Watchdog opens NMC Health inquiry amid accounting scandal

The financial watchdog has launched a formal investigation into NMC Health hours after shares in the FTSE 100 healthcare group were suspended from trading amid a deepening accounting scandal.

The news of the investigation by the Financial Conduct Authority came the day after Abu Dhabi-based NMC removed its chief executive and placed its finance chief on extended sick leave as its own investigation into its finances continues.

NMC’s shares have lost two-thirds of their value since the US-based short-seller Muddy Waters questioned its financial statements in December. The firm, which runs private hospitals and health services in the United Arab Emirates, has also admitted it is unclear who controls its biggest shareholdings.

Healthcare empire NMC should be clear about who owns its shares | Nils Pratley

This week NMC shared details of an independent review of the firm’s finances, led by a former FBI director. The review revealed that companies controlled by NMC’s founder and another executive had accessed $335m (£260m) in secret financing since early 2018, without the knowledge of the company’s board, and which did not appear on its balance sheet.

The review found that companies which accessed the supply chain financing are apparently linked to NMC’s founder, the Indian-born billionaire Bavaguthu Raghuram Shetty, and its major shareholder and former deputy chair, Khaleefa Al Muhairi.

In a statement issued on Thursday, Muhairi rejected all allegations of wrongdoing and insisted: “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.”

The healthcare group said the FCA had agreed to a temporary suspension of its shares on Thursday “to ensure the smooth operation of the market”. It has said it will continue to cooperate with the financial regulator “and any and all other relevant authorities”.

Following the removal on Wednesday of NMC’s chief executive, Prasanth Manghat, the founder of Muddy Waters, Carson Block, said: “At this point, the company’s announcements speak for themselves and seem to be even more damning than our initial report was.”

A fresh investigation into a FTSE 100-listed company will also raise questions about London’s governance of firms listed on its stock exchange, following scandals concerning the mining companies ENRC and Bumi.

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