revelations about Orpea and its buying center in Switzerland

The building is located near the quiet village of Etua, Switzerland, a stone’s throw from Lake Geneva. It is here, in the designer business center, that the company is located, which, until the end of 2020, was engaged in ordering meat, fish, fruits, frozen foods, crackers and other compotes that made up the food for residents of the city. Orpea in France. This is almost 400 establishments. Here is Kauforg: the Swiss purchasing center of the global nursing home giant, a subsidiary of Senevita, itself a subsidiary of the Orpea group.

Until 2020, a dozen employees negotiated favorable prices with food suppliers for France and Europe. The system was as follows: Nursing home cooks placed their orders on a computer platform linked to vendors. Which vendors sent their invoices to the Kaufor Swiss Purchasing Center, which in turn issued invoices to each establishment. A way for Orpea to make shopping as easy as possible, centralize invoices and save on high volume orders.

This operation, apparently classic, however, seems to have gone very far, including in the food industry. In March 2022, a report by the General Inspectorate for Social Affairs (IGAS) and the Financial Inspectorate (IGF) following a six-week investigation indicated that priority was given to financial performance over quality criteria. in particular the food “inadequate”. “We are rationing it so as not to exceed the famous CRJ, the cost of a daily meal, set at about four euros per inhabitant. [pour trois repas et un goûter par jour]. This is less than the CRJ of other industry players.”– says the former director, who left the company.

Thus, it seems that optimization is the mantra of the leaders of the Swiss central purchasing body Kaufor. But it seems that this culture of savings spared them. Until recently, three Frenchmen were at the head of this plant. There was the director of purchasing for Orpea, who came almost 17 years ago, the director of IT services, a pure “internal product”, who came 25 years ago, and the deputy director of purchasing, a former employee of Sodexo.

The peculiarity of their status: all three of them were employees of the Orpea headquarters in Puteaux, and, in addition, they had a third contract with the Kaufor company in Switzerland. The contract, which was awarded to Radio France’s investigative department, included a substantial remuneration for two of these directors. They received an annual salary of 150,000 gross Swiss francs (i.e. 143,000 euros) per year, to which was added an annual bonus of the same amount that could “to be free to decide whether to exceed the ceiling in the event of an employee’s exceptional performance”. Thus, one of these annual salaries can reach 400,000 euros for the third time. The deputy director, on the other hand, was more modest: CHF 76,170 gross (€72,748) and no bonus, again only for the third time.

Excerpts from the employment contract of the head of Caufort (confidential document) (RADIO FRANCE INTERVIEW CELL)

“If we combine the annual salaries of these three executives, we get 211,000 days of meals. For Ehpad of 80 inhabitants, this corresponds to almost a seven-year food budget.”– the former director of Orpea is indignant. Was the overall management of the group informed about the existence of such remuneration? During interrogation, the group did not wish to answer this question. But the Swiss contracts of the directors of Kauforge were indeed signed by the former director of finance and accounting of the Orpea group. During interrogation, one of the former leaders of “Kaufor” said that he did not report confidential information. As for the other two, they did not respond to our inquiries.

Extracts from the certificate of the annual salary of officer Cauforg (confidential document).  (RADIO FRANCE INVESTIGATION GROUP)

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 Radio France’s investigative department claim to have only seen them “very rare between 2017 and early 2020.”. The director of IT services Orpea would come “twice in 2019 to participate in management committees”. According to employees, Orpea’s purchasing director would apparently still make the act more presence: “a dozen times in 2019”. Only the third would come more regularly.

Other practices raise questions. In a contract also awarded to Radio France’s investigative department, the Kaufor factory demanded a discount from one of the leading food wholesalers, the French company Pomona (who sells fish, meat, fruits and frozen foods). “an unconditional, fixed, final and annual amount of EUR 250,000 for three years”, i.e. the duration of the contract (2017-2019). The Swiss Center is also asking its supplier to fund a satisfaction survey of its affiliates (worth 300,000 euros). Other services called “specific commitments”, “product performance analysis”, or even “product development plan”. Pomone is billed at a cumulative rate of nearly 20% of its net sales.

Extracts from the reference agreement between Pomona and Caufor (confidential document).  (RADIO FRANCE INVESTIGATION GROUP)

If you add all these commissions and this margin, Caufort will make a profit of four million euros over three years, according to the calculations of the Radio France investigative team. “Nothing but very ordinary”, says the retail specialist. “All distributors have buying centers that sell services to their customers, places at the head of the gondola, even the entire management of the department to be able to place their products there.” Except that here we are not talking about mass distribution, but about nursing homes. Residents are not clients. Therefore, it remains to be seen if these services actually existed and if Kaufor’s suppliers in Switzerland have increased the prices of Orpea nursing homes to offset the cost of these commissions.

This latter hypothesis appears to have been put forward as a result of an internal audit commissioned by the Orpea group by two independent firms, Grant Thornton and Alvarez & Marsal, which was obtained by Radio France’s investigative department. Their report has “discounts were found to be received by the food purchasing center from certain vendors that are not institutions.” To our knowledge, Orpea would have been corrected by the tax authorities in 2021 for the period 2018 to 2019 due to redistribution ratio reasons. too low of all those high markups and commissions charged from his central purchasing department Caufor.

Orpea’s headquarters in Switzerland does not limit its services to just food vendors. It also bills for services to the largest supplier of Orpea paramedical products in France, namely Bastide Le Confort Médical (BLCM). This medical devices company, funded by the Primary Health Insurance Fund (CPAM), allegedly, according to the internal audit mentioned above, partially financed part of the cost of five internal seminars of Orpea France in the amount of 1.3 million euros.

And she, too, allegedly paid Caufor large sums in exchange for “Services” all kinds. In 2018, an international strategic partnership agreement seen by Radio France’s investigative department shows that BLCM spent at least €500,000 (excluding taxes) to benefit from “exchange of regulatory and commercial statistics”from “support in bringing together (their) teams in markets where the Orpea group has a lot of experience that it wants to share” his supplier. An amount of €500,000 was also paid to Bastide in 2019.

Extracts from the partnership agreement between Bastide and Kaufor (confidential document).  (RADIO FRANCE INVESTIGATION GROUP)

Other providers also paid Kaufor for this type of service. This is the case of Hartmann, which sells drugs for addiction-related urinary incontinence. She paid 166,674 euros for the services. “link” in 2019. However, the report of the General Inspectorate for Social Affairs (IGAS) and the General Inspectorate for Finance, which, it should be noted, did not concern Switzerland, expressed serious reservations about this type of service in France, given that some of them raise questions.

Extracts from Igas and IGF report on the management of the Orpea group.  (RADIO FRANCE INVESTIGATION GROUP)

Asked about all these points, Philippe Charrier, CEO of the Orpea Group, told us: “Our duty is to shed light on the accusations against the group. This is what we have been doing for four months through extremely thorough investigations and reviews. In this context, several information channels have allowed us to discover potentially criminal facts that call into question individual behavior. This led to us filing our first complaint against X with the prosecutor’s office in April and taking our first disciplinary action as several people had already left the company. We are continuing our investigations and will take all measures and sanctions that prove necessary.”

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