The founder of NMC Health accused the bank, auditor and former director of fraud for six years

The founder of NMC Health accused its fired CEO, auditor Ernst & Young, and two banks of conspiring to commit fraud for six years in a $8 billion legal action initiated last week.

In a court document filed in New York, BR Shetty’s attorney claimed that the Indian-born tycoon was defrauded through a “debt-driven Ponzi scheme” involving false invoices, artificial inflation of medical group income, and the suction of health care groups The private interest of funds.

The claim claims that the audit firm Ernst & Young, along with one of India’s largest banks, Bank of Baroda, and the Dutch-based EuroCredit Bank, are at the heart of a “planned and deliberate conspiracy” in which more than US$5 billion The company was stolen from Shetty’s business empire.

NMC, a former FTSE 100 index hospital operator, was brought under management in April last year when it was discovered that more than 4 billion US dollars of debt was hidden in its balance sheet, suspected of fraud Threatening the reputation of the London stock market For good governance.

Lawyers allege that Shetty’s executives forged his signature on personal guarantees to obtain fraudulent loans, and then set him as a “degenerate” when their plans were discovered.

The lawsuit alleges that the Bank of Baroda handled thousands of related party transactions without submitting a suspicious activity report to the U.S. regulator, breaching its fiduciary obligations and failing to comply with anti-money laundering rules.

“If Baroda complies with the existing AML [anti-money laundering] Legal and investigating suspicious transactions, large-scale accounting fraud and theft will be discovered in its early stages, and the plaintiff will never suffer economic losses,” they said.

The defendants named in the court proceedings included the brothers Prasanth and Promoth Manghat, the former chief executives of NMC and Finablr, a London-listed financial technology company founded by Shetty. Finablr’s stock was suspended from trading in March 2020, and the company later reported more than $1 billion undisclosed debtBoth brothers have previously denied wrongdoing.

Shetty and Neopharma, another company in which he owns 49%, accused the defendant of conspiring to artificially exaggerate the income of NMC and related companies through the “circular flow of funds” between NMC and related parties, and “intent to conceal the source and source of funds.”

Shetty’s lawyers wrote that thousands of “fraudulent related party round-trip transactions” between NMC and its group companies were designed to deceive Shetty and Neopharma, pretending that the business is booming. They claim that this enables Manghats and others to obtain millions of dollars in off-balance sheet loans for NMC and other group companies.

They called the process a “Ponzi scheme”, claiming that they had obtained larger loans to repay their previous borrowings, and that the defendants “sucked the proceeds from these undisclosed and fraudulently obtained loans, and put the stolen funds in Pay between them”.

The lawyer said that Bank of Baroda and EuroCredit are at the core of the fraud. They said that the Manghat brothers persuaded Baroda’s senior management to join the conspiracy by “providing and paying them rebates from the funds that were taken away.”

The Manghat brothers were also accused of participating in forged invoices for sales allegedly provided by the group company to NMC in order to exaggerate their sales figures.

The lawyer stated that the European Credit Bank was aware of these “forged” invoices, but continued to lend because it charged a 5% loan fee.

The claim also lists payments allegedly made to some defendants and their alleged accomplices. According to the claim, Promoth Manghat paid 7.4 million UAE Dirhams (US$2 million) from an account belonging to Shetty.

According to the legal claim, the biggest beneficiary of the account was Abdul Rahman Basaddiq, who received a total of 11.1 million dirhams from the Manghat brothers. Bassadiq, a former partner of EY, has served on the boards of NMC and Finablr. He declined to comment.

Shetty’s allegations against Ernst & Young are not limited to Previous professional negligence claims, Produced by the administrator of NMC Health. His lawyer accused the auditing company of helping conceal fraud, and actively assisted the alleged perpetrators by suggesting how to use “illegal means” to inflate revenue figures and prevent loans from appearing in financial statements.

Ernst & Young said: “We believe that this case is baseless and we intend to vigorously defend it.”

The New York legal claim is the latest standoff between the bank and Shetty, the latter Make similar allegations After an internal investigation he commissioned last year.Both Bank of Baroda with CEB obtains freezing order A lawsuit was filed against him for outstanding debts last year, and he also became Criminal proceedings.

Bank of Baroda and CEB did not respond to requests for comment. Lawyers for Prasanth Manghat declined to comment, and Promoth Manghat could not be reached for comment.

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