The alleged fraud which led to the UAE based healthcare group, NMC Health being put into administration was reportedly carried out over at least 8 years and the management’s investigation into this was delayed due to the documents being lost.
Michael Davis, the Chief Executive of NMC Health also added that it is challenging to reconstruct what happened because unidentified employees had destroyed thousands of documents.
His statements were made in a testimony by the firm, which was prepared to defend itself in Dubai International Financial Centre, against a lawsuit from Credit Europe Bank.
In April this year, NMC Health had filed for bankruptcy after several months of uncertainty that began in December. The US based activist investor Muddy Waters had uncovered that NMC Health had inflated its cash balances and understated its debts. This led to the hiring of external investigators, including a firm led by Louis Freeh, the former Director of the United States Federal Bureau of Investigations (FBI).
Investigations found that the debt at NMC Health was significantly higher than the stated $2.1 billion by approximately $6.6 billion. They also emphasized the company’s “suspected fraudulent conduct.”
The Board felt that the former chief executive officer of NMC, Prasanth Manghat obstructed the access to information for Freeh Group before being removed from his position in February, notes the witness’ statement from Mr. Davis.
Last month, NMC Administrators Alvarez and Marsal established a three-year turnaround planfor the company to enable its UAE operations to continue operating through the Abu Dhabi Global Markets Courts to counter claims by creditors and increase additional lender funding by raising $300 million.
A hearing is due soon to select administrators for NMC Healthcare and over 30 associated companies.
