The Financial Conduct Authority (FCA), UK’s finance watchdog, announced on Thursday that it is going to investigate NMC Healthcare.
The UAE-based company has been in crisis since December when questions were raised on its financial statements. But things got particularly bad for the company this week. On Wednesday, NMC fired its CEO and sent its CFO on ‘sick leave’, while it conducted its own investigation in the matter. However, the company was removed from the London Stock Exchange on Thursday, hours before FCA announced its intention to investigate NMC.
NMC officials have expressed their willingness to cooperate with the FCA in the investigation.
Persistent Troubles
The troubles for NMC began in December last year when short-seller Muddy Waters questioned the company over its financial statements. This prompted NMC to launch its own internal investigation into the matter, led by former FBI officer Louis Freeh. However, this was not the only foes the company had to face. Major doubts have been cast of the size of shareholdings possessed by its major investors, which includes names like B R Shetty (NMC’s founder and co-chairperson) and Khaleefa Butti Al Muhairi (NMC’s vice-chairman). These prompted another separate legal review into the matter. However, Muhairi has publicly denied any wrongdoing on his part.
The fate of NMC shares
Since the claims of Muddy Waters came into the public light, NMC’s shares lost more than 60% of their value. But more bad news is to follow. NMC Healthcare is reportedly raising credit card receivables for financing its operations. It effectively means that NMC is putting up the money paid in credit cards for good sold but not yet delivered. This clearly suggests that the company is in a quite desperate spot. Hence, any investor should be dissuaded from investing in NMC’s shares for the time being.
