Monday 4 May 2020 11:47 am

EY investigated over audit of scandal-hit NMC Health

Regulator the Financial Reporting Council (FRC) said today it had opened an investigation into Big Four firm EY’s audit of scandal-ridden NMC Health.

The audit watchdog said it was probing EY’s audit of NMC for the year ended 2018. It said the investigation, which launched on 15 April, is being carried out by its enforcement division.

Read more: NMC Health founder claims he is a victim of ‘serious fraud’

NMC was thrown into turmoil in December after US shortseller Muddy Waters issued a report it said cast “serious doubts” on the London-listed businesses’ finances.

NMC’s share price was blasted by the report and it initially pushed back against the claims.

However, an independent investigation commissioned by its board found evidence of fraud and debt that was $1.6bn (£1.3bn) higher than previously disclosed.

The former FTSE 100 firm asked last month for its shares to be delisted from the stock market.

Founder BR Shetty and its former chief executive have both now stepped down.

Read more: Ex-EY partner wins $11m gold smuggling cover-up case against firm

Shetty said last week that he was the victim of “serious fraud” carried out by a handful of senior executives at the company.

EY said in a statement: “We can confirm that EY has been notified of the FRC’s intention to conduct an investigation into the audit of NMC Health plc for the year ended 31 December 2018. We will be fully cooperating with the FRC during their enquiries. It would be inappropriate to comment further at this time.”

EY has been in the spotlight after a judge last month backed one of its former partners in an $11m claim against the firm.

Ex-EY partner Amjad Rihan sued the firm after he said he was forced to flee Dubai after alleging the firm helped cover up the smuggling of gold for suspected money laundering.

The judge, Justice Kerr, heavily criticised EY’s conduct and accused the firm and its staff of “failing to act with integrity”.

EY said it would appeal against the decision.

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