the times | Saturday May 28 2022 21
News
Half of Britain’s biggest children’s social
care operators are owned by offshore
private equity firms, The Times has
found. Corporate bodies in Jersey, Lux-
embourg and the United Arab Emir-
ates lie behind companies largely paid
by the taxpayer to look after some of the
country’s most vulnerable children.
As a report on children’s services in
England warned of a “broken system”,
The Times found that hundreds of UK
children’s homes and fostering agencies
are ultimately owned by foreign com-
panies.
Regulators said that the role of large-
scale childcare providers, primarily
funded by local councils, has distorted
the market. An independent review this
week called for the government to levy
a windfall tax on top companies.
Many of the private equity-owned
companies have been loaded with debt,
which allows them to be used to finance
more takeovers.
An analysis of the ten largest provid-
ers of children’s homes and fostering
services, based on Local Government
Association data, found that half are
owned offshore.
Outcomes First Group, the largest
provider of children’s residential homes
and foster places, is ultimately owned
by a holdings firm based in Luxem-
bourg. Accounts filed this week for
SSCP Spring Topco, the parent com-
pany, showed revenue of £421 million,
up from £365 million for the previous
12 months. The company posted a pre-
tax loss of £69 million, partly because of
its £871 million debts.
Outcomes First said: “We are a UK
registered company and pay all UK tax-
es due, any profit is reinvested into
improving and extending services.”
Polaris, the third largest children’s
social care provider, is ultimately
owned by a corporate body registered
in Jersey, known for its generous tax re-
gime.
CareTech, which runs about 200
children’s homes and had an operating
profit of £79.5 million last year, is the
only big care home group listed on the
London Stock Exchange. The Times has
previously disclosed that the company
sent £2 million to its founders’ offshore
company in the Caribbean while
accepting Covid support from the gov-
ernment. Caretech said company divi-
dends were subject to UK taxes.
Mubadala Capital, a subsidiary of
Abu Dhabi’s second-largest sovereign
wealth fund, owns Witherslack, which
runs 36 children’s homes and schools
through a UK holding company. With-
erslack said its structure was not de-
signed to avoid paying tax.
The Priory Group, which owns 58
children’s homes operating under the
name Aspris, was bought by Waterland,
a Dutch private equity firm, in January
last year for almost £1.1 billion.
Anne Longfield, chairwoman of the
Commission on Young Lives, said:
“This is a sign of how broken the child-
ren’s homes market is. Money that
should be invested in providing high-
quality places for vulnerable children
here is instead being shipped abroad to
fill the coffers of wealthy investors and
institutions.”
Of the 20 largest UK children’s care
providers, half have some form of pri-
vate equity ownership. Nick Hood, ahealthcare specialist at Opus Business
Advisory Group, said the appeal of off-
shore structuring was “tax and secre-
cy”, adding: “These groups have pretty
much unfettered ability to decide how
much profit or loss they’ll declare and
therefore how much tax they will pay.”
The average margin on operating
profits for the leading care providers is
22.6 per cent, according to data com-piled by the Competition & Markets
Authority.
Children’s care was once provided
mostly by local authorities but cash-
strapped councils have turned to pri-
vate providers. Local authorities spent
£2.2 billion on residential care and fos-
tering in the past financial year.
Peter Sandiford, chief executive of
the Independent Children’s HomesAssociation, said: “With the absence of
investment from government, [it] had
to come from somewhere. The pro-
posed windfall tax is a blunt policy lever
that will likely cause unintended conse-
quences.” Andrew Rome, a director of
Revolution Consulting, who monitors
the market, said some private-equity
run firms would be unable to deal with
the “ shock” of a windfall tax.Jail for human traffickers who controlled five brothels
A human trafficking gang has been jail-
ed for exploiting hundreds of women
across London.
Sebastian Zimoch, 48, and his wife
Anna Zimoch, 46, along with Gregaor
Borowka, 44, Michael Lozinski, 52, and
Rafal Lacki, 41, were convicted at Isle-
worth crown court in London in March
of conspiracy to arrange or facilitate
human trafficking and conspiracy to
control prostitution between January 1,
2015, and February 9 last year.
Lozinski was also convicted of con-
trolling prostitution for gain between
January 1, 2017, and February 9 last
year, in relation to a business called
Massage Bunnies.
The trafficking gang was run by Seb-
astian Zimoch, with his wife in control
when he was absent. The business,
which began in 2015, was known as
Golden Kiss.
