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The surprising practices of the Swiss purchasing center of the Orpea group

Journalist Victor Castanet revealed the existence of commissions received by the Orpea group from its suppliers. The investigation unit of Radio France was able to identify in Switzerland the purchasing center which collects some of them.

Revelations on the methods of the Swiss purchasing center of the Orpea group. © AFP / Loic Venance

The building is located near the peaceful village of Etoy, in Switzerland, a stone’s throw from Lake Geneva. It is here, in a designer business centre, that the company which was responsible for ordering meat, fish, fruit, frozen products, rusks and other compotes until the end of 2020 which made up the meals of the residents of all the accommodation establishments for dependent elderly people (Ehpad) and clinics of the Orpea group in France. That is nearly 400 establishments. Here is Kauforg: the Swiss purchasing center of the world giant of nursing homes, a subsidiary of Senevita, itself a subsidiary of the Orpea group.

Until 2020, a dozen employees there negotiated favorable prices with food suppliers for France and Europe. The system was as follows: the chefs of nursing homes placed their orders on a computer platform linked to suppliers. Which suppliers sent their invoice to the Swiss purchasing center Kaufor, which in turn invoiced each establishment. A way for Orpea to make purchases as easy as possible, centralize invoices and save on large order volumes.

This operation, apparently classic, seems however to have been taken very far, including in the food sector. In March 2022, a report by the General Inspectorate of Social Affairs (IGAS) and that of Finance (IGF), the result of a six-week investigation, pointed to a priority given to financial performance rather than quality criteriadenouncing in particular a food “insufficient”. “It is rationed so as not to exceed the famous CRJ, the cost of the daily meal, set at around four euros per resident [pour trois repas et un goûter par jour, NDLR]. This is less than the CRJ of other players in the sector”says a former director, who has left the company.

An unlimited bonus

Optimization therefore seems to be the mantra of the executives of the Swiss central purchasing body, Kaufor. But they seem to have been spared by this culture of savings. At the head of this plant, there were until recently three French people. There was the director of purchases from Orpea, who arrived almost 17 years ago, the director of IT services, a pure “in-house product” who arrived 25 years ago and the deputy director of purchases, a former employee of Sodexo.

Particularity of their status: these three men were all employees of the headquarters of Orpea in Puteaux, with in addition, a third-time contract in the Kaufor company, in Switzerland. This contract, which the investigation unit of Radio France obtained, provided for substantial remuneration for two of these directors. They received an annual salary of CHF 150,000 gross (i.e. 143,000 euros) per year, to which was added an annual bonus of the same amount, of which the employer could “freely decide to exceed the limit in case of exceptional performance of the employee”. One of these annual salaries could therefore reach 400,000 euros for a third time. That of the deputy director, on the other hand, was more modest: 76,170 CHF gross (72,748 euros) and did not include a bonus, again for only a third time.

Excerpts from the employment contract of a Kauforg officer (confidential document).
Excerpts from the employment contract of a Kauforg officer (confidential document). © Radio France / Investigation Unit

“If we combine the annual salaries of these three executives, we arrive at 211,000 meal days. For an nursing home with 80 residents, this corresponds to nearly seven years of food budget”, is indignant a former director of Orpea. Was the general management of the group informed of the existence of such remuneration? When questioned, the group did not wish to answer this question. But the Swiss contracts of the directors of Kauforg were indeed signed by the former director of financing and accounting for the Orpea group. Questioned, one of the former leaders of Kaufor let us know that he did not communicate on confidential information. As for the other two, they did not respond to our requests.

Extracts from the annual salary certificate of a Kauforg officer (confidential document).
Extracts from the annual salary certificate of a Kauforg officer (confidential document). © Radio France / Investigation Unit

In addition to the level of certain salaries, there is also the question of the reality of their work in the field. Several employees interviewed by the investigation unit of Radio France claim to have seen them only “very rarely between 2017 and early 2020″. Orpea’s director of IT services would have come”twice in 2019, to attend management committees”. The purchasing director of Orpea would have made an act of more presence, it seems, again according to the employees: “about ten times in 2019″. Only the third would have come more regularly.

