Orpea says audit found evidence of some 'failures and misconduct'

[June 09, 2022]  By Sudip Kar-Gupta and Tassilo Hummel

PARIS (Reuters) -Scandal-shaken French care home operator Orpea on Wednesday said an audit found evidence of financial wrongdoing but did not support all allegations against the company while police raided its offices in a broader probe.

"Although the report demonstrates that some of these allegations cannot be substantiated, it also confirms failures and misconduct for which, once again, we would like to offer our most sincere apologies", Orpea Chief Executive Philipp Charrier said.

A 62-page report by auditors Grant Thornton and Alvarez & Marsal said the company inflated its labor expenses and made suspicious large payments to third parties, confirming some claims in "Les Fossoyeurs" ("The Gravediggers"), a book published this year.

"The processes in the care homes and at the headquarters are unreliable, subject to numerous manual interventions and there is no satisfactory internal control system", the audit found.

The audit did not cover the full scope of accusations leveled at the company by journalists, residents, relatives and the French government. The additional claims include embezzlement, tax fraud and patient mistreatment. The company had denied those allegations.

Earlier on Wednesday, over 200 national and local police agents raided several Orpea offices around the country, according to the Nanterre prosecutors' office, which is leading the investigations.

Orpea, whose shares have plunged 72.6% since the start of the year, confirmed the police raids but declined further comment on the matter.

A view shows the logo of French care homes company Orpea at the entrance of a retirement home (EHPAD - Housing Establishment for Dependant Elderly People) in Reze near Nantes, France, February 2, 2022. REUTERS/Stephane Mahe/File Photo

RIVAL ALSO HIT

Separately, shares in rival Korian also dropped on Wednesday after a newspaper report said it faces legal action by family members of residents over the way it managed its homes.

"We make sure that every serious situation brought to our attention is duly reported to the authorities," Korian said in a statement.

Shares in both companies have taken a beating since January, when an investigative journalist published a book alleging there had been severe lapses at an Orpea care home in a wealthy Paris suburb, sparking a nationwide debate on nursing conditions for the elderly.

The French government said in March that following an administrative investigation, it planned to file a criminal complaint against Orpea over alleged mistreatment of elderly patients.

Orpea shares closed down 3.13% on Wednesday while Korian shares fell 9.5%.

(Reporting by Sudip Kar-Gupta and Tassilo Hummel; Editing by Emelia Sithole-Matarise, Mark Potter and Cynthia Osterman)
 

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