In 1973, at the age of 31, B R Shetty migrated from Kapu near Udupi to UAE with just $8 in his pocket and began working as the country’s first medical representative.
Two years later, he founded the New Medical Centre Health (NMC) to provide cost-effective healthcare. Over the years, NMC became UAE’s largest healthcare chain and operated across 45 locations. Shetty was on top of the world and the toast of the NRI community.
Now, the founder of the healthcare conglomerate is reportedly on the run, saddled with a debt of at least $6.6 billion, including at least $3.9 billion of unreported debt.
Shetty’s remarkable success story unravelled early this year.
Muddy Waters — a private investment firm that conducts investigative research on public companies — did some digging and accused the company of governance lapses, payment of high-contractor fee to Shetty controlled firms and under-reporting of debt, which was never reported to the company’s board.
“The contractor that was responsible for the renovation work on the hospital (the building already existed) appears to be de facto controlled by B R Shetty, which was not disclosed. There are some indications that Khalifa Bin Butti’s (al Muhairi) company, KBBO Group, was involved in the development as well, which also was not disclosed,” the firm said in a note.
When contacted over phone to ascertain his views on the matter, Shetty refused to comment.
Interestingly, Khalifa bin Butti al Muhairi, the largest shareholder in NMC Health, is married to Ameera bint Aidan bin Nayef Al-Taweel Al-Otaibi, a Saudi princess and former wife of Saudi billionaire Prince Alwaleed Bin Talal.
On January 17, the group set up a committee to investigate the charges. The Review Advisers informed the committee that they have discovered evidence leading to suspected fraudulent behaviour in relation to some elements of the NMC’s previous financial activities.
Soon, there were several exits from the company, including Shetty. On February 27, the trading of the company, which is listed on the London Stock Exchange, was suspended.
On March 2, the company hired Moelis and PwC to assist it in revealing the true financial position.
Currently, according to the company’s filings on the London Stock Exchange, the group’s debt is estimated to be around $6.6 billion, including the $360 million convertible bonds and $400 million Sukuk, shariah-compliant bonds.
“Work on verifying the outstanding debt obligations of the company is continuing,” NMC Health said in its last financial update on March 24. Amid the rising numbers, it emerged that 60% of this debt was not reported by the company.
The Group’s bilateral and syndicated debt obligations comprise over 75 debt facilities from over 80 financial institutions. Some of these borrowings were used for transactions not pertaining to the group, the company said in one of its regulatory filings. This kind of transactions, if proved, can be interpreted as siphoning off of funds.
As the company has gone through insolvency proceedings at a UK court, and got delisted from the London Stock Exchange, it has been reported that Shetty had escaped to India.
Meanwhile, back in Dubai, reports say that Shetty’s and family members’ accounts have been frozen, while senior executives’ accounts have been blacklisted.