UK regulators have ended a three-year investigation into the former boss of NMC Health, the FTSE 100 company that collapsed in 2020 after an alleged multibillion-dollar fraud.
The Financial Conduct Authority has shelved its previously undisclosed probe into the hospital operator’s former chief executive Prasanth Manghat, according to people familiar with the matter and a letter sent by the watchdog and seen by the Financial Times.
A previously unreported FCA investigation into NMC’s founder BR Shetty has also been “discontinued”, according to his lawyer.
UAE-headquartered NMC floated on the London Stock Exchange in 2012. Its valuation peaked at more than £8bn before it hit trouble in late 2019 after short seller Muddy Waters published a report questioning the company’s finances.
The company filed for administration in April 2020 after collapsing under the weight of more than $4bn of previously undisclosed debt.
Shetty started the business in the 1970s, growing it into the UAE’s largest private hospital operator. He became joint chair in 2017 when Manghat succeeded him as chief executive. Manghat had previously served as chief financial officer and deputy chief executive.
Manghat was fired in February 2020 after investigators hired by the company delivered their initial findings.
Manghat was under investigation by the FCA over possible breaches of market abuse rules, including market manipulation, insider dealing or unlawful disclosure of inside information.
In its letter to Manghat this month the watchdog said it had “decided to discontinue its investigation and has no present intention to take action against you”. The regulator added that it could review the decision if it receives new information.
The scope of the investigation into Shetty is not known. The FCA declined to comment on the existence, scope or closure of the investigations into Manghat and Shetty.
A separate FCA investigation into the company, launched in February 2020, is continuing, said a person familiar with the matter. Any sanctions imposed following that probe would risk being largely ceremonial because the former UK-listed entity is now in administration.
The FCA probes are part of an array of regulatory, legal and criminal proceedings relating to NMC.
Administrators at Alvarez & Marsal have alleged that the group’s revenues were fraudulently inflated and that it had entered into “unreported and improper transactions with related parties for the purpose of enriching senior management, financed in part by the group’s hidden borrowing”.
The administrators last month filed a 110-page legal claim in London’s High Court, accusing Manghat and Shetty of being involved in fraudulent trading as early as 2012. Bank of Baroda — one of India’s largest lenders — was also named as a defendant in the case.
A spokesman for Manghat declined to comment on the case. Manghat has previously denied receiving any unlawful payments and rejected accusations that he said “seem to be designed maliciously to distract attention away from those responsible for damaging” NMC.
Shetty’s lawyer said he was “preparing to defend vigorously” the administrators’ claims against him. Bank of Baroda did not respond to a request for comment.
Shetty has also launched an $8bn legal action of his own in New York against EY, Manghat and two banks. The NMC founder has claimed he was defrauded through a “debt-fuelled Ponzi scheme” in which company funds were siphoned off for personal gain.
Manghat’s spokesperson said he had yet to be served with the court papers in the New York case.
NMC’s auditor EY is defending a $2.7bn lawsuit by the company’s administrators and is also under investigation by the UK accounting regulator. EY has denied negligence or wrongdoing.