How care-crisis homes made Saudis millions
Tycoon’s firm funnelled cash to tax haven in Caymans
SAUDI Arabia’s wealthiest families have profited at the expense of Britain’s most vulnerable care homes residents, it can be revealed today.
A company run by millionaire Saudi Olympic showjumper Kamal Bahamdan owns HC-One – which, with 265 facilities and bed capacity of 16,116 in England, is the country’s largest care home operator.
HC-One stands accused of siphoning off millions from its heavily subsidised care homes to its private equity owners in the Cayman Islands, via a legal yet complicated business structure.
The findings are revealed in a BBC Panorama documentary, to be aired tonight, which details how HC-One and Four Seasons, another major care provider, are owned by private equity behemoths basing themselves in offshore tax havens.
The Daily Mail can also reveal the extent of Saudi Arabian firms’ involvement in the care home crisis, raising questions about how much of residents’ money is going to frontline care.
The social care system is facing collapse, with a mounting staffing shortage and rising costs. Residents in England pay the full cost of social care until their assets – including the value of their own home – fall to below £23,250. Many are forced to raid their life savings to fund care in their final years.
In October 2023 a new lifetime care cap of £86,000 will come into force – but the Commons health committee warns help is needed for pensioners before then.
But for the companies run by Mr Bahamdan, 50, who won a bronze medal with the Saudi Arabian show-jumping team at the 2012 London Olympics, these lifechanging sums are loose change.
Since 2002, he has been at the helm of Bahamdan Group, a global investment group with investments in telecommunications, education, infrastructure and retail in the Middle East and North Africa. The Bahamdan Group controls Safanad Ltd, of which Bahamdan is also founder and chief executive, and which is the majority owner of HC-One.
On the board of Safanad, Mr Bahamdan rub shoulders with Abdul Kareem Abu Al Nasr, a former chief executive of Saudi Arabia’s National Commercial Bank, and Lubna Olayan – a member of a family ranked by Forbes magazine in 2016 as the wealthiest in the Middle East, with a fortune of over £7.6 billion. According to a report by the Centre for International Corporate Tax Accountability and Research, the companies in the HC-One structure have loaned money to each other via complex accounting, with very high interest rates. These highinterest payments reduced taxable profits in the UK and let the company shift money to the Cayman Islands as interest income – where it is tax-free. HC-One stresses it pays full tax in the UK.
Jason Ward, principal analyst at CICTAR and author of the report, said: ‘You have the wealthiest families in Saudi Arabia ripping money out of cash-strapped care homes in the UK, while workers and residents are suffering, to make some of the world’s richest people even richer off of the backs of government funding and people’s life savings. A significant chunk of [care home costs] is not going to provide care for granny or grandad, it’s going to the Cayman Islands.’
As the pandemic took hold, HCOne asked councils for financial help. The firm then received £18.9million of taxpayer-funded government support.
HC-One, on behalf of itself, Safanad, the Bahamdan Group and other affiliates, says that its owners ‘are a net-positive contributor to HC-One’. But as with any business, owners would not invest money if they did not predict a healthy return. And in a private equity model, this return is usually only recouped once the business is sold on.
Between April 2020 and the end of March 2021, there were 1,618 deaths at HC-One facilities, more than any other operator. The rate of Covid-19 deaths at HC-One facilities in England per bed capacity was 10 per cent – well above the 8.3 per cent average.
The company insisted that the majority of its facilities are nursing homes and it operates predominately in major metropolitan areas, where community transmission of the virus was highest.
A spokesman for HC-One said: ‘As a private company that delivers an essential public good, the most important thing for us is to meet the needs of our residents… and to do this we need access to long-term finance so we can invest in our people and homes.
‘In the past five years, our owners have enabled us to invest £145million in upgrading our homes, with a further £115million committed by 2022/23. This far exceeds all the cumulative dividends and management fees they have received over the same period – a total of £32 million...’ We have always been UK tax resident, pay full tax in the UK, and file our accounts at Companies House... We do not use our structure to artificially reduce our earnings.’
Former health secretary Jeremy Hunt said the CICTAR report exposed ‘the Wild West’ of the current social care landscape.
‘To me, it is the unacceptable face of capitalism, because this is a sector that is under enormous pressure,’ he told Panorama.
‘It is wholly inappropriate given
‘Significant chunk isn’t going on care’
‘It’s the Wild West out there’
that the purpose of the sector is to look after literally the most vulnerable people in our society... It’s the Wild West out there.’
And Caroline Abrahams, charity director at Age UK, said: ‘Given the intensely vulnerable situation of most of their clients, every care business needs to be able to demonstrate they always stay the right side of the line.’
HC-One is not the only care provider owned by private equity giants. Since the 1990s Four Seasons Health Care has been bought and sold three times, with cash trails leading to debt that ultimately care residents help pay for.
Like HC-One, Four Seasons comprised a labyrinthine corporate structure. According to Panorama, its last accounts in 2019 show that it was made up of 160 different firms. The two at the top of the pyramid, Elli Investments Ltd and Fino Senior Co Ltd. are based in the tax havens of Guernsey and the Cayman Islands respectively.
In the same year, Four Seasons Health Care tumbled into administration in 2019 with a £625million debt pile. Around 20 per cent of the average weekly care fees goes on to paying Four Seasons’ interest payments. But a spokesman for Four Seasons Health Care said that ‘Our ownership structure does not have any bearing on the day to day care of our residents…’
Three of the biggest care providers, Four Seasons, Care UK and HC-One are owned by private equity firms – providing nearly 39,000 beds between them. A fifth are rated ‘inadequate’ or ‘requiring improvement’ by the CQC.
A Government spokesman said: ‘The UK has led the world in cracking down on global tax abuse, delivering new rules that will help ensure that taxes due are paid irrespective of where in the world the business is based.’
Panorama’s ‘Care in Crisis: Follow the Money’, is on BBC One tonight at 7.35pm.