Embodying the ultimate immigrant dream in the oil-rich Persian Gulf, Dr B R Shetty started off as an outdoor medical representative at the onset of his career. Since he had no money then, he would return home from a hard day's field job, and wash the shirt he wore for work every day at night to don the same avatar the very next day and set out with a Samsonite bag full of medicines for door-to-door delivery.

Through years of continuous hard work, he tasted fabulous success and was able to own properties at the Palm Jumeirah and Dubai's world trade centre, two floors (100 and 140th floors) of the Burj Khalifa, a Gulfstream G450 personal aircraft, 7 Rolls-Royes, a Maybach and vintage Morris Minor.

NRI billionaire Bavaguthu Raghuram Shetty
NRI billionaire Bavaguthu Raghuram Shetty, founder of NMC HealthWikimedia Commons

However, success never made B R Shetty lose his humility and look back at his humble beginnings, he always made a point to give it back to the society, help businesses in need, the jobless looking for opportunities in UAE and contribute to the overall welfare of communities, by committing to donate at least half a part of his personal fortune to the Giving Pledge, a campaign by Warren Buffet and Bill Gates.

With destiny by his side and hard work to his credit, there was no reason why a successful sprawling empire of Shetty could crash down all of a sudden. The companies owned by Shetty include NMC Health listed in LSE, Finablr that includes brands such as UAE Exchange, Express Money and Travelex, NeoPharma - a contract manufacturer for Merck, Pfizer, Boots UK, etc., NMC Trading - a marketing and trading distribution company working with brands in multiple sectors such as 3M, Nestle, Samsung, Siemens, Pfizer, and Royal Catering - an official caterer for the Abu Dhabi Formula 1, FIFA club and World Cup.

In 2012, NMC Health launched an IPO in the London Stock Exchange (LSE), which was the first for an Abu Dhabi-based company raising £117 million. In 2014, Shetty acquired UK-based forex major Travelex for £1 billion. Soon, Shetty was owning a sprawl of small businesses into diverse sectors spanning healthcare, marketing, finance, pharmaceuticals and more.

Forbes estimated his personal fortune to be worth $4.2 billion in 2018. The staggering rise of Dr B R Shetty in the Persian Gulf is a source of inspiration for many. However, no one ever thought times would change for the NRI billionaire, and his companies would report losses, be accused of frauds and go hugely in debt.

Accounts of the phenomenal rise of NMC Health

Bavaguthu Raghuram Shetty belonged to the Tulu-speaking Bunt community of coastal Karnataka. He grew up in a modest, well-respected farming family in Kapu in Udupi district, alongside three brothers and three sisters.

NMC Health
NMC HealthMiddle East Monitor

In the 1970s, Shetty, a qualified pharmacist, became a distributor for a Pune-based pharmaceutical company in Udupi. However, considering his political interest nurtured since the early 20s, his business began to suffer so much that he had to take a personal loan to fund his sister's marriage. The loan sanctioned by KK Pai, managing director of Syndicate Bank, then played a crucial role in his fortunes later. With little money in hands and a huge debt to repay, Shetty decided that he had no choice but to look for greener pastures elsewhere and thus made his way to the newly formed United Arab Emirates (UAE).

Dr Bavaguthu Raghuram Shetty, a man from coastal Karnataka landed in Abu Dhabi in 1973 with just Rs 56 ($8) in his pocket, knowing no Arabic, rose to a position of acclaim in a matter of no time.

Amongst the first outdoor medical representatives in UAE, Shetty also started selling FMCG later for a commission. In 1975, he took up his sleeve the biggest gamble of opening up a private healthcare clinic, while the UAE government was offering healthcare for free then. He opened New Medical Centre (NMC), a clinic and a pharmacy in a two-room apartment with the first doctor on board being his wife, Chandrakumari Shetty. Never shying from hard work and doing all it takes to keep functioning, Shetty also drove ambulances to carry patients as the need arose and in time, NMC grew to become a healthcare giant in UAE employing over 2,000 doctors across 45 hospitals.

Dr. B. R. Shetty launches
(L-R): Binay Shetty (Executive Director, Finablr), Dr. B.R. Shetty (Founder and Chairman, Finablr) and Promoth Manghat (Executive Director, Finablr) (Photo: AETOSWire)Businesswire.com

Five years later, the ambitious Shetty saw an opportunity when he noticed long queues of migrant workers lining up to send money back home. In 1980, he went ahead to launch a money remittance firm UAE Exchange that charged lesser than banks to remit funds at that time and became an undisputed market leader expanding to 850 direct branches in 31 countries. Keeping up with the latest technological advancements and growing customer demands, Shetty believed personalised service set his firms apart from the competition. UAE Exchange was first to offer SWIFT transactions, thus enabling speedy money transfer across borders. Many new financial entities were later acquired and operated under the Finablr umbrella.

In 2003, Shetty set up a pioneering pharmaceutical manufacturing venture with a state-of-the-art plant in Abu Dhabi called NeoPharma. The company entered into a JV with Bengaluru-headquartered Biocon in 2007 called Neobiocon. His business interests kept expanding over the years in the oil-Gulf region. He was awarded the Order of Abu Dhabi by the UAE government in 2005, which you can always see him wearing, pinned to his lapel. A Padma Shri was awarded to him in 2009.

Alongside, Shetty kept expanding his business interests in India with acquisitions that include the 180-year-old Assam Company, Mumbai's Seven Hills Hospital that was facing insolvency proceedings, and few hospitals in Kerala and Odisha.

