The joint administrators of UAE healthcare group NMC Health have said they intend to begin legal action in a bid to recover part of the $4 billion that disappeared from the company.
Cases are expected to be filed once the group's restructuring through a Deeds of Company Arrangement, or Doca, is complete, Richard Fleming, joint administrator from Alvarez & Marsal, said.
A Doca refers to binding arrangement between a company and its creditors that details how the former's assets and operations are to be dealt with.
“Investigations on the cause and facilitation of the fraud, which was catalyst to the crisis that befell NMC in February 2020, is ongoing and progressing at pace," said Mr Fleming.
"Following the formal launch of the Doca, the joint administrators intend to start commencing legal actions.”
NMC Health was placed into administration in April last year. Problems at the UAE's biggest healthcare group first emerged in December 2019 after activist investor Muddy Waters issued a report claiming the company had under-reported its debts and inflated the value of its assets.
That triggered an investigation that uncovered more than $4.4bn of previously unreported debt. In total, $6.4bn worth of claims were filed with administrators from hundreds of creditors.
The proposed restructuring involves bringing the company's debt back down to a more manageable level of $2.25bn, with creditors receiving equity stakes in return for part of the $4bn-plus written off.
The deal had received "firm commitments" from most creditors, with companies representing 99 per cent of the allocated value in the restructured group acceding to proposals, administrators said last month.
However, it is understood that Dubai Islamic Bank, which is owed about $425m by NMC Health and is involved in ongoing legal disputes with NMC entities in onshore Dubai and Sharjah courts, has not agreed to the restructuring. DIB did not immediately respond to a request to comment.
In a progress report filed in May, NMC Health's administrators said they were continuing "to progress the investigation and formulation of claims" in a bid to pursue some of the missing money.
They issued letters before legal action to the group's former auditors, EY, and were in the process of issuing letters against "certain former directors of the company", they said, without naming them.
EY told The National at the time that it had "received correspondence from the administrators to NMC Health indicating an intention to pursue a claim", but declined to comment further.
The progress report said administrators had also received information requests from "various regulators and law enforcement agencies" including the UK's Serious Fraud Office and the Financial Conduct Authority, as well as the US Securities and Exchange Commission and the Department of Justice.
NMC Health's biggest lender, Abu Dhabi Commercial Bank, has already taken action in both UK and UAE courts to freeze the assets of former directors and of the group's founder and former chairman, BR Shetty.
Mr Shetty has denied any wrongdoing at the company, saying that bank accounts, cheques and bank guarantees were created in his name but without his knowledge, using forged signatures.
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
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