“Services” that raise questions

Other practices raise questions. In a contract that Radio France’s investigation unit also obtained, the Kaufor plant demanded from one of the leading food wholesalers, the French company Pomona (which sells fish, meat, fruit and frozen foods), a discount “unconditional, fixed, final and annual of 250,000 euros over three years”, ie the duration of the contract (2017-2019). The Swiss center is also asking its supplier to finance a satisfaction survey of its affiliates (worth 300,000 euros). Other benefits, called “specific duties”product performance analysis”or “product development plan, are billed to Pomona at the aggregate rate of nearly 20% of its net sales.

Extracts from the referencing contract between Pomona and Kaufor (confidential document).
Extracts from the referencing contract between Pomona and Kaufor (confidential document). © Radio France / Investigation Unit

If we add all these commissions and these margins, the gain for Kaufor amounts to four million euros over three years, according to the calculation of the investigation cell of Radio France. “Nothing but very common”, comments a retail specialist. “All distributors have purchasing centers that sell their customers services, seats at the head of the gondola, even the entire management of a department to be able to place their products there. Except that here, it is not a question of mass distribution but of retirement homes. And residents are not customers. It therefore remains to be seen whether these services really existed and whether Kaufor’s suppliers in Switzerland have increased their prices with Orpea nursing homes to offset the cost of these commissions.

This last hypothesis seems to be considered by an internal audit commissioned by the Orpea group from two independent firms, Grant Thornton and Alvarez & Marsal, which the investigation unit of Radio France obtained. Their report hasidentified the existence of discounts collected by the food purchasing center from certain suppliers which are not charged to the establishments”. According to our information, Orpea would have been rectified by the tax authorities in 2021 for the period from 2018 to 2019 due to too low a redistribution rate of all these high margins and commissions, charged to its central purchasing Kaufor.

Other suppliers requested

Orpea’s Swiss headquarters does not limit its services to food product suppliers alone. It also bills services to the supplier of paramedical products Orpea’s largest in France, namely Bastide Le Confort Médical (BLCM). This company, which sells medical devices financed by the Primary Health Insurance Fund (CPAM), allegedly, according to the internal audit cited above, partially financed part of the cost of five internal Orpea France seminars to the tune of 1.3 million euros.

And she, too, allegedly paid Kaufor large sums in return for “services” all sorts. In 2018, an international strategic partnership contract that Radio France’s investigation unit was able to consult, shows that BLCM spent no less than 500,000 euros (excluding tax) to benefit from “sharing of regulatory and commercial statistics”of a “support in connecting (its) teams in the markets in which the Orpea group benefits from a great experience which it wishes to share” its supplier. A sum of 500,000 euros was also paid by Bastide in 2019.

Excerpts from the partnership contract between Bastide and Kaufor (confidential document).
Excerpts from the partnership contract between Bastide and Kaufor (confidential document). © Radio France / Investigation Unit

“Potentially criminal” facts

Other vendors have also paid Kaufor for this type of service. This is the case of the company Hartmann, which sells protection against incontinence linked to addiction. She paid 166,674 euros in return for services “referencing” in 2019. However, the report of the General Inspectorate of Social Affairs (IGAS) and the General Inspectorate of Finance – which, it should be noted, did not relate to Switzerland – expressed serious reservations about this type of services in France, considering that some of them ask questions.

Excerpts from the Igas and IGF report on the management of the Orpea group.
Excerpts from the Igas and IGF report on the management of the Orpea group. © Radio France / Investigation Unit

Asked about all these points, Philippe Charrier, the CEO of the Orpea group replied: “It is our duty to shed light on the accusations against the group. This is what we have been doing for four months through extremely thorough investigations and audits. In this context, several information channels have enabled us to detect potentially criminal facts, which call into question individual behavior. This led us to file a first complaint against X with the public prosecutor in April and to take the first disciplinary measures, several people having already left the company. We are continuing our investigations and we will take all necessary measures and sanctions.”

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READ | The Gravediggers (Ed. Fayard), Victor Castanet.

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