(Alliance News) - NMC Health PLC on Wednesday removed Prasanth Manghat as chief executive officer and director after an independent review revealed potential discrepancies in the company's finances.
In January, NMC asked Freeh Group International Solutions LLC, founded by former US federal judge and FBI director Louis Freeh, and law firm Glaser Weil LLP to provide a independent report addressing allegations raised by short-selling firm Muddy Waters Capital LLC.
Muddy Waters in 2019 raised doubts over NMC's financial statements, including reported profit and levels of debt, and a USD107.4 million investment by NMC in the redevelopment of NMC Royal Women's Hospital, previously known as Brightpoint Royal Women's Hospital.
The Abu Dhabi-based company on Wednesday said that independent review found discrepancies and inconsistencies in ledger entries and bank statements and that it has suspended a member of the treasury team until the review has been completed.
NMC also granted Chief Financial Officer Prashanth Shenoy an extended sick leave.
The UAE-focused hospital operator said review also identified supply chain financing arrangements that were entered into by the company and which are understood to have been used by entities controlled by former joint chair Bavaguthu Shetty and former vice-chair Khaleefa Butti Omair Yousif Ahmed Al Muhairi. Under the arrangements, suppliers to companies owned by Shetty and Muhairi were paid by certain credit facility providers.
"The facilities have been in place since early-2018. The draw-down on the facilities as at December 31, 2019, was approximately USD335 million and the current draw-down on the facilities is the subject of ongoing verification. Having been made aware of these arrangements, the board has determined that the facilities will no longer be made available for further supplier financing with the aim that the relevant balances should be unwound in line with existing terms," NMC said.
The FTSE 100-listed company has appointed Chief Operating Officer Michael Davis as interim chief executive for the foreseeable future.
NMC lastly said that due to delays and additional work required as part of the review, it does not expect to publish its 2019 results before the end of April.
The stock closed 6.6% higher at 938.40 pence each on Wednesday in London as investor Richard Chandler's Clermont Trust raised its stake in the embattled company.
Singapore-based Clermont Trust, which invests in healthcare, finance and technology assets, now holds 6.6 million shares, or a 3.18% stake in NMC, having previously held 2.2 million shares last week.
By Ife Taiwo; ifetaiwo@alliancenews.com
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