Prominent NRI industrialist and NMC Healthcare founder BR Shetty and his former CEO Prasanth Manghat have been held liable for their roles in a $5.4 billion financial fraud by an Abu Dhabi court. The fraud involved hiding billions of dollars in loans, diverting company funds and manipulating financial records before the healthcare group’s collapse in 2020.
The Abu Dhabi Global Market (ADGM) Court of First Instance delivered its judgment on November 5. A few months ago, Bank of Baroda, found as accused along with Shetty and Manghat, paid `5700 crore to the court as part of the settlement. The court had charged Bank of Baroda’s Abu Dhabi branch for violating anti-money laundering norms. Justice Sir Andrew Smith found that Shetty and Manghat knowingly took part in fraudulent trading and rejected their claims that they were unaware of the financial wrongdoing.
“I have concluded that Dr Shetty and Manghat were both party to the business being carried on fraudulently,” the court said. The court identified $5.397 billion as the starting figure for calculating the amount the two men may have to contribute towards NMC’s assets. A separate hearing will decide the final amount, along with interest and legal costs.
During the arguments, BR Shetty (85) accused his former CEO, Prashant Manghat, and top officials at Bank of Baroda of cheating him and misusing his signatures in huge money transfers. Last month, Shetty filed a compensation suit of 15 Billion Dollars against Bank of Baroda in the Bombay High Court.
The judgment revealed that more than 500 transactions worth AED 4.18 billion were made into Shetty’s personal bank accounts. After adjusting for money returned to the company, the net amount transferred was around AED 2.6 billion. The Abu Dhabi court also examined spending on private aircraft, properties in Dubai Hills and investments in an oil field in Wyoming, US.
Shetty founded NMC Health Plc in Abu Dhabi in 1975. The company expanded over the years, got listed on the London Stock Exchange in 2012 and later became part of the FTSE 100 index. However, the company had hidden a large amount of debt in its financial records. By December 2018, NMC’s undisclosed borrowings had reached around $3.88 billion, even though its reported debt was only $1.99 billion.
The court found that the group used fake supplier invoices to conceal its borrowings. Suppliers raised invoices for goods and services that were never intended to be delivered.
Banks released money against these invoices, and the funds were then transferred back to the company. NMC eventually collapsed in 2020 after the financial fraud came to light. During the trial, Shetty argued that senior executives had also defrauded him.
Manghat claimed that he did not control the company’s financial affairs. The court rejected both arguments. It held that the two men had knowingly participated in fraudulent trading from April 30, 2012, under the ADGM Insolvency Regulations, 2022.