Behind the success of 2012 IPOs were two brothers from Palakkad, Kerala, Prasanth Manghat then CFO of NMC Health, while younger brother Promoth Manghat was CEO of UAE Exchange and executive director of Finablr. Through years, the brothers became a part of Shetty's inner circle, the most trusted lieutenants. When Shetty stepped down as CEO of NMC Health in 2017, Prasanth, then the deputy CEO, was elevated to the new role. Over 70% of NMC group business workforce was from Kerala and they were Malayalis, he had mentioned in one of his interviews.

Shetty owned a sprawling empire spanning healthcare, pharmaceuticals, finance, marketing, distribution, and more. He became the billionaire and founder of NMC Health, then the biggest private healthcare entity in the United Arab Emirates (UAE).

An eye of doubt cast by Muddy Waters: The Nightmare begins

On August 6, 2019, Muddy Waters, a controversial research firm known for exposing accounting frauds in Chinese public companies posted on Twitter that it will soon release a report on a UK-based investment firm the following day. Carson Block known for taking short positions on a stock hinted at an accounting fiasco that's potentially insolvent and possibly facing a liquidity crunch. Post this announcement, an interesting development was noticed by Muddy Waters, the stock of NMC Health dropped, which is a clear indicator that the market knows something is not right within the company and that's when Block decided to explore details further.

Carson Block of Muddy Waters Research
Carson Block of Muddy Waters ResearchBusiness Insider

Four months later on December 17, 2019, Muddy Waters released a report that ignited a chain of reactions stunning the entire UAE. The first company started by BR Shetty, NMC Health was accused of falsifying accounts and thus facing charges of fraud. A private investigation into the matter revealed that the company has understated its debt by $4.5 billion in 2019.

It was discovered that $100 million worth of cheques were issued without the board's knowledge by UAE Exchange owned by Shetty's LSE-listed financial enterprise Finablr. Plus the top executives at both of these firms have either resigned or were sacked. Further, the London Stock Exchange (LSE) suspended trading in stocks of both of these companies, and NMC Health was put into administration. Shetty later stepped down as director and joint non-executive chairman of NMC Health in February 2020. He is now facing criminal charges in Abu Dhabi allegedly for fraud and forgery.

In-depth investigation and findings revealed that NMC Health owes Abu Dhabi Commercial Bank $963 million, Dubai Islamic Bank $541 million, Abu Dhabi Islamic Bank $325 million, Standard Chartered Bank $250million and Barclays $146million, according to court filings reported in the media. Post-release of the report on November 26, the stocks of the companies owned by BR Shetty had fallen by more than 60% from the levels recorded earlier. Also, the American Depositary Receipt, a stock-equivalent instrument traded on Nasdaq had lost 98.99% of its value from November 26.

Now at the age of 77, Dr B R Shetty is in huge debt, almost besmirching his legacy irreparably, a problem so severe, threatening to obliterate everything earned through hard work, commitment, and built from scratch over the past four decades.

The turn of events that led to the fall of the Shetty empire

Post-release of the report by Muddy Waters on November 26, a lot of new accusations were made and accountancy fraud was brought to light without quantifying them. On February 10, NMC Health stated that Shetty will be removed from board discussions for misreporting his stake. Later, Dr B R Shetty quit as a Chairman, while NMC fired his close associate Prasanth Manghat, the trading of shares were suspended and UK's financial authority conducted a probe. Besides $2.1billion debt discovered earlier, the advisors reveal an additional $2.7 billion debt.

The debt burden
The debt burdenRepresentative Image - Pixabay

On March 24, the company revised debt estimate was around $6.6 bn owed to over 80 financial institutions. With the stocks continuing to tank in January 2020, despite denials from NMC, the company appointed Freeh Group to investigate the charges. The probe found that the company had entered into a $335 million financing arrangement with entities controlled by Shetty and another main shareholder, Khaleefa Bin Butti without knowledge of the board and the stock market.

As of March 31, 2020, Rosen Law, a global investor rights law firm, reminded purchasers of the securities of NMC Health Plc between March 13, 2016, and March 10, 2020, inclusive, of the important May 11, 2020 lead plaintiff deadline in the securities class action commenced by the firm. The lawsuit seeks to recover damages for NMC investors under the federal securities laws.

Prasanth Manghat was fired after the secret loan discovery, and there was confusion about how much stake each shareholder-owned, considering few principal shareholders had "misstated" their stake, as revealed during findings. Creditors were against the Manghats and Shetty, however a plea from creditor ADCB, the UK court placed NMC in administration on April 9.

On April 15, the ADCB initiated criminal proceedings against individuals linked to NMC Health, Khaleej Times, Shetty, Manghat brothers and the bin Buttis.

The unbelievable fall of NMC Group companies
The unbelievable fall of NMC Group companiesPixabay

Returning back to his roots in Karnataka in February 2020

Stating "personal reasons" behind the need for his homecoming and highlighting the recent demise of his ailing elder brother, Shetty hopes to find some solace in his home terrain, delving into the roots in hopes to take new leaps once again. He told ET Magazine that he will share "very good news" soon, though not at the moment, and declined to comment further. Previously Shetty indicated launching his own legal and forensic investigations.

Determined to bring full facts and the whole truth around the fraud accusation that has transpired, Shetty said the results will be shared with the appropriate authorities soon. The accusations on Shetty have left many aghast, especially the people hailing from Karnataka who look up to him as the leader of Indian expatriate gods in the Gulf.

Shetty had earlier stated that he would return back to Abu Dhabi once the flight restrictions are lifted, but what worries the Bunt community in Coastal Karnataka is that once Shetty leaves Kapu to make the journey again, he will have massive obligations to fulfil with the law enforcement authorities and other stakeholders of NMC group companies in the emirates. With the law becoming stricter and watching his movements closely, we are not quite sure what the future has in store for BR Shetty. Will he rise again?