GMB Demo at Harrods on QIA
Friday 25th February
GMB PROTEST AT QIA OWNED HARRODS OVER NO ACTION BY QIA ON HIGH
RENTS ON QIA BUILDINGS USED AS SOUTHERN CROSS CARE HOME AND OVER
TAX AVOIDANCE ON RENTS SENT TO OFFSHORE TAX HAVENS
If QIA can spend £1.5billion for a shop and another £1.5billion
for a football team it’s about time they paid for their
responsibilities for staff and residents at Southern Cross and
stopped avoiding taxes on much of the £248.3 million paid in rent
which ends up in off-shore tax havens
The Qatari Investment Authority (QIA), which owns Harrods,
faces a further GMB demonstration over the total lack of
action by the QIA on the sky high rents charged for care homes for
the elderly owned by the QIA in Britain and the continuing tax
avoidance on the income from these rents as the funds are channeled
to off-shore tax havens.
Overcharging on rent amounts to £60 per week per care home bed.
The public funds involved was intended to be used to pay for the
care of the elderly in Southern Cross care homes. Instead these
funds are being used to pay the interest on £1,100m bonds raised by
the QIA when they bought the care home builidngs from a private
equity company in 2006. Taxes on this income are avoided as the
funds are funnelled via companies in the Isle of Man and the Caymen
Islands.
The demonstration will take place from:
Between 12 NOON AND 2 P.M.
on
THURSDAY 3RD
MARCH 2011
Outside
HARRODS
87-135 BROMPTON
ROAD
KNIGHTSBRIDGE
LONDON
SW1X 7XL
GMB protesters will be dressed in Bedouin dress and will pitch
up with oil drums and placards with slogans calling for QIA to stop
ignoring the issue.
GMB has 10,000 members working for Southern Cross care homes for
the elderly. These members are paid the National Minimum Wage (NMW)
and the majority have had their pay frozen. A list of all 750
Southern Cross care homes is available at http://www.gmb.org.uk/ at the foot of
this release in the Newsroom.
Paul Kenny GMB General Secretary said, “It has been
reported that QIA are interested in buying premiership leaders
Manchester United. If they can spend £1.5billion for a shop and
another £1.5billion for a football team it’s about time they paid
for their responsibilities for staff and residents at Southern
Cross. GMB is calling on the QIA to meet a delegation of residents,
their relatives and staff from Southern Cross care
homes.
The QIA raised £1,110 million in bonds to buy 300 care
homes from the private equity company Blackstones in 2006. Rents
are being overcharged to the tune of £60 per week per care home
bed. Most of this is public money. It is needed to care for the
elderly in the homes. It is being used instead to pay interest on
these enormous and expensive bonds which was never the intended
purpose. To add insult to injury these funds are being funnelled to
off-shore tax havens and no tax is being paid in the UK on this
income.
The elderly residents in the care homes are being made
to pay for this syphoning off of these funds intended for their
care. Staff turnover in the care homes is very high because of the
low pay to the workers the majority of which have had their
pay frozen. This lack of continuity of care staff has an
adverse effect on the care the elderly receive.
GMB has already staged protests calling on the Emir of
Qatar to instruct the QIA to redeem the bonds and negotiate a
reasonable rent with Southern Cross which operates the care home
business. That £60 per week per bed can then be used to pay for the
care for the elderly residents as it was intended to do in the
first place before private equity and QIA got
involved".
Ends
Contact: Justin Bowden, GMB National Officer on
07710 5631351 or Paul Clarke 07713 077193 or GMB Press Office:
Steve Pryle on 07921 289880.
Notes to Editors:
1 GMB
estimate that rents for the 752 Southern Cross care homes are £100m
higher than they should be. QIA acquired the freehold in up to half
of the homes in 2006 and are still the legal owner of them. In
January 2010 GMB wrote to councilors on a number of councils to
bring to their attention GMB’s concern about high rents charged by
the owners of buildings, including QIA. used as Southern Cross
Care Homes and the lack of transparency regarding who owns the care
homes and the financial returns to the ultimate owners of the
properties.
There are 752 Southern Cross Care Homes in the UK with a total
of 38,603 care beds for the elderly (September 2010).The published
accounts for that period showed that in 2010,Southern Cross paid
£248.3m in rent to the owners of the properties. GMB research
indicates that up to half of the properties were
acquired by a company called NHP, of which the ultimate parent
company is Delta Commercial Property. This is a company owned by
the Qatari Investment Authority and is registered in the Isle of
Man. The financial returns for this company are consolidated within
Libra No.2 Ltd, a company incorporated and registered in the Cayman
Islands.
