French care home group Orpea plunged into crisis by mistreatment allegations

A crisis engulfing French care home operator Orpea has deepened after the government summoned the chief executive to respond to allegations made in a new book that it systematically mistreated elderly residents.

The company’s shares fell a further 10 per cent on Thursday and have lost half their value since Monday when journalist Victor Castanet revealed the findings of a three-year investigation in a book titled “Gravediggers”. He also alleged he had been offered a bribe to stop his work.

“I was pressured and threatened, and so were some of my sources,” he told French channel BFM TV. “Halfway through the investigation, via an intermediary, a proposal was made to see if I would stop my work for €15m.”

A spokesperson for Orpea said the company “formally denied” any payment was offered to stop publication of the book.

The book alleges the company cut corners to save money at the roughly 370 nursing homes it operates in France, causing elderly residents to be treated poorly. One employee at a care home in a wealthy Paris suburb where residents pay starting rates of €6,500 per month said she was told to ration adult nappies and only allow people three a day.

Orpea on Monday called the allegations made by the book “outrageous and prejudicial”. But on Wednesday its board of directors said it would mandate two consulting firms to carry out an independent investigation of the book’s allegations and promised to share the findings with regulators.

“We continue to affirm that at no time did the group’s management put in place any system to orchestrate the practices that it is being criticised for,” Orpea said.

Orpea has expanded rapidly in recent years into more than 20 countries, earning €3.9bn in revenue and €467m of operating profit in 2020. France and the Benelux region are its biggest market, generating 60 per cent of sales from 372 homes.

It now faces a potential political scandal, with politicians calling for a parliamentary investigation and the government vowing to impose “sanctions of the greatest severity” if the allegations are true.

Shares in rival French care home operators have also sold off this week as investors worry about the fallout: Korian has lost almost 30 per cent of its market value and LNA Sante 18 per cent.

Castanet said he was surprised by the effect of his book. “I thought this would be a national scandal but I didn’t think there would be such a shockwave or that so many families would get in touch with me,” he said. He also predicted a series of legal complaints against Orpea in the coming days from the families of residents and employees.