.6 billion, most of it unaccounted.

Finablr is being broken up, with some of its operations being prepared for insolvency, while its UAE foreign exchange business is being run by the country’s central bank.

Shetty’s statement follows investigations by forensic investigators, lawyers and handwriting experts working for the Indian entrepreneur, who is believed to be still in his home country.

The statement fails to name any individuals, but said the alleged offenses appear to have been committed by “a small group of current and former executives” at the companies.

Shetty said that false companies, bank accounts and loan agreements had been set up without his knowledge or authorization, and that he had been supplied misleading financial information. The perpetrators had also used fraudulent powers-of-attorney and expenses payments from his personal companies and bank accounts.

Authorities in the UAE and UK have been informed of the findings. Shetty said that he is cooperating with authorities to “get to the truth and help ensure that misappropriated or missing funds” are identified and returned.

“I will work tirelessly to clear my name,” he said.

“To see everything that my family and I have strived to build over the past 45 years eroded over the course of a few short months, and mainly due to the misconduct and wrongdoing of people I put so much trust in, saddens me beyond words. It has also left my entire family in a perilous financial position,” he added.

Shetty, who founded NMC in the UAE in 1975, ended his executive involvement with the company in 2017, but remained joint chairman until earlier this year, after the scale of its problems became apparent.

Doubts over NMC’s financial health were first raised last year by activist investor Muddy Waters, which identified serious irregularities at the company. Over the space of a few weeks, its share price collapsed and shares eventually suspended.

The crisis at NMC — the biggest health provider in the UAE — comes at a difficult time for the country as it combats the coronavirus pandemic.

An economic downturn because of global lockdowns has put increased strain on the country’s financial system.

Abu Dhabi Commercial Bank (ADCB) is the biggest creditor to NMC, with outstanding liabilities of nearly $1 billion, although many others also have big exposures, as well as international banks such as Barclays, Standard Chartered and HSBC.

ADCB has filed criminal cases against several former executives at NMC, who cannot be named under the country’s laws. There were reports that the UAE central bank has issued freeze orders against several companies and individuals, but these have not been officially confirmed.

A spokesman for Alvarez & Marsal, joint administrator to NMC, said: “We will review the statement as part of our ongoing investigation into the affairs of NMC and look forward to (Shetty) sharing the findings of his investigation with us.”

G7 backs extension of G20 debt freeze, calls for reforms 

Updated 25 September 2020

G7 backs extension of G20 debt freeze, calls for reforms 

  • Group of Seven ‘strongly regret’ moves by some countries to skip participation in debt relief for world’s poorest nations

WASHINGTON: G7 finance ministers on Friday backed an extension of a G20 bilateral debt relief initiative for the world’s poorest countries, but said it must be revised to address shortcomings hindering its implementation.

In a lengthy joint statement, the ministers from the Group of Seven advanced economies said that they “strongly regret” moves by some countries to skip participation by classifying their state-owned institutions as commercial lenders.

Two officials from G7 countries said the reference was clearly targeted at China, which has refused to include loans by the state-owned China Development Bank and other government-controlled entities in its official bilateral debt totals when dealing with countries seeking debt relief.

The ministers also acknowledged that some countries will need further debt relief going forward, and urged the Group of 20 major economies and Paris Club creditors to agree on terms by next month’s meeting of G20 finance ministers.

“Everyone was disappointed by China’s lack of transparency and commitment,” said one official, who asked not to be named.

At an online meeting hosted by US Treasury Secretary Steven Mnuchin, the ministers underscored their commitment to work together to support the poorest and most vulnerable countries, which have been hard hit by the coronavirus pandemic.

They asked the International Monetary Fund and World Bank to provide regular updates on the financing needs of low-income countries and propose solutions for expected financing gaps, including through instruments to leverage access to private finance.

They said the Debt Service Suspension Initiative (DSSI) approved in April by G20 countries, including China, had helped 43 countries defer $5 billion in official debt service payments to free up money to respond to the pandemic.

But the total is far short of the $12 billion in savings that were initially projected, and represents just over half of the 70-plus countries that were eligible.

The ministers said the initiative should be extended, “in the context of a request for IMF financing,” and called for a new term sheet and memorandum of understanding to improve its implementation.

The ministers said claims classified as commercial under DSSI would also be treated as such in future debt treatments and for implementation of IMF policies, delivering a stern reminder to China and others that have not been fully transparent about the scope and terms of government lending to poor countries.

The ministers also called again on private lenders to implement the debt relief initiative when requested, noting that the absence of private sector participation has limited the potential benefits for several countries.