A new report from France’s two largest unions reveals how Europe’s largest care home operator has been building a property empire, through complex and opaque financial structures, while facing allegations of understaffing, diversion of public funds, and the rationing of food and sanitary items.

The report, developed by CICTAR | Centre for International Corporate Tax Accountability and Research for the CGT & CFDT healthcare and social service federations reveals for the first time how the Orpea Group’s 40 Luxembourg subsidiaries are being used to expand a European property portfolio.

The new report details how money appears to flow from Orpea’s facilities to finance property investments rather than care

Orpea is already in the spotlight following the publication of “The Gravediggers”, by journalist Victor Castanet. The book is based on a three-year investigation into Orpea’s French care homes and has led to numerous Government investigations and calls for reform from a wide range of stakeholders, including some investors.

The new report details how money appears to flow from Orpea’s facilities to finance property investments rather than care. Thirty-seven of the forty Luxembourg companies identified have never been disclosed in Orpea’s public reporting, despite holding tens of millions of euros in assets. In one case, the beneficiaries of an Orpea property acquisition in France remain hidden behind two shell companies in Panama and the British Virgin Islands. Other recent Orpea property transactions involving “offshore intermediaries” are already under investigation by French authorities.

The company has repeatedly tried to frustrate past attempts by unions to address issues such as worker exploitation. PSI affiliates Fédération Santé Action Sociale CGT and Fédération CFDT Santé-Sociaux said :

“Our members who work within ORPEA and other corporate care home operators have been speaking out for years – long before COVID – about dangerous levels of staffing, impossible and inhumane workloads, stagnant pay, and the risks that these conditions pose to carers and the cared-for alike. Both through the press and in the courts, a picture has formed of a company that, rather than listening to the concerns of workers and working with their unions, stands accused of intimidating and silencing the voices of front-line care workers, interfering with genuine union activity, and opposing works councils. The results of this alleged behaviour are now clear to everyone. The only way to fix ORPEA, and the broader care sector, is for the collective concerns of workers to be heard and addressed through their unions. “

PSI has long claimed the The Human Right to Care  is incompatible with profit driven privatised care. Multiple scandals in Australia, UK, Canada and now France demonstrate that the system is built on exploiting workers, poor care outcomes and opaque financial structures which are often used to siphon public funds offshore and boost corporate profits.

As PSI General Secretary, Rosa Pavanelli says: "While the private sector continues to dominate the provision of long term care there will always be incentives for it to syphon off profits, dividends and rents to tax havens at the expense of the quality of care and the workers who provide it”.

Jason Ward, Principal Analyst for CICTAR, said: "The global pandemic brutally revealed underlying structural problem and now the demands for greater transparency and accountability cannot be ignored”.

The report shows that Orpea’s €7.4 billion property portfolio has been built using debt, and finance costs have grown twice as fast as revenues. A case study of a German care home group, acquired in 2015, outlines how front-line staff have been reduced by 10% while interest and lease expenses have increased.

Hancock noted this isn't the only disreputable long-term care operator being bankrolled by Canadian pension funds. In 2020, it was revealed that Revera, Canada's second-largest private long-term care provider, was wholly owned by the Public Service Pension plan, and was recording nearly twice as many COVID-19 fatalities as the sector average, while notching enormous profits and aggressively avoiding paying its taxes. “Clearly, we're not talking about one bad apple.

"Long-term care residents have suffered untold harm and neglect during the pandemic because of cost-cutting by multinational corporations who only care about profit," said CUPE National Secretary-Treasurer Candace Rennick. "It is unthinkable that Canadians are unknowingly financing this abuse by having our retirement income invested in these cruel schemes."

Fédération Santé Action Sociale CGT and Fédération CFDT Santé-Sociaux have called on the French government to immediately:

• review Orpea’s finances and operational performance,

• implement greater financial transparency and accountability across the sector, particularly to ensure that public funds are spent on staffing and care

• guarantee worker’s rights and whistle-blower protection for front-line care staff.

CICTAR, CFDT and CGT make no allegations that Orpea acted unlawfully. But if public funds are legally being used to build a property empire, then the system clearly needs urgent and radical change.

PSI has previously warned that vast public funds are being are being used to subsidise private profits of large corporations more interested in profits than care.

Too many governments have deliberately created markets for elderly and other long-term care, providing incentives to the private sector to invest. Yet at the same time, they have de-regulated, and loosened oversight of the private care market and facilitated exploitation of care workers. The ORPEA scandal, and similar scandals all over the world show the inevitable consequences of leaving vulnerable people prey to market forces and corporate greed.

Well-funded public care that places patients need at the centre of the system and supports workers is the only way to realise the human right to care.

PSI repeats its calls for the rebuilding of the social basis for care as contained in our Care Manifesto.   

It is time to end profit in care.