Small group of employees behind fraud at NMC Health, says B.R. Shetty
Dubai: Fraudulent bank accounts were created and cheques issued by a “small group of current and former” executives at NMC Health, according to the founder, the Indian billionaire Dr. B.R. Shetty.
The former chairman of the Abu Dhabi headquartered hospital operator said, investigations he commissioned found:
1. The fraudulent creation and operating of bank accounts in my name including many fraudulent transfers that I neither authorised, consented to, or had any knowledge of.
2. The fraudulent creation of loans, personal guarantees, cheques and bank transfers in my name, and using my forged signature, that I neither authorised, consented to, or had any knowledge of.
3. The creation and set-up of companies in my name that I neither authorised, consented to, or had any knowledge of, and that were seemingly created with the express intention to commit or conceal fraud.
4. The fraudulent creation of powers of attorney, and the misuse of existing powers of attorney, again in my name, that I that I neither authorised, consented to, or had any knowledge of.
5. The creation and provision to me of false and misleading financial statements and information regarding the performance of some of my private companies and investments by members of my own management team.
6. The payments of expenses using my private companies and personal bank accounts, I believe to hide the true financials of the public companies.”
This is the first time Dr. Shetty, who has been in India for the last two months and more on a family issue, has issued a statement based on investigations he commissioned privately. He had brought in a consultancy to conduct it after initial revelations came to light that NMC Health had not been fully transparent with its finances.
Dr. Shetty had stepped down as executive chairman after the then Board of Directors barred him from attending any meetings. “I intend to work tirelessly to clear my name and assist any authorities in getting to the truth and help them ensure that misappropriated or missing funds are returned by the perpetrators to their rightful owners,” said Dr. Shetty.
This month, ADCB, which has the highest exposure among UAE banks to NMC Health, brought charges against five former officials, including ex-board of directors, with Abu Dhabi prosecution.
The former CEOs of NMC Health and Finablr are also currently not in the UAE.
The financial frauds extend to Finablr as well, Dr. Shetty states. Again, the impact is magnified because Finablr is the holding company for UAE Exchange Centre, which is now under UAE Central Bank monitoring and had ceased all remittance activities for weeks now.
There are instances of customers having sent funds as recently as February and which took weeks to be credited. (It is not known as of now whether all these fund transfers have reached their destinations.)
“The preliminary findings provided by my advisors from my own investigations indicate that serious fraud and wrongdoing appears to have taken place at NMC, Finablr PLC (‘Finablr’), as well as within some of my private companies – and against me personally,” said Dr. Shetty in the statement.
“This fraud also appears to have been undertaken by a small group of current and former executives at these companies.”
“To see everything that 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.”
Gulf News earlier this week broke the story that the Central Bank of the UAE instructed financial institutions in the country to search and freeze all bank accounts of Dr. Shetty and his family along with those of companies where he has a stake. The bank has also blacklisted several firms associated with Shetty along with their entire senior management.
“My advisors and I have shared information and evidence from our findings… with relevant law enforcement and regulatory authorities,” Dr. Shetty said. “We will continue to proactively share this information as this work continues and in order to assist these parties with their own investigations and inquiries.”
“Out of respect for due process and to allow the various UK and UAE authorities and investigations, including my own, to quickly expedite their mandates, I have refrained from making any extensive public statements. This restraint in speaking out has come at great personal cost to me – reputationally and materially.
“However, given my own legal and forensic investigations are now starting to produce some initial findings, and in consideration of some misleading and inaccurate allegations and claims made against me, now is the right time to do so.”
Uncertainty
NMC Health is currently under a UK High Court ordered administration, and all decisions being taken by three appointees.
As for UAE Exchange House and Finablr, UAE authorities are still taking stock of the situation.
Together, NMC Health and UAE Exchange House had a staff strength of more than 25,000. And up until mid-December, the two entities were at the top of their game.
“My greatest regret is for the thousands of hardworking employees in the companies we established who are now enduring extreme uncertainty and hardship, especially during the current public health crisis,” said Dr. Shetty. “It also pains me to see the damage caused to my business partners, shareholders and other stakeholders who we have worked with for so long.
“I intend to work tirelessly to clear my name and assist any authorities in getting to the truth and help them ensure that misappropriated or missing funds are returned by the perpetrators to their rightful owners.”
