Ernst & Young, along with two other banks, face accusations it “actively concealed” a six-year fraud from investors in a new lawsuit over its auditing work for NMC Health, according to reports.

BR Shetty, the Indian-born founder of the hospital operator, filed a court document in New York, alleging that the company had been subject to a “debt-fuelled Ponzi scheme”, according to the Financial Times.

He claims that EY, Bank of Baroda and Netherlands-based Credit Europe Bank were all part of a “co-ordinated and deliberate conspiracy” in which over $5bn was stolen from the tycoon’s companies.

NMC went into administration last year after it was discovered that over $4bn of debts had been hidden from its balance sheet in a suspected fraud that called the London stock market’s reputation for governance into question. 

Fraudulent loans, his lawyers claim, were secured by executives at Shetty’s companies who forged his signature on personal guarantees to set him up in case the scheme was discovered.

The claim filed by Shetty’s lawyers alleged that Bank of Baroda – one of the biggest lenders in India – processed thousands of transactions without filing any suspicious-activity report with US regulators, thereby breaching its fiduciary duties and failing to follow anti-money laundering (AML) rules.

“If Baroda had complied with existing AML laws and investigated the suspicious transactions, the massive accounting fraud and theft would have been discovered in its infancy and the plaintiffs would never have sustained their financial injury,” they said.

The New York lawsuit is the latest battle between Shetty and banks. He made similar allegations after commissioning an internal investigation last year. Both Bank of Baroda and CEB obtained freezing orders against him though over unpaid debts. The tycoon himself also became the subject of a criminal complaint.

The allegations filed against EY last week though go a step beyond previous claims of professional negligence. Shetty’s lawyers accused the auditing giant of actively concealing the fraud and even helping the alleged perpetrators with “illicit tactics” and to avoid loans appearing in financial statements.

In response to the lawsuit EY have said: “We believe this case is without merit and we intend to defend it vigorously.”