NMC on the critical list. Will the patient recover?

The patient may not be dead, but he’s certainly in a critical condition. Can the UAE’s largest for-profit provider survive further scandal and return to fitness – and how have things gone wrong so quickly for the FTSE-100 Middle East flagship? Are there salutary lessons to be learned from the company’s fall from grace? Who is to blame?

Up until the summer of 2018, NMC looked unsinkable. A soaring share price and growing international footfall complimented its number one position in its domestic market, yet in a little over 12 months, that seemingly steadfast position has begun to resemble a house of cards.

The revelations have come thick and fast with even nimble reporters struggling to keep up with the (belatedly) honest and frequent disclosures from NMC about the way in which it has been conducted business. No sooner have we written the latest confession and are set to put it live, then the next hits our inbox.

In a short space of time NMC has (and it takes a deep breath to get to the end of this sentence) sacked its CEO, seen its CFO go on sick leave, suspended a member of its treasury team, uncovered $335m of alleged secret clandestine off-balance sheet financing as of December (so there may be more to come), seen a series of directors leave under a cloud, appointed a former Director of the FBI to conduct an independent review, suspended shares from trading, deferred publication of its financial results and, today, the UK financial regulator has announced its own investigation.

Or to put it another way, what a shambles.

NMC has, for now, fallen from grace. A fall out of the FTSE 100 is imminent. Further disclosure will cause further harm. And yet – management issues and cash discrepancies aside (and they are impossible to put aside for now) there remains the machinery for a successful business

And a shambles which reflects badly not just on senior management of NMC but potentially, on some of those who advised them – and even on how effective governance standards are on the London exchange. Could this have been seen sooner? And could it happen elsewhere?

Clearly, NMC’s founder was held in reverence – seemingly to the extent that some of his business dealings were not scrutinised to the degree that might be expected elsewhere (and, potentially, required). As a private company that is one thing. A listed company has greater requirements for scrutiny, however. Could something like this happen elsewhere? Certainly. Do we have names in mind. Perhaps.

Would we name them? Not without a better lawyer.

We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.