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19 January 2020

UAE’s NMC Health hires former FBI chief to probe short-seller allegations

NMC Health, which previously dismissed the allegations, appointed a committee of independent board members to look into the matter last month.

The appointment is part of NMC’s effort to restore investor confidence/Shutterstock

by Bloomberg

NMC Health has hired former FBI Director Louis Freeh to investigate allegations by short-seller Muddy Waters Capital of financial wrongdoing by the hospital operator.

The appointment is part of NMC’s effort to restore investor confidence. The hospital operator’s shares have plunged 44 per cent since Muddy Waters’ December 2019 report, in which the accounting firm said that NMC’s financial statements hint at potential overpayment for assets, inflated cash balances and understated debt.

In a statement, the hospital operator said that the panel is focusing its review initially on confirmation of the company’s cash balances as of 15 December 2019.

Jonathan Bomford, the Chairman of the Committee, said, “The committee chose Freeh Group to provide a completely independent, unbiased, comprehensive and transparent report that will address all of these allegations.”

Muddy Waters, led by Carson Block, also alleged that NMC’s independent directors are not truly independent and that the company appears to be doing business with entities controlled by its leading shareholders without properly disclosing it.

The short-selling firm made headlines last year with reports criticising both NMC and Burford Capital, a litigation-finance company. Muddy Waters has also issued critical reports on companies including French retailer Casino-Guichard Perrachon.

Freeh, a former FBI agent and federal judge, ran the US law-enforcement agency from 1993 to 2001. Additionally, Freeh’s risk-management firm, Freeh Group International Solutions, includes former senior law enforcement officials, accountants and security and compliance experts.

Saul Rans, Morgan Stanley Analyst, said, “We had expected NMC to appoint an accounting firm, but it may have opted for a third party with a wider range of expertise given the governance-related allegations made against it.”


RELATED STORIES: Louis Freeh Carson Block Burford Capital Muddy Waters NMC Health





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