If billions can be embezzled using impersonation without one entity knowing anything about it then I consider UAE to be a banana republic. Even a 5 grand wire transfer to new a new payee these days raises money laundering alert these days and to say billions were siphoned off without the banks or the NMC board or the regulator being aware of it is pure fiction.
If I were to put a finger on it, I would say it’s a world class heist where many people are involved – the accuser, accused, lender, locals and they all wanted to pull something really big because these people are untouchable in UAE. Without Muddy Waters exposé this would have continued for a while. Listing on LSE turned out to be their undoing as they were subject to public scrutiny. NMC insider leaked the malpractice info to Muddy Waters and then they couldn’t hide it no more and hence started to distance from each other and our man left holding the bag. There is no honour among *******. The clarification above seems too vague and does not present anything other than what a defense lawyer worth his salt would come up with. What doesn’t this letter not clarify about misrepresentation of the stake and attending the board meeting when one was not legally allowed to? That itself is enough to nail the case. This case can be covered up at India and GCC but not in the West because thousands of people have lost money that they had honestly invested in the stock. The regulators in the West will go far deeper into the forensic investigations because they are answerable to investors at LSE or else they will lose their edge.
So people can deny and deflect all they want and the sheep in India may buy it but it doesn’t wash in front smart people in the West.
Moreover Indian government is still waiting for the investment money promised to Kashmir, Kashi and elsewhere especially when such grand public announcements were made. Until that is fulfilled they won’t care. In UAE government has distanced itself well in advance. SO god only can save the royal family.
$4 billion unaccounted debt can not build up in 1 or 2 years. My view is this goes back at least 10 years. No bank will keep mum over billions lent to one entity up until the scam is exposed. No lender puts all their eggs in one basket without there being corruption at the very top. Such massive amounts lent makes an entry in banker’s gazette distributed through the central banks so the whole banking system is aware of the financial exposure. Central banks do these things to mitigate systemic risks to the whole economy. We are talking about an amount which is the entire GDP of some of the tinpot countries. This whole thing smacks of the rot at the very top. I am absolutely certain a few prominent local towel heads are involved in this too.
May be it goes back to 10-12 years when they were trying to float NMC on London Stock Exchange. They must have misrepresented/misstated the company finances just for convincing the UK regulator so they could lure the western investors. They must have pocketed the auditors too. They might have started small with the lenders with nice kickbacks (like how Mallya pulled it off) but the ponzi grew to unmanageable levels over time but they felt they were OK as long as they stuck with each other and never revealed it to the outsiders. This muddy waters expose figuratively threw muddy water over the whole scandal and the people involved are now trying to hide by blaming each other. The first thing the accuseds do in such circumstances is to muddy the water (if you pardon the pun!) to an extent the public gets confused. In psychology it’s called the gaslighting. This news article above is exactly that.
All said and done our man is in deep trouble. Looks like biriyani in the middle of the desert if he ever steps into GCC. Those who lost money in the stock will bring in a class action suite for compensation. If UAE does not compensate them, then they will not be able to access international financial markets. And now UAE needs that access more than ever. So UAE government can not cover it up period.
Let’s see what the UK regulator’s investigation comes up with.
NMC, the company B R Shetty founded was listed in London stock exchange in 2012. B R Shetty was the Chairman of the NMC board till 2017 and played an active role in its management till then. In 2019, the report on non disclosure of $2.7 Bn in debt was published. This is a serious matter as NMC was now a public company with thousands of employees and shareholders. Therefore, I am not sure if Mr.Shetty can feign ignorance of such a huge amount of debt in his company. There is also an allegation that these amounts were used to promote other businesses owned by Mr. Shetty. It is pertinent to note that it was in 2018 that Mr. Shetty and his son launched their financial services firm Finablr and acquired TImesMoney the same year.
In the interest of the thousands of NMC employees, its shareholders, the banks and the reputation of India, Mr. Shetty must submit himself to the UAE and UK authorities and be accountable for this financial fiasco which involves $billions of public money.
