Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

NMC founder sues EY, banks and execs for $8 billion over alleged fraud

Stock MarketsJul 22, 2021 02:10PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. The logo of Ernst & Young is seen in Zurich, Switzerland November 13, 2020. REUTERS/Arnd Wiegmann

By Abhirup Roy

MUMBAI (Reuters) - B.R. Shetty, the founder of stricken UAE hospital operator NMC Health, has sued auditor EY, two former top executives of his companies and two banks in a U.S. court, seeking $8 billion in damages for an alleged multibillion-dollar fraud at his group.

EY said in a statement: "We believe this case is without merit and we intend to defend it vigorously."

Several companies linked to the Indian entrepreneur ran into trouble last year after short-seller Muddy Waters (NYSE:WAT) questioned NMC's financial statements.

NMC subsequently announced far higher debts than it had previously reported and was later put into administration.

Shetty, now in India, is himself facing a criminal complaint in Abu Dhabi from one of NMC's lenders, Abu Dhabi Commercial Bank, and fighting court cases in India and Dubai as banks seek to recover loans from his companies. Last year, the UAE central bank ordered banks to freeze accounts of Shetty and members of his family, sources told Reuters.

Shetty has denied wrongdoing and says that he has been the victim of fraud.

In October, Shetty filed a complaint with Indian federal investigators, accusing brothers Prasanth and Promoth Manghat - respectively the former CEOs of NMC and Finablr, another Shetty group company -, along with their associates and bankers, of inflating the companies' balance sheets, arranging "illegal" credit facilities and misappropriating funds since 2012.

In the case filed last week at a U.S. Supreme Court in New York, Shetty repeated his allegations against the Manghat brothers and also said EY had issued fraudulent audits and financial reports while being aware of the laundering of illegally obtained loan proceeds.

"EY actively and intentionally conspired with the defendants to conceal their fraudulent conduct," Shetty said, according to a copy of the 105-page filing seen by Reuters.

He also alleged India's Bank of Baroda, through its New York and UAE branches, was a "principal conduit" for the fraudulent transactions, and Credit Europe Bank (CEB) in the Netherlands continued lending and earning fees despite being aware of the fraud.

A spokesperson for the Manghat brothers, who have denied Shetty's allegations, did not immediately respond to emails and phone calls seeking comment.

Bank of Baroda did not immediately respond to an email seeking comment outside of regular business hours.

CEB said in a statement that Shetty's allegations had "no legal or factual merit."

Shetty said in the court filing he had been "financially devastated" by the alleged fraud and that it had cost him more than $7 billion, while drugmaker Neopharma, in which he owns a 49% stake, had suffered more than $1 billion in damages.

NMC founder sues EY, banks and execs for $8 billion over alleged fraud
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email