NMC founder B.R. Shetty and former CEO Prasanth Manghat held liable for fraudulent trading

Abu Dhabi: The Abu Dhabi Global Market (ADGM) Court of First Instance has ruled that NMC Healthcare founder B.R. Shetty and the group’s former CEO, Prasanth Manghat, knowingly participated in fraudulent activities involving the group over approximately eight years, from April 2012 to April 2020. In a ruling issued by its Commercial and Civil Division on November 5, the court said the $5.397 billion figure would form the basis for assessing the potential financial contributions the parties may be required to make to NMC Healthcare’s assets as part of the fraudulent trading claims. The court stressed that the amount does not represent final compensation. A subsequent hearing will determine the parties’ final financial obligations and other implications of the ruling. The case stems from fraudulent activities involving the misappropriation of the group’s assets and funds and the concealment of its true financial position through substantial undisclosed loans. Financial management proceedings were subsequently initiated against NMC Healthcare, NMC Holding and 34 other companies listed in ADGM. According to the ruling, Shetty dishonestly participated in the fraudulent scheme by receiving substantial transfers from the group and using the funds to acquire assets. The court also found that he failed to disclose collateral related to personal financial facilities, allowed misleading financial statements to be published, and concealed loans and liabilities from the external auditor. The court found that Manghat played a pivotal role in facilitating the misappropriation of the group’s funds for Shetty, himself and other parties. It said he knew that false financial statements were being used to conceal the transactions and withheld information about the group’s debts from auditors. The court also found Shetty and Manghat liable for fraudulent and wrongful trading and upheld civil claims against them under UAE law. In a separate lawsuit filed by Abu Dhabi Commercial Bank against Manghat, the ruling found him liable to the bank, which could recover more than $1.19 billion, including financial liabilities and lost profits, subject to the necessary adjustments. The court is expected to determine the final value of the financial contributions arising from the ruling at a future hearing.