|27 February, 2020

UAE's NMC removes CEO amid enquiry into Muddy Waters' claims

Ongoing review finds 'potential discrepancies' in company's bank statements, ledger entries

General view of NMC specialty hospital in Abu Dhabi, United Arab Emirates, February 11, 2020.

General view of NMC specialty hospital in Abu Dhabi, United Arab Emirates, February 11, 2020.

REUTERS/Satish Kumar

The board of UAE-based healthcare conglomerate NMC has removed its CEO, Prasanth Manghat, amid an independent review being conducted over allegations raised against the company’s finances, it has been confirmed.

The company said on Wednesday that the board also removed Manghat from his position of director with immediate effect. NMC’s current chief operating officer, Michael Davis, will assume the role of interim CEO.

The move comes less than two weeks after Indian billionaire and NMC founder Dr. BR Shetty was removed from the discussions of the board. NMC is the sister company of financial services firm Finablr, the umbrella for popular brands such as UAE Exchange, Travelex, Xpress Money, Unimoni and Remit2India. Both firms are listed on the London Stock Exchange.

The company came under fire recently following claims that Shetty may have misreported to the stock market the size of his stake. American short-seller Muddy Waters published in December a report alleging that Shetty’s company underreported its debt and inflated the value of its cash balances.

The claims sent NMC’s shares plunging more than 15 percent in January 2020. Also in the same month, Finablr saw its shares falling by 27 percent after it was reported that Shetty had pledged more than half of the company’s stock as security against debt.

Independent review

NMC announced in January that it has created a special committee and started conducting an independent review into the allegations. 

It has tasked law firm Glaser Weil and former Federal Bureau Investigation (FBI) director and federal judge Louis Freeh and his company Freeh Group International Solutions to look into Muddy Waters’ claims.

In its latest statement seen by Zawya, the NMC board said that the people behind the review have so far found potential discrepancies and inconsistencies in the company’s bank statements and ledger entries. 

Other updates

The company also said that besides the removal of Manghat, it has also suspended one member of the company’s treasury team after it was believed that the independent enquiry has been “obstructed.” Prashanth Senoy, the company’s chief financial officer, has also been granted extended sick leave.

The independent review is still ongoing and is not expected to conclude for several weeks.

NMC operates a chain of clinics and hospitals, specialised maternity and fertility clinics and long-term care homes hospitals across 19 countries. Its revenues for the year ended December 31, 2018 stood at $2.1 billion. It listed on the London Stock Exchange in April 2012.

(Reporting by Cleofe Maceda; Editing by Mily Chakrabarty)



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© ZAWYA 2020

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