A significant ruling from the Abu Dhabi Global Market’s primary court has found B.R. Shetty, the founder of NMC Health, and the group’s former CEO, Prasanth Mangat, culpable for their involvement in fraudulent activities that targeted the organisation over an eight-year period from April 2012 to April 2020.
Court Ruling and Financial Implications
On November 5, the court delivered its verdict through its commercial and civil division, stating that an amount of $5.397 billion will serve as the basis for estimating the potential financial contributions that both parties may be required to pay towards the assets of NMC Health as part of the fraudulent trading claims. The court clarified that this sum does not represent a final restitution, indicating that further hearings will be held to establish the eventual financial liabilities and the implications of the ruling.
The Fraudulent Activities
The case revolves around fraudulent practices that involved the misappropriation of assets and funds belonging to NMC Health, along with the concealment of the company’s true financial status through the use of significant undisclosed loans. Subsequently, NMC Health, NMC Holding, and 34 other companies registered within the Abu Dhabi Global Market entered into financial administration procedures.
Roles of B.R. Shetty and Prasanth Mangat
The court’s findings indicated that Shetty was complicit in the fraudulent scheme by unlawfully receiving substantial transfers from the group, using these funds for asset purchases, and failing to disclose guarantees related to personal financial facilities. Additionally, he was held accountable for permitting the dissemination of misleading financial statements and concealing loans and obligations from external auditors.
Conversely, the court concluded that Mangat played a crucial role in facilitating the misappropriation of company funds for both Shetty and himself, fully aware that incorrect financial data was being used to cover up these actions. He also withheld information regarding the company’s debts from the auditors.
Liability and Future Proceedings
The court acknowledged their accountability for fraudulent trading and wrongful trading, accepting civil claims against them under the laws of the United Arab Emirates. In a separate lawsuit filed by Abu Dhabi Commercial Bank against Mangat, the ruling confirmed his legal liability, with the bank potentially recovering compensatory amounts exceeding $1.19 billion, which include financial obligations and lost profits, following necessary settlements. The court is expected to deliberate on a subsequent session to ascertain the final value of the financial contributions stemming from the judgment.