The UK High Court has opened a landmark £2 billion trial into claims that accountancy giant EY failed to detect a colossal fraud at collapsed UAE-based hospital group NMC Health.
The legal battle, expected to last 12 weeks, centres around EY’s audits of NMC between 2012 and 2018. During that period, the now-disgraced FTSE 100 firm received clean audit opinions—even as it accrued more than $4 billion in undisclosed debt.
NMC’s administrators, Alvarez & Marsal, are suing EY—formerly Ernst & Young—alleging the auditor was negligent. They say EY repeatedly failed to gain appropriate access to NMC’s financial records, overlooking billions in hidden loans and liabilities.
In court, barrister Simon Salzedo, representing the administrators, launched a blistering attack on EY’s conduct.
“Two wrong opinions look very much like carelessness, and to give seven in a row is rather harder to explain away,” he told the court, adding the audits were among the “most fundamentally flawed examples of big-firm auditing that have disgraced a courtroom in this jurisdiction.”
EY has firmly rejected the allegations. In its defence, the firm says it was deceived by NMC’s own executives and senior shareholders. The auditors claim they were “a principal target and victim of the fraud,” insisting the wrongdoing was orchestrated and concealed by the company’s top brass.
“NMC’s case was based on expecting an auditor to do the impossible by uncovering a pervasive and collusive fraud being practised and covered up in effect by the directors and management,” EY’s legal team stated in written submissions.
The NMC case is the latest in a series of controversies dogging major audit firms. EY has already come under fire for its role in the collapses of Thomas Cook and Wirecard—two high-profile corporate failures linked to flawed audits.
Founded by Indian entrepreneur BR Shetty, NMC Health was once a rising star on the London Stock Exchange.
It was listed in 2012 and surged into the FTSE 100 by 2017. But its fortunes nosedived in late 2019, after US short-seller Muddy Waters questioned the firm’s financial integrity. Shares plunged by nearly a third in a single day.
By early 2020, the company had crumbled under the weight of previously undisclosed debts. Administrators are now seeking roughly £2 billion in damages from EY, plus interest. Earlier estimates had placed the claim closer to £2.7 billion.
This lawsuit is not the end of the legal road. NMC’s administrators have filed additional cases against BR Shetty and other individuals across multiple jurisdictions, including the UAE, the US, and the UK. Shetty has denied all allegations of wrongdoing.
The trial continues, with observers closely watching its outcome. If the court rules against EY, it could mark one of the most significant audit failures in recent UK history, raising further questions about the oversight of large financial firms and the role of auditors in corporate governance.
