Finablr, the embattled foreign-exchange business, which uncovered about £1 billion of debt hidden from its board that may have been used for purposes outside of the company and compounding a scandal that pushed its sister firm NMC Health Plc into administration has announced that founder BR Shetty will resign as director and co-chairman with immediate effect.
The company, which grew out of a United Arab Emirates remittance house and is part of the Indian entrepreneur’s business empire, last month appointed law firm Skadden to help investigate potential wrongdoing and theft in relation to about £1 billion of undisclosed debt discovered on its balance sheet earlier this year.
The Wirecard scandal has been closely followed by pretty much all the major financial papers, but he Finablr story seems of less interest. For context the accounting black hole at NMC and Finablr is more than twice the size of Wirecard ($4 billion +£1 billion versus €1.9 billion) and the story deserves more attention. It seems inconceivable that the money disappeared in a puff of smoke without a
well orchestrated fraud perpetuated by senior figures in the company, indeed Mr Shetty has made this very allegation.
Finablr’s shares were suspended in March after a liquidity crunch forced it to suspend some payment services and the board disclosed the discovery of $100 million in cheques written by group companies, that were claimed to have been used as security for financing arrangements for the benefit of third parties.
In April the group lost control of Travelex, the world’s largest retail currency trader, to creditors and warned this year that it could face insolvency. Mr Shetty, who floated Finablr in London last year at a valuation of about £1.2 billion, has a stake of about 65% in the financial services group.
He also founded NMC, the UAE’s largest healthcare provider, which collapsed into administration in April after disclosing billions of dollars in unreported debt. Mr Shetty, who has been carrying out his own investigation into events surrounding the implosion of his businesses, in April accused various current and former executives of his companies for the “serious fraud and wrongdoing”.
Another company controlled by Mr Shetty, UAE-based Neopharma, is probing the alleged use by NMC of false invoices worth hundreds of millions of dollars to raise debt for purported medicine purchases from the pharmaceuticals company and one of its partners, the Financial Times reported earlier this month.
Finablr grew out of Shetty’s flagship money exchange and remittance business, UAE Exchange, which he founded in Abu Dhabi in 1980. The UAE central bank in March placed the remittance house under its supervision as Finablr faced severe cash flow issues linked to creditor concerns over the unfolding financial scandal across the empire.
On Monday, Finablr also disclosed that HM Revenue & Customs had notified it of the proposed suspension of UAE Exchange UK’s business registration and the suspension of Xpress Money Services, a global money transfer subsidiary of Finablr.
The suspension of any entity’s registration means that it has to cease operations.
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