Financial watchdog to investigate scandal-ridden NMC Health
NMC Health is facing battles on two fronts after the City watchdog stepped up its probe into the embattled hospital operator and a major shareholder criticised its handling of an investigation into its finances.
The Financial Conduct Authority (FCA) will investigate NMC, the FTSE 100 company said, just hours after trading in its shares was suspended.
News of the probe comes the day after the UAE-based hospital operator fired its chief executive and placed its finance chief on extended sick leave following its own ongoing investigation into its finances.
NMC said it would fully cooperate with the FCA and all other authorities. The regulator announced earlier this month it was “making enquiries” into the company after questions were raised over the size of major investors’ holdings in the firm.
It also emerged today that the crisis-ridden company has resorted to pledging future credit card payments from customers to secure bank funding.
Public filings in the UAE show that NMC had began raising money using “credit card receivables” at more than 20 of its sites as collateral for funds at the start of the year, according to a report by the Financial Times.
Shares in NMC have lost almost two thirds of their value since December, when US short-seller Muddy Waters published a report questioning its finances and governance.
NMC denied any wrongdoing and launched an review into the allegations, led by former FBI director Louis Freeh.
The healthcare group’s struggles have been compounded by doubts over the size of major investors’ shareholdings, including those of founder BR Shetty and former vice-chairman Khaleefa Butti Omair Yousif Ahmed Al Muhairi, which are being examined under a separate internal review.
Yesterday, NMC fired its chief executive after discovering supply chain financing facilities entered into the company without the knowledge of its board, and said these entities had been controlled by Shetty and Butti.
Butti today hit back at the company, issuing a statement denying any wrongdoing and accusing NMC of shutting him out of the investigation.
“Any suggestion that I have been involved in wrongdoing is categorically rejected,” he said.
Butti said he had been “surprised and greatly disappointed” by NMC’s statement to the stock exchange yesterday announcing the discovery of the facilities, and accused the company of denying him “a reasonable opportunity to engage with and assist the investigation”.
NMC said its board was “focused on providing additional clarity to the market as to its financial position and to restoring its admission to trading”.
It added that the group could not comment further because it is in an offer period following possible takeover interest from GK Investment Holding.