The administrators of collapsed healthcare group NMC Health’s bankruptcy proceedings have filed a $2.7bn (£2.1bn) lawsuit against Big Four accountancy firm EY, over claims the auditor failed to spot a multi-billion-dollar fraud at the former-FTSE 100 firm.
The High Court lawsuit claims EY failed to spot NMC Health’s accounts had been fraudulently misstated, that the Abu Dhabi firm had not been keeping proper accounting records, and that it did not have proper controls in place to prevent fraud.
The claim comes after NMC Healthcare was plunged into bankruptcy in 2020, following the discovery that billions of dollars in debt had been hidden from the firm’s balance sheet.
Bankruptcy administrator Alvarez & Marshall is now suing EY for audit negligence in relation to work carried out by the accountant from 2012 to 2018.
The lawsuit is seeking to maximise returns to creditors, after San Francisco short seller Muddy Waters Research cast doubt over the credibility of NMC Health’s financial statements and the healthcare firm’s relationship with auditor EY.
EY confirmed it had received a claim form from the administrators of NMC Health, as the Big Four auditor said it will now “defend the claim vigorously.”