The court was told that the gang ran
at least five brothels. Gareth Munday,
for the prosecution, had told the court
that the women in them had no auto-
nomy. “Men were being brought to
them and they had to get on with it,” hesaid. Munday said that £232,000 in un-
explained earnings had been found in a
bank account belonging to Sebastian
Zimoch. Lacki and Borowka were two
of the main drivers for the business,
ferrying girls to calls around London.
Borowka also doubled as a receptionist.
The court was read the victim impact
statement of a 19-year-old woman who
reported the gang to the police. She told
of the emotional toll on her.
“I have been spat at in the face by a
client, made to feel stupid, and like I did
not matter. I cry when I think abouteverything that has been done to me.”
Her statement added that she struggles
to trust men. “When someone is being
nice to me, especially men, I always
think why are they being nice?”
Judge Fiona Barrie paid tribute to the
victim. “She has shown herself to be a
very brave young woman.”
She said the woman was in tears
when she was picked up by Lozinski
after fleeing from an abusive pimp.
“It should have been to obvious to
anyone that she was extremely vulner-
able,” she said. “To the contrary she wasput to work straight away, sent out to
outcalls for the remainder of the night.”
Sebastian Zimoch, of Romford, east
London, was jailed for eight years. His
wife received a two-year jail sentence
suspended for two years, and was
ordered to do 150 hours of unpaid work.
Lozinski, of Hayes, west London, was
jailed for seven years; Borowka, from
Harrow, also west London, for three
years and nine months; Lacki, 41, from
Harlow, Essex, for 18 months. He was
released on licence, having served nine
months by the time of the sentencing.Offshore firms own children’s homes
Mario Ledwith
T
he 25-year-old
daughter of a City
investor who was
accused of
overseeing a
£21 million tax fraud is the
owner of one of the largest
children’s care home
companies (Mario Ledwith
writes).
Melissa Bell took control
of Hexagon Care Services
in 2016 when she was 19
and a geography student at
the University of
Manchester.
The graduate from the
Isle of Man is one of the
youngest care home owners
in the country, in charge of
45 children’s homes.
Hexagon was paid more
than £91 million by councils
between January 2017 and
September last year and
was the seventh largest
provider of UK children’s
homes last year.
It made a profit of
£2.6 million last year on
turnover of £30.4 million.
Bell is also a director of
the company, which is
based in Preston,
Lancashire, and was set up
by her father, Paul Bell, in
2014.
The 56-year-old former
stockbroker, once said to be
worth £400 million, has
been investigated as the
alleged head of a crime
group suspected of “being
involved in an organised
attack on the UK tax
system”.
The former director of
Bet666, an online gaming
site that closed in 2015
owing customers
£1.6 million, no longer holds
any equity in Hexagon orits parent company. HMRC
refused to comment on the
case. Hexagon and Melissa
Bell did not respond to
requests for comment.
Although the majority of
Hexagon’s premises are
highly rated, Ofsted
inspectors gave one of its
homes a damning verdict
this year over “serious and
widespread concerns”about safety. A report
detailed how staff had
raised the alarm about a
colleague’s “inappropriate
handling of a child”, and
there were other
inappropriate instances of
restraint.
On another occasion an
allegation of abuse against
a person working in the
home was “overlooked bythe manager” and then the
regulator was not alerted.
In its last overview of the
sector, published last
September, Ofsted said that
“serious and widespread
concerns” had been found
at three Hexagon homes
between September 1, 2020,
and March 31 last year.
The round-up showed
that about 80 per cent ofchildren’s homes were
awarded the highest ratings
of “outstanding” or “good”.
Of the 1,617 rated at the
time, a further 18 per cent
were graded “requires
improvement”, and less
than 2 per cent were
deemed “inadequate”.
A home run by Cambian
Childcare, a subsidiary of
Caretech, the largest
children’s home provider,
recently joined the ranks of
the worst-rated homes.
At an interim inspection,
Ofsted inspectors found
that the care afforded to the
two children living at the
home was inadequate.
A report detailed filthy
carpets and bare communal
areas. Staff recruitment was
said to be unsafe as checks
were not done to ensure
employees were suitable to
work with children.
Caretech said: “Wherever
Caretech’s services fall
short of the standards it
expects, it provides prompt
and comprehensive support
to address the concerns
raised and return the home
to a high standard.”Accused
fraudster’s
daughter in
charge at 19
Melissa Bell was a student
when she took control of
Hexagon. Above, with father
Paul, a former stockbroker