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Bank of Baroda fell nearly 4% after businessman BR Shetty filed a $15 billion lawsuit against the bank and several others. The accusation pertains to carrying out suspicious transactions linked to the collapse of his business empire.
Who all are involved:
- BR Shetty: an Indian businessman who founded NMC Healthcare and UAE Exchange in the UAE.
- NMC Healthcare: once one of the UAE's largest private healthcare companies, which collapsed in 2020 after billions of dollars in hidden debt came to light.
- Prasanth and Promoth Manghat: former NMC executives whom Shetty accuses of being involved in the alleged financial wrongdoing.
- Bank of Baroda: the Indian public sector bank accused of allowing suspicious transactions through its accounts.
The allegations: Shetty has approached the Bombay High Court with several allegations against the bank and other defendants.
As per him, the bank allegedly received over 100 alerts about suspicious transactions but failed to investigate them properly. Shetty claimed the money was transferred using signatures and instructions he never approved.
BoB allegedly allowed people without permission to operate his personal account and move money between companies and accounts to make suspicious transactions appear legitimate.
The bank's Abu Dhabi branch allegedly guided NMC executives on how to structure transactions to avoid scrutiny. Moreover, NMC executives gave bank officials gifts, including Apple laptops, iPads and iPhones.
Important: these are allegations made by Shetty. They have not been proven in court.
How much is he demanding: Shetty is seeking $15 billion in damages, divided into three parts:
- $5 billion for direct financial losses.
- $5 billion for lost business opportunities and other losses.
- $5 billion for damage to his reputation, claimed from Bank of Baroda alone.
He has also demanded 18% annual interest on the amounts claimed.
A little background: NMC Healthcare's troubles began in 2019 when an investment research firm questioned its financial statements.
In 2020, the company revealed billions of dollars in previously undisclosed debt. Its total debt was later revised to around $6.6 billion, and the business entered administration.
The collapse triggered investigations and legal disputes involving several banks, executives and auditors.
BoB’s side: in its October 14 stock exchange filing, Bank of Baroda said it was aware of reports about the lawsuit but had not yet received the official court documents.
The bank said it could not comment on the allegations without reviewing the case.
However, it added that it would firmly defend itself and take necessary steps to protect its interests if formally served with the lawsuit.
