Abu Dhabi Court Finds NMC's BR Shetty and Former CEO Liable in $5 Billion Fraud

Justice Sir Andrew Smith found both men liable on all counts in a judgment dated November 5, following a four-month trial that began in March, according to AGBI, which has seen the judgment. The case was brought by Alvarez & Marsal, which has run NMC as administrator since 2020. The precise amounts, interest and costs will be decided at later hearings for which no dates have been set, and both men can appeal.

The ruling is the biggest step so far in the attempt to recover money lost in one of the UAE's largest corporate failures. NMC was worth £8.6 billion ($11.4 billion) on the London Stock Exchange at its peak in 2018 and operated in 19 countries before it unravelled in 2019 and 2020 after a short-seller report by Muddy Waters questioned its accounts. A later investigation commissioned by the company by Freeh Group uncovered $6.6 billion of debt.

How the Money Moved

The court found that over a period spanning "at least" 2012 to 2019, Shetty knowingly received money improperly transferred to him from the NMC group and used it to buy assets including a majority stake in currency exchange business Travelex, villas in Dubai Hills, a Wyoming oilfield and a share in an aircraft, AGBI reported. He also failed to disclose securities backing personal bank facilities, allowed misleading financial statements to be published and helped hide group borrowings from auditor EY, the judgment found.

Indian legal publication Bar & Bench, which also reviewed the ruling, reported that the court counted more than 500 transfers to Shetty's personal accounts totalling AED 4.18 billion, or about AED 2.6 billion net after money returned to the group. By December 2018 the group had about $3.88 billion of undisclosed borrowings while reporting debts of $1.99 billion, it said, partly through sham supplier arrangements in which banks financed invoices for goods and services that were never meant to be delivered.

The judgment described Manghat as knowingly "party to a scheme whereby money and assets were extracted from the NMC Group, while the false appearance of a successful and growing business was maintained when it was, in reality, balance sheet insolvent". The court rejected Shetty's defence that he had himself been the victim of fraud by senior executives, and Manghat's claim that he lacked control over the company's finances. "This is an unlikely submission from a man who was the CEO of a FTSE 100 company," the judge wrote of Manghat's argument, according to Bar & Bench.

"For fraudulent trading, $5.4 billion was identified as the starting point for determining the appropriate contributions," the judgment states.

Banks and the Auditor

Abu Dhabi Commercial Bank, NMC's largest lender, had a separate fraud claim against Manghat heard alongside the administrators' case. The court found in ADCB's favour and awarded more than £1 billion in damages for outstanding liabilities and lost profits, AGBI reported.

India's majority state-owned Bank of Baroda, the third defendant, was accused of knowingly helping the fraud. It agreed a $600 million settlement in July without admitting liability, and the judge declined to make findings against it. EY settled a separate professional negligence claim with the administrators on confidential terms in February.

Richard Fleming, joint administrator of NMC Health and a managing director at Alvarez & Marsal, called the judgment "a vindication" of the administrators' efforts and said they would pursue "every available avenue in recovering funds for those who suffered losses."

NMC's operating companies left administration in 2022 and trade as NMC Healthcare, which is not implicated in the case. The next hearings will set how much of the $5.4 billion starting figure Shetty and Manghat must actually pay.