ADGM Court Finds BR Shetty and Ex-CEO Liable for Fraud That Sank NMC Health

In a judgment dated November 5, Justice Sir Andrew Smith held both men liable for fraudulent trading and wrongful trading. He set $5.39 billion as the starting point for working out how much they must contribute to the assets of NMC Healthcare, which remains in administration. The figure is not a final award, and it does not order each man to pay that sum. The amount each owes will be decided after further submissions.

The ruling is the most important court finding so far on who was personally responsible for the NMC collapse, one of the largest corporate frauds in the Gulf. It gives the administrators and creditors a basis for pursuing recoveries from the two men. It also hands Abu Dhabi Commercial Bank, one of the group's biggest lenders, a win in a separate claim against Manghat.

The court found that ADCB had proved its case under Articles 282 and 285 of the UAE Civil Code and Article 84 of the 2015 Commercial Companies Law. The bank's damages include $1.02 billion in outstanding liabilities and about $168.98 million in lost profits, subject to adjustments. Khaleej Times reported that the bank must give credit for about $30 million it has already recovered. ADCB had alleged that Manghat took part in a "Loan Recycling Scheme", under which borrowings used to cover misappropriations were kept out of the group's accounts, and that he gave the bank false assurances about NMC's finances.

The court noted it was not disputed that NMC was the victim of a "massive and sophisticated" fraud between April 2, 2012 and April 9, 2020. The fraud had two parts: taking group assets, and overstating net assets and turnover in the published accounts. Khaleej Times reported that the men's liability for fraudulent trading runs from April 30, 2012.

The judge found that Shetty took part throughout that period. He knowingly received large sums moved improperly out of the group, and either used his signature or let it be used to make such transfers. Relying on expert evidence that was not challenged, the court accepted that direct transfers to Shetty's Bank of Baroda accounts totalled Dh4.18 billion, or about Dh2.6 billion after counter-payments. It also found that he used group money to buy personal assets and investments, helped hide the group's borrowings from its auditor EY in March 2019, and, as a director, allowed the publication of accounts that concealed NMC's true position.

Shetty had argued that he knew nothing and was himself a victim of Manghat and other senior managers. The judge rejected this, calling it "inherently most improbable" that a secret of that size could have been kept from him for so many years. He also rejected Manghat's defence that he was "subservient" to Shetty and the Bin Buttis, finding it inconsistent with the evidence. Manghat's gains were smaller than theirs, the judge said, but large enough to give him a motive. He added that he could not generally rely on Manghat's evidence.

Shetty founded NMC in 1975 as a single clinic. The company listed in London in 2012 and reached a peak value of £8.58 billion in 2018. It unravelled after short seller Muddy Waters questioned its accounts in December 2019. Its shares were suspended in February 2020, and it later disclosed $2.7 billion and then a further $1.6 billion of debt it had not previously reported. The English High Court put the parent company into administration in April 2020. In September 2020 the ADGM court did the same for NMC Healthcare, NMC Holding and 34 other group companies. A restructuring completed in 2022 moved 34 operating companies into a new group, whose board has since appointed former Mediclinic Middle East chief executive David Hadley as chief executive.

The case is not finished. A further hearing will decide interest, costs, the cross-claims between the defendants and the terms of the final orders.