Finablr founder steps down as HMRC suspends payments unit

The founder of Travelex-owner Finablr stepped down as chairman and director on Monday after a fraud scandal that engulfed the payments firm.

Finablr said in a filing with the London Stock Exchange that Indian billionaire BR Shetty who also set up the Gulf hospital and medical centre operator NMC Health.

“The company announces that Dr BR Shetty has resigned as a director and co-chairman with immediate effect,” it said.

In a separate announcement the company said the UK tax office (HMRC), had suspended the business registration for Finablr subsidiary Xpress Money Services, and has proposed to suspend that of UAE Exchange UK Limited.

Xpress has a network that allows customers to send or receive money at 200,000 locations in more than 170 countries.

In June, the Financial Conduct Authority banned Xpress from carrying out any of the activities it regulates, such as payment services, without special dispensation from the regulator.

"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," Finablr said.

In March, authorities in the United Arab Emirates took control over UAE Exchange.

The problems for Shetty started when US shortseller Muddy Waters mounted an attack on NMC Health over its corporate governance. These were compounded by a malware attack on Travelex's computer system and the collapse in air travel caused by the coronavirus pandemic.

Travelex ran into difficulties when its systems were hit by computer hackers over the New Year weekend. These were compounded by the discovery of £1.3bn in debts and reports of unauthorised loans at Finablr, which was suspended from the London Stock Exchange.

A probe into NMC, which is now in administration, found more than $4bn in hidden debt. Shetty at the time said his own investigations indicated that “serious fraud and wrongdoing appears to have taken place” at NMC and Finablr “by a small group of current and former executives at these companies”.

Earlier this month, Travelex said it had agreed a debt restructuring with its lenders that would involve them taking full control of the business in return for a debt restructuring and £84m cash injection. The company put itself up for sale in April after Finablr warned of a potential insolvency.

The UK-based company said the deal would see debt reduced by 84% as €360m worth of senior secured notes would be converted into equity after agreement with at least 66.7% of its senior secured noteholders and all of its revolving credit facility lenders.

Travelex will be split into two businesses – ‘New Travelex’ which includes the wholesale and outsourcing business, as well as some international retail businesses and ‘Warehouse Travelex’, made up of some of the company’s retail businesses in UK, Europe and North America.

Shetty bought Travelex for £1bn in 2014, and it formed a major part of the Finablr group of foreign exchange and digital payments companies that listed on the London Stock Exchange in May 2019, in a deal that valued the group at £1.23bn.