12 Monday February 21 2022 | the times
News
Britain’s largest private provider of
children’s care homes sent more than
£2 million to its founders’ offshore
company in the Caribbean while
accepting huge sums in government
Covid support.
CareTech Holdings has announced
soaring profits in the past two years
despite having care homes for the most
vulnerable in society that are among
the worst-rated in the country.
An investigation by The Times has
found that the two brothers who found-
ed the company have channelled mil-
lions through an offshore structure,
potentially reducing UK tax payments.
This coincided with the company,
whose income is largely taxpayer-fund-
ed through local authority payments,
recording an operating profit of
£79.5 million last year — a 49 per cent
year-on-year increase.
Company spending included a
£144,000 package for Haroon Sheikh,
65, the company’s chief executive, to re-
locate to the Middle East, with housing
and education fees paid for.
Analysis of Ofsted reports has shown
that concerns about substandard care
have been raised about seven homes
operated by one of the firm’s subsi-
diaries in the past year.
Experts described the company’s
“eye-watering” profits as wrong and
called for reform of the social care
sector to prevent it “lining the pockets
of a few very wealthy individuals”.
During the past two years, dividends
of £2.24 million were paid to a holding
company linked to Farouq, 63, and
Haroon Sheikh, who set up the com-
pany in 1993. It was incorporated in
Nevis, a Caribbean island that is a
popular hub for offshore financial
services.
The filings show that the company,
Westminster Holdings Ltd, is wholly
owned by a trust based in Guernsey.
Tax experts said that the legal structure
likely served as a “dividend trap”, mean-
ing that profits were incurred overseas
and therefore were not liable to UK
income tax. Last year the company’s
profit margin after tax was a “mere 7 per
cent profit”, according to the firm.
Last August, Westminster Holdings
sold shares worth £4.65 million as part
of the Sheikhs’ “family estate planning
in relation to their adult children”.
Lawyers for the brothers said that they
“pay all their UK tax due” and make“significant social and economic con-
tributions to charitable causes”.
Anne Longfield, a former Children’s
Commissioner for England, said: “The
children’s social care market is broken
and failing many vulnerable children.
Meanwhile, many private providers are
making eye-watering profits. This is
financially unsustainable and wrong.”
Eileen Chubb, founder of Compas-
sion in Care, the charity, said: “No com-
pany should be making this kind of
profit when the standard of care is not
good enough.”
The percentage of CareTech facili-
ties rated “good” or “outstanding” by
the Care Quality Commission fell from
91 per cent in 2020 to 86 per cent by
September 30 last year, while its
children’s care facilities given the same
ratings by Ofsted fell from 82 per cent to
80 per cent. Ofsted said that 67 assur-
ance visits had been carried out at the
196 homes registered to CareTech
between September 1, 2020, and March
31, 2021. It found “serious and wide-
spread concerns” at five.
Seven homes owned by CambianCare home founders took Covid
funding and sent £2m offshore
Healthcare, a CareTech subsidiary, are
rated “inadequate” — the lowest poss-
ible ranking.
After a visit last December, inspec-
tors said that safeguarding at a child-
ren’s home in Warrington, Cheshire,
was a “serious concern”.
They said that staff had not res-
ponded sufficiently to indicators of one
child’s sexual exploitation, concluding
that “the risk of harm increased
throughout her time living at the
home”.
CareTech said its adult services
ratings were ahead of the national
average and that standards at children’s
homes were above the national aver-
age.
In the past two years, CareTech
received £5.1 million in emergency
grants as part of a £3.2 billion govern-
ment pandemic response package.
According to CareTech accounts, the
company incurred additional costs of
£7.6 million during the pandemic. The
company said that it “did not rely and
has not profited from the Covid-
grants” and that the funds had been
used in accordance with government
guidelines.
The Kenyan-born brothers moved to
the UK as children in 1969. CareTech
runs more than 550 sites, including care
homes, specialist schools and day facili-
ties serving 4,100 adults and children.
Farouq Sheikh, the group executive
chairman, has donated to the Labour
Party and the Liberal Democrats, Sadiq
Khan, the London mayor, and Rosena
Allin-Khan, the Labour MP.
A lawyer for the Sheikhs said it was
untrue that CareTech’s senior manage-
ment had behaved unethically. They
said that all “inadequate” services had
quality improvement plans in place to
address any shortcomings.Swimming lesson Mishka, a Siberian tiger, watches her three-month-old cub Kira’s debut dip at Banham Zoo, Norfolk. There are about 400 of the species left in the wild
TOM JONES/SWNSCritics say reform is
needed to prevent
care sector ‘lining the
pockets of wealthy few’,
writes Mario Ledwith
times investigation
Farouq, left, and Haroon Sheikh with the mayor of London, Sadiq KhanScams play
on fears over
cost of living
Nadeem BadshahThere has been a rise in the number of
text-message scams where fraudsters
impersonate energy companies and
exploit the cost-of-living crisis, the
banking trade body has said.
UK Finance said it had recorded
more “smishing”, or SMS phishing,
which tries to take advantage of house-
holders facing soaring energy bills.
It has urged the public to be vigilant
for the deception, in which people re-
ceive a text message that their energy
supply has switched providers and that
they should set up a new direct debit.
The criminals are exploiting the
announcement that household energy
bills are expected to rise by almost £
from April 1 after Ofgem, the energy
regulator, lifted the price cap by a
record 55 per cent to £1,971.
UK Finance told The Daily Telegraph:
“It comes as no surprise that criminals
are preying on concerns about energy
bills.”
The energy regulator Ofgem said it
was also aware of fraudsters imperson-
ating it, and cautioned: “Ofgem would
never sell you energy [or] ask for
personal information.”
Another recent type of fraud involves
scammers who impersonate the energy
company Eon and tell people they are
eligible for an £85 refund. Recipients
are directed to a fake Eon log-in page
that enables the criminals to obtain
personal details. Eon said: “We will
never ask you for passwords, payment
details or your address.”
Last summer the dedicated card and
payment crime unit, a specialist police
team, carried out raids around Britain
on people who were suspected of
sending scam texts.Charities gain
from attacks
by politicians
Nadeem BadshahCharities labelled as “woke” and sub-
jected to criticism by politicians expei-
enced a rise in public support as a result,
research suggests.
An annual survey found that 78 per
cent of campaigners said they felt
politicians were hostile to civil society
campaigning, up from 63 per cent the
previous year.
A majority said attacks by politicians
and sections of the media were a threat
to charities’ right to speak out and
campaign, according to the Sheila
McKechnie Foundation survey.
However, charities that campaigned
on issues including race, immigration
and the environment also found that
the attacks resulted in public support
for social activism. A third of charities
said they were now “more likely to
speak out”.
The National Trust was criticised by
The Common Sense Group, comprised
of 59 Conservative MPs and seven
peers, after publishing a report high-
lighting the slave trade links of some of
its historical properties. It subsequently
reported an unprecedented number of
new members, with 159,732 new sign-
ups in August last year.
Sue Tibballs, the chief executive of
the Sheila McKechnie Foundation, told
The Guardian: “The high-profile
attacks on charities over the past few
years seem to have backfired.”