Auditor EY hit by £2bn negligence claim over NMC Health collapse
A $2.5bn lawsuit was filed against EY UK this week by the administrators to the Gulf-based hospitals group which collapsed in 2020 amid an apparent fraud, Sky News learns.
Friday 29 April 2022 15:29, UK
The UK arm of EY, the big four accountancy firm, is facing a $2.5bn (£2bn) legal claim from administrators to NMC Health, a former FTSE-100 healthcare group.
Sky News has learnt that a lawsuit against EY was filed in London this week alleging negligence during its work on NMC’s accounts spanning a seven-year period.
City sources said on Friday that the claim would seek at least $2.5bn in damages, with that figure potentially rising to close to $3bn.
At either end of that spectrum, a successful claim would rank among the largest damages payouts involving the auditor of a major listed company, and underlines the extent of allegations that NMC Health was engaged in a long-running financial deception.
By comparison, a claim from the Official Receiver against KPMG in relation to its auditing of Carillion, the construction company which collapsed in 2018, is seeking well over £1bn in damages.
NMC Health, a hospital operator, collapsed in 2020 following the emergence of an apparent wide-ranging fraud which had kept billions of dollars of debt concealed from its balance sheet.
The claim from NMC’s administrators at Alvarez & Marsal is said to allege that EY was negligent in its professional duties during the financial years 2012-2018 inclusive.
By the end of that period, NMC Health was a member of London’s blue-chip share index with a market capitalisation of several billion pounds.
The Financial Reporting Council is engaged in an investigation into MC’s 2018 financial statements.
It is unclear when the watchdog’s probe will be concluded.
A spokesman for EY UK said: “We are aware a claim has been submitted to the court by the administrators of NMC Health Plc.
“We will defend the claim vigorously.”
Last month, NMC exited administration under a new corporate structure, enabling its largely UAE-based operations to continue to trade.
A spokesman for the administrators declined to comment.