Let’s for argument’s sake say what has been clarified so far through the above press release is true but then how do you explain the financial scandal at UAE Exchange/Finablr which is a different entity than NMC? In the last 48 hours it has come to light that there is nearly a billion dollar black hole on Finablr’s books and it was so far hidden from the auditors. Where is that money gone? At Finablr the accused is still the chairman so he can’t give the NMC employee excuse. Trust me, this is a classic 420 case. If the accused has not clarified why he was part of the NMC board until March when he did not have the qualifying stake, how valid is the above clarification? Whatever reported stake was totally misstated to pull wool over investors’ eyes. That in itself was criminal. West will never trust another Indian businessman ever again.
Earlier this year the problems in the group started to exacerbate and there wasn’t enough money even to pay the NMC staff salary. That time money was illegally diverted from UAE Exchange (i.e. the money people remit to their home countries). Normally remittance money clears within the same day of the transaction but if you go to twitter today there are people whose money has been withheld without any explanation for more than 2 months now. How does the defendant explain that? One of my distant relatives wanted to use their service in GCC in January this year to make payment to the overseas suppliers but was told the money would be debited from his account immediately but remittance would be done after 15 days. There itself I got the whiff of things being not kosher at the emerald city.
Now, the accused is unlikely to ever set foot in the GCC. As I said clearly there are other big local sharks involved in this scam and for their survival they do not want the accused back in the UAE. The lenders and the investors will suffer. UAE may cover it up and people may forget it after some time but UAE has been caught at the worst possible economic downturn. On one hand oil prices have plummeted and on the other, they are fighting the epidemic. This NMC drama was the last thing they wanted. NMC brand is unlikely to survive because if UAE government bails it out then the western investors will file a class action suit for compensation and at the same time the new management will be liable to clear the debt. So if I were to wager a bet, NMC brand will disappear. All the assets could be sold off to condors at bargain basement price. But UAE will lose its reputation and nobody will invest in that country.
Just to be clear, I do not have a dog in the fight but my interest is only from the viewpoint of 20000 NMC staff who have been left in the dark about their careers in the middle of the worst economic downturn. Second interest is about the reputational damage this scandal has caused to Indians. Now onwards no Indian will ever be trusted in the Middle East again. In Indians there is total lack of integrity and sense of corporate responsibility. We have seen it times and again, be it Mallya, ILFS, PNB, PMC, Jet Airways, HDIL, Yes Bank Choksi, Nirav Modi, and this is the latest kid on the block. I keep repeating this – we do not have strict laws against corporate malpractice where as in the West such crimes get minimum 25 years in jail. That’s what we are lacking. Punishing one person with 25 years jail terms will bring the rest of them in line.
Another thing that I have learnt from this drama is that the so-called “successful” businessmen are economically illiterate. They simply do not understand the business cycle. They think there is never-ending supply of new credit/money entering into the system so all their embezzlement could be tided over. But in economy there are ups and downs. In Buffet’s own words It’s during the ‘downs’ that people who were swimming naked get caught out. That’s exactly happened in this case. They thought the scam could be covered up by continuing to grow the ponzi bigger but trees don’t grow all the way to the moon.
My prediction has turned out to be true – 6 US law firms have filed class action suit against NMC on behalf of the investors who have lost money, to demand compensation for losses due to the alleged securities fraud. This could run into several hundred millions but nobody has that kind of money as NMC already has more debt on its books than what they can handle, let alone compensating investors which means focus will turn on those who had allegedly committed the fraud.
Now people alleged will lose their shirts, pants, lungi and everything. India is the safe place for now. But India has strong treaty with UAE where in a decree passed by a UAE court can be legally enforced in India (to even attach assets and hand it over to UAE). For criminal cases even extradition is also in the treaty. More over there will be diplomatic pressure from UK and US as their investors have lost money and importantly UK has lost its image as a prominent investor destination due to the NMC fraud. So, Indian lawyers need to be really creative. First remedy I recommend is to transfer of Indian assets to distant relatives ASAP. And when the extradition summons comes, start something like a chest pain or something to that effect and drag it on in the Indian courts for another 10 years. By then probably it’s time to buy the field anyway.
A point to note – A lot of family members of the alleged and those in higher positions of the alleged’s group of companies are inside UAE. Until UAE squeezes the last penny they won’t be able to get out of the country.
Just Curious to know If Dr BRS is a Medical Doctor or PhD or Honorary Doctorate. I read that he was the first Medical representative in UAE.