Published by Global Banking & Finance Review®
Posted on May 19, 2025
3 min readLast updated: January 23, 2026
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EY faces a $3 billion trial in London for allegedly missing a major fraud at NMC Health, a former FTSE 100 company.
By Sam Tobin
LONDON (Reuters) -EY failed to spot a major fraud by main shareholders of UAE hospital operator NMC Health in what lawyers for the firm's administrators described as disgraceful auditing, at the start of a roughly $3 billion London trial on Monday.
The administrators of NMC – a FTSE 100 company when it collapsed in 2020 after disclosing more than $4 billion in hidden debt – are suing over audits from 2012 to 2018, when EY gave an unqualified opinion that NMC's accounts were accurate.
The company's administrators Alvarez & Marsal say EY, one of the world's "Big Four" auditors and formerly known as Ernst & Young, was negligent in failing to get proper access to NMC's books, missing billions in unreported borrowing.
EY, however, denies the negligence allegation and argues that it was NMC's own senior personnel who perpetrated the fraud and manipulated its accounts, hiding the fraud from EY.
The 12-week trial at the High Court which began on Monday is the latest lawsuit brought against a major auditor and comes after recent criticism of EY specifically over work for travel firm Thomas Cook and German payments company Wirecard.
NMC Health PLC listed in London in 2012 and joined the FTSE 100 in 2017, before short-seller Muddy Waters questioned its financials in December 2019 sending NMC's shares tumbling by almost a third in a day.
NMC's administrators were seeking up to 2.7 billion pounds from EY in damages for losses, largely relating to undisclosed guarantees, but court filings for the trial put the figure at around 2 billion pounds plus interest.
Their lawyer Simon Salzedo said EY's audits over seven years were among the "most fundamentally flawed examples of big-firm auditing that have disgraced a courtroom in this jurisdiction".
Salzedo accepted that auditors giving a wrong opinion did not amount to negligence, but said: "Two wrong opinions looks very much like carelessness and to give seven in a row is rather harder to explain away."
But EY's lawyers argued in court filings the auditing firm was "itself a principal target and victim of the fraud" committed by NMC staff for the benefit of its principal shareholders.
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 lawyers said.
NMC has separately brought litigation against its founder BR Shetty, who denies any wrongdoing, and others in London, the UAE and the United States.
(Reporting by Sam TobinEditing by Tomasz Janowski)
The main allegation against EY is that they negligently failed to detect a major fraud perpetrated by the main shareholders of NMC Health, which resulted in significant financial losses.
NMC's administrators are seeking up to 2.7 billion pounds from EY in damages, primarily related to undisclosed guarantees.
EY's defense argues that the fraud was committed by NMC's own senior personnel, who manipulated the company's accounts and concealed the fraud from EY.
This trial is significant for EY as it follows recent criticisms of the firm regarding its auditing practices, particularly in high-profile cases like that of travel firm Thomas Cook.
The audits in question were conducted from 2012 to 2018, during which EY provided unqualified opinions despite the alleged fraud occurring within that period.
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