ORPEA publishes the summary of the external evaluation report on the use of public funds and business relations with third parties

PUTEAUX, France–(BUSINESS WIRE)–Regulatory news:

ORPEA (Paris:ORP) announces that it has published on its website the summary of the final conclusions of the audits of Grant Thornton and Alvarez & Marsal concerning the allegations contained in the book The Gravediggers linked, on the one hand, to the use of public funds and, on the other hand, to business relations with third parties, including certain public officials. This publication follows the publication of the preliminary conclusions on April 26, 2022.

The final conclusions of these firms on subjects relating to the care of EHPAD residents and labor law will be made available to the public, in the same form and under the same conditions, as soon as possible following their transmission to the Company by the end of June at the latest.

Philippe Charrier, Chairman and Chief Executive Officer, declared:

“The publication of the conclusions of the external evaluation mission is part of the total transparency approach adopted by the Board of Directors in response to the allegations against the Group. While the report demonstrates that some of these allegations cannot be substantiated, it also confirms failures and wrongdoings for which, once again, we would like to sincerely apologize to all of our stakeholders. Since the departure of the former CEO on January 30, 2022, we have put in place emergency and structural measures to correct inefficient systems, eradicate inappropriate practices, sanction individual misconduct and initiate appropriate legal action. We will resolutely pursue this path and give the Group the means to fully accomplish its mission and build the foundations for its future. Laurent Guillot, who will take up his duties as Chief Executive Officer on July 1, will be tasked with building this new ORPEA to better meet the expectations of the Group’s stakeholders and employees. »

The use of public funds

Regarding the allegations relating to the misuse of public funds intended for the Group’s nursing homes in France, ORPEA notes, among others, that Grant Thornton and Alvarez & Marsal:

  • found no evidence to support the following claims:

    • maneuvers in the management of inspections by the authorities;

    • falsification of the production of supporting documents intended for the authorities.

  • observed:

    • ineligible or excessive amounts reported to authorities due to unreliable workforce reporting processes;

    • a lack of reliability in the process of reconciling purchase orders, delivery slips and purchase invoices, which did not allow the systematic detection of possible fraud;

    • the granting of end-of-year discounts by certain major suppliers of products financed by public allocations that were not communicated to the authorities as planned. These end-of-year rebates made it possible to finance Group activities or investments that were not directly related to care or dependency;

    • a practice, abandoned since 2017, of maximizing the consumption of the allowance for medical devices granted by the authorities to EHPADs. This was done through invoicing by a service provider whose reality could not be verified and from which the Group benefited via the mechanism of end-of-year discounts;

    • the existence of surpluses in allocations received from local authorities, the accounting treatment of which may have contributed to the Group’s results; the existence of an under-use of grants received from public authorities. The surpluses thus generated were able to contribute to the Group’s results.

Prior to submitting the conclusions of these reports, ORPEA implemented a set of corrective measures aimed at correcting its internal processes with the aim of eradicating the practices identified above, where they still existed.

The results of all of these investigations were brought to the attention of the statutory auditors during their examination of the financial statements for the 2021 financial year, as well as this press release. The financial impact of the conclusions of these investigations has, to the best of the Group’s knowledge, been taken into account in the financial statements approved by the Board of Directors.

Commercial relations with third parties

ORPEA notes that Grant Thornton and Alvarez & Marsal have not found any evidence confirming the allegations of inappropriate relations with public officials or the allegation of attempted bribery by Victor Castanet.

However, Grant Thornton and Alvarez & Marsal have identified remuneration paid, with the agreement of the former managing director or members of his team, to third-party intermediaries, the very high amounts of which raise questions.

These remunerations were identified by the Group during its recent internal investigations and some of them already appear, among other transactions, in the complaint filed by ORPEA on April 21, 2022 with the Public Prosecutor of Nanterre both in its own name what about ut singular for the companies in which he is a shareholder.

Legal and disciplinary actions taken by ORPEA

The complaint against X filed by ORPEA concerns facts relating to:

– capital partnerships, in particular during external growth operations outside France, involving complex economic and financial structures including entities governed by foreign law whose shareholders, beneficiaries or managers are natural or legal persons having an economic link with the Group . Some of these operations raise questions and do not always make it possible to clearly identify (i) their economic logic and (ii) the social interest, if any, for ORPEA, or the ORPEA Group of such an operation;

– other economic transactions, in France or abroad, which appear to have been carried out without clear justification for ORPEA or the ORPEA Group, or without appropriate information or internal approval, and which would have had the effect or intended to unduly benefit third parties, in particular employees and/or former employees, or companies in which employees and/or former employees of the Group may have held a stake, or to optimize the tax regime of these third parties.

In support of these facts, ORPEA provided the Public Prosecutor of Nanterre, among other things, with documents and reports drawn up by several outside contributors mandated by the new management as well as other previous reports brought to the attention of Management. General and of the current Board of Directors. of directors in April 2022.

ORPEA and the companies of the ORPEA Group consider themselves victims of any infringement that may be qualified as such. The ORPEA Group has therefore reserved the right to subsequently assert claims for compensation in the context of the complaint.

In this regard, the investigations carried out by ORPEA or by the parties it has appointed have provided an idea, albeit approximate, of the damage suffered, which remains insignificant at the level of the ORPEA Group.

Disciplinary procedures are underway against all managers identified to date as having been involved in the events referred to in the complaint. Layoffs and dismissals have already taken place.

In the meantime, the mandates of these people, when they exercised them, have been (or are in the process of being) terminated.

It is recalled that the work of Grant Thornton and Alvarez & Marsal is necessarily limited and partial, their purpose being to verify the allegations made in a book published in January 2022.

ORPEA confirms the information published today according to which it was searched at its headquarters and in some of its facilities, following the problems identified by the joint IGAS-IGF (General Inspections) mission. ORPEA is mobilizing to support the ongoing investigations.

About ORPEA (www.orpea-corp.com)

Founded in 1989, ORPEA is one of the world leaders in dependency care (EHPAD, EHPAD, Aftercare and Rehabilitation Hospitals, Mental Health Hospitals, Home Services)

ORPEA is listed on Euronext Paris (ISIN code: FR0000184798) and is part of the SBF 120, STOXX 600 Europe, MSCI Small Cap Europe and CAC Mid 60 indices.

Shirlene J. Manley