The has held founder BR Shetty and former Chief Executive Officer Prasanth Manghat for massive that led to the collapse of the healthcare group in . In a comprehensive judgment delivered on , Justice Sir Andrew Smith concluded that both individuals knowingly participated in a sophisticated scheme involving the , the concealment of billions of dollars in borrowings, and the systematic . The court established $5.397 billion as the initial baseline for assessing the financial contributions the defendants must make toward the company’s assets.
The , brought forward by the of the collapsed healthcare giant and , sought accountability for the catastrophic financial decline of the NMC Group, which once commanded a position in the index. The judgment confirms that the group’s was directly linked to clandestine financial arrangements that allowed the defendants to siphon off funds and obscure the company’s true economic state from stakeholders and auditors for nearly a decade.
A Decade of Financial Mismanagement The court found that the NMC Group was the victim of an extensive, years-long fraud occurring between and . The fraud was underpinned by two primary mechanisms: the direct misappropriation of corporate assets for personal use and the systematic overstatement of net assets and turnover in financial reporting. By , the group had reportedly accumulated approximately $3.88 billion in undisclosed borrowings, despite reporting debts of only $1.99 billion to the public and regulatory authorities.
Justice Smith was particularly critical of the defendants' attempts to evade responsibility. BR Shetty, who founded the healthcare network in
, had argued that he was merely a victim of fraud perpetrated by his senior executives. The court flatly rejected this defense, noting that Dr. Shetty, as a director and executive vice-chairman, could not abdicate his oversight duties by blaming subordinates.
"In my judgment, Dr Shetty was dishonest,"
the court observed, noting that it was implausible for the founder to have been ignorant of the massive financial activities flowing into his personal accounts.
Similarly, the court dismissed the defense mounted by former CEO Prasanth Manghat, who contended that his job title was merely nominal and that he was subservient to Shetty and other principal shareholders. Describing this submission as
"an unlikely submission from a man who was the CEO of a
company,"
Justice Smith rejected the attempt to frame the chief executive as a figurehead without financial authority. The evidence presented during the extensive trial revealed that Manghat played an instrumental role in managing the group’s financial function, negotiating bank facilities, and orchestrating the concealment of debt from
, the group's auditors.
Deception Through Sham Suppliers Central to the judgment is the exposure of a complex "Sham Supplier" scheme. Under this arrangement, third-party entities would issue invoices for goods and services that were never actually provided. Financial institutions, acting on these fraudulent documents, extended credit to the NMC Group, which then funneled the borrowed funds into the group's accounts to artificially bolster cash flow and cover interest obligations on previous undisclosed debts.
The court noted that this machinery allowed the NMC Group to maintain a facade of profitability while the company was, in reality, . The manipulation extended to the use of offset deposits—where term deposits were used to secure credit facilities that were then deliberately hidden from the company's internal ledgers and consolidated financial statements. The court found that these methods were meticulously designed to bypass audit scrutiny, often involving the creation of two sets of financial records to keep the reality of the from being detected by auditors or the board.
The judgment detailed how the fraud reached a breaking point in , when auditors began requesting verification of specific balances. The court documented instances of forgery and impersonation, including the creation of a "First Resolution Letter" and a "Second Resolution Letter" that purported to come from the but were, in fact, forged by the NMC executives to mislead auditors. When asked about these instances of forgery, the court found the explanations provided by the defendants to be entirely lacking in credibility.
Legal Responsibility and Next Steps The court’s finding of liability rests on the application of the , specifically sections 251 and 252 regarding . Because the defendants knowingly participated in the carrying on of the company's business with intent to defraud creditors, the court has ordered that they must contribute to the company's assets. While the court acknowledged that the defendants' culpability varied in its specific operational expression, it found both to be essential architects of the harm caused to the group's creditors.
The court chose not to make specific findings regarding the involvement of the , noting that the administrators reached a settlement with the bank toward the end of the trial, rendering further judicial pronouncements unnecessary. However, the ruling provides a clear path forward for the to seek recovery of assets. The court has scheduled a further hearing to settle the precise amounts payable by Shetty and Manghat, address interest and costs, and resolve remaining claims against other parties named in the .
This judgment serves as a definitive ruling on the collapse of one of the UAE’s largest private healthcare providers. It reaffirms the standard that executives in high-level management cannot rely on arguments of delegation or ignorance when confronted with evidence of massive, systemic financial malfeasance. The court has required the parties to prepare draft orders to implement these findings, marking the end of the initial adjudication phase in a case that has redefined accountability in the region's corporate sector.
fraudulent trading liability - corporate insolvency compensation