Southern Cross rents paid to the homes acquired by QIA in
2010 equated to £6,444 per bed. This was a 1.5% increase on the
2009 figure when the rent was £6,348 per bed which was a 4.9%
increase on the 2008 figure of £6,050. This in turn was a 3.1%
increase on the 2007 figure when the rent per bed was £5,866. This
in turn was a 7.9% increase on the 2006 figure when the rent per
bed was £5,435. Thus in the past 4 years rents have gone up by
18.6% at a time when property values were falling.
GMB have told the councilors that use Southern Cross to care for
their clients, paid for with public money, that if the beds were
used for different purposes the market clearing rents paid to the
landlords would at least £100m less. If the accommodation was used
for students, for example, GMB conclude that the total amount the
landlords would receive is £121.8m.If the space were made available
for private residential use, GMB consider that this would give rise
to £139.5m in annual rental income.
2 Southern
Cross- a financial history timeline
2004 Blackstone acquires Southern
Cross from West Private Equity for £162m. It then bought NHP for
£564m (£1.1bn including debt). NHP managed homes through its
Highfield subsidiary, now owned by Southern Cross and at the time
Southern Cross was one of its largest tenants.
2005 OFT investigated the NHP
takeover by Blackstone believing it to be anti-competitive,
particularly in Nottingham, Arbroath and Port Talbot. After an
investigation OFT did not refer the case to the Competition
Commission. (http://www.oft.gov.uk/shared_oft/mergers_ea02/2005/blackstone.pdf)
2006 Blackstone floated Southern
Cross. NHP bought by Three Delta with funds provided by the Qatari
Investment Authority (QIA) for £1.3bn. The £1.17bn debt NHP had was
sold on to investors packaged as asset backed bonds and
subordinated debt. QIA, through Three Delta, already owns The Senad
Group, Four Seasons Health Care and Care Principles. It is the
performance of these health care investors coupled with the failed
Sainsbury bid which led to the split between the QIA and Paul
Taylors Three Delta investment group.
2007 Blackstone sold remaining
stake in Southern Cross. The ‘buy and build’ technique is
understood to have netted a fourfold return for Blackstone.
2008 Southern Cross failed to pay
back a £46m loan facility, unable to offload the properties
attached to recent purchases. The banks agreed to a renegotiation
but the company were likely to pay higher interest rates.
2009 NHP in negotiations over the
restructuring of more than £1bn of loans that have been in default
since November 2008. Its portfolio was worth £243m less than the
loans secured on it.
GMB informed that owners of NHP are in negative equity and QIA
have lost a lot on money on the transaction but are still the legal
owners of the homes.
Three Delta big wigs: three non-executive Directors: Sir Peter
Middleton, the former Chairman of Barclays Bank and Permanent
Secretary at HM Treasury, Sir Christopher Howes, former Chief
Executive of the Crown Estate, and Nick Land, former Chairman of
Ernst & Young LLP. David Mellor, former Tory cabinet minister,
was business development director of Three Delta. The current
Business Development Director is Malcolm Le May. Delta Commercial
Property is the name of the investment arm of Three Delta that
acquired Four Seasons Health Care and the NHP portfolio. The
results of NHP Ltd are consolidated within Libra no 2 Ltd, its
immediate parent undertaking.
Qatari Investment Authority was established in 2000 with $40
billion. The fund does not report how much money it has invested or
how much they have added to the fund. As a result, there is much
debate on how much the fund actually has. There have been estimates
of $50 billion and as high as $75 billion. Most likely it is around
$60 billion. The QIA is controlled by Sheikh Hamad bin Jassim bin
Jabr al Thani, the Prime Minister of Qatar. Due to the private
nature of sovereign wealth funds and investment firms, there is a
cloak of secrecy surrounding their activities and internal affairs,
they are government owned and are not officially answerable to any
international body and have no obligation to make any disclosures
about the source of their funding. Most of the companies involved
with Three Delta are Limited Liability Corporations and as a
result, little and in some cases, no information is publicly
available.
Qatari Investment Authority holds a 7.1% share in Barclays. They
have recently taken a share in Porsche and currently own
about 26% of Sainsbury.
Click here to see full list of
Southern Cross Care homes.