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Thu 27 Feb 2020 07:36 AM

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NMC Health dismisses CEO amid financial discrepancies

CEO Prasanth Manghat will be succeeded on an interim basis by Michael Davis, currently chief operating officer, with immediate effect

NMC Health dismisses CEO amid financial discrepancies

Operator of the largest medical network in the United Arab Emirates, NMC had commissioned a review of potential financial discrepancies. 

NMC Health Plc, the Middle Eastern hospital operator targeted by short seller Muddy Waters Capital, dismissed its chief executive officer and said advisers identified potential discrepancies in its bank statements.

CEO Prasanth Manghat will be succeeded on an interim basis by Michael Davis, currently chief operating officer, with immediate effect, the company said in a statement late Wednesday. Chief financial officer Prashanth Shenoy has been granted extended sick leave.

Operator of the largest medical network in the United Arab Emirates, NMC had commissioned a review of potential financial discrepancies. It said Wednesday that it has suspended a member of the treasury team because of “a belief that the independent review has been obstructed,” and is looking at whether others are involved.

NMC said it’s still verifying the drawdown of some supply-chain financing arrangements that amounted to about $335 million at the end of 2019. These arrangements were not disclosed to, or approved by, the board, it said.

Founder Bavaguthu Raghuram Shetty this month resigned from the board amid investor concern he faced a margin call and misrepresented his stake.

The latest moves come after a scathing report from Muddy Waters in December that has slashed the stock’s value by about two-thirds. The investment firm alleged the company manipulated its balance sheet and inflated the prices of assets it purchased.

NMC has said the allegations are false. The company hired former FBI Director Louis Freeh to conduct the independent review.

“At this point, the company’s announcements speak for themselves and seem to be even more damning than our initial report was,” Muddy Waters founder Carson Block said in an email.

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