Finablr co-chair quits as HMRC suspends money service businesses

BR Shetty, the co-chair of payments group Finablr, stands down with immediate effect following HMRC’s move amid growing accounting scandals at payments group and healthcare company NMC

Finablr, the FTSE 250 payments group whose shares were suspended in March following the discovery of a £1bn black hole in its accounts, has announced the immediate departure of founder and co-chair Shetty. At the same time, the company, which lost control in April of subsidiary Travelex, the foreign currency exchange business, revealed that HMRC had suspended the business registrations of two other companies within the group, UAE Exchange UK Ltd and Xpress Money Services Ltd.

Shetty’s departure marks another blow to Finablr, which warned earlier this year that it faced insolvency – Shetty had floated the company on the London Stock exchange only last year. EY resigned as the company’s auditor on 30 March 2020 over corporate governance concerns, though there has been no news regarding a replacement.

In a statement, the company said: ‘Suspension of business registration would result in cessation of business by the relevant entities unless and until the suspension is lifted. The company intends to work with HMRC to attempt to restore the registrations.’

In March, the company said it could not accurately assess its financial position after discovering $100m (£81m) of undisclosed cheques, which it believed may have been used as security for financing arrangements for the benefit of third parties.

At the beginning of this year Travelex admitted it was being held to ransom by hackers after a cyber-attack meant the business had to turn off all computer systems and carry out processes manually. There were several weeks of disruption after hackers claimed to have copied more than 5GB of users’ personal data and demanded as much as $6m from Travelex.

Shetty’s departure is another personal blow for the Indian entrepreneur, who in February stepped down from the board of NMC, the former FTSE 100 healthcare company that went into receivership in April this year following the discovery of a £258m accounting blackhole. A subsequent investigation by PwC revealed undisclosed debts of more than £2bn.

In a statement in April, Shetty said: ‘The preliminary findings provided by my advisers from my own investigations indicate that serious fraud and wrongdoing appears to have taken place at NMC, Finablr plc, as well as within some of my private companies, and against me personally. This fraud also appears to have been undertaken by a small group of current and former executives at these companies.’

In May, the Financial Reporting Council (FRC) announced it is to investigate EY’s auditing of NMC. The Big Four firm was appointed as auditor to the company at the time of its IPO in April 2012. According to NMC’s annual report for 2018, the Big Four firm was paid $4m in audit fees for the year, plus non-audit fees of $984,000.

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