Wednesday, 8 June 2011

Scandal of Southern Cross

Birmingham MP Roger Godsiff joined the attack over the scandal of the financial crisis at Britain’s biggest nursing homes group, Southern Cross Healthcare, tabling an Early Day Motion (EDM1863) highly critical of the financial management of the company as well as naming both a former and current senior Government advisor who benefited substantially from the flotation of the company in 2006.

The hard hitting EDM tabled by the Hall Green MP states that: ‘Elderly people who need residential care should be helped to live out their lives with care, support and dignity rather than having their futures determined by the avaricious greed of financial entrepreneurs and their apologists who view care for the elderly as just another commodity and market opportunity to make vast sums of money’.

One of the 753 homes currently run by Southern Cross is the Oaklands home in the Moseley district of Mr Godsiff’s constituency and he firmly believes that residents of Oaklands and all the other 30,000 Southern Cross residents can do without the worry and distress that is being caused by the present financial uncertainty.

Former and current senior Government advisors involved with Southern Cross are Baroness Morgan of Huyton and Jeremy Heywood.

Baroness Morgan, who served as Tony Blair’s political secretary, is one of the longest serving board members at Southern Cross and sits on the company’s remuneration committee which determines the pay of senior executives and directors. She received £53,000 from the company last year. Jeremy Heywood who was appointed Permanent Secretary to the Prime Minister’s Office in 2008, was co-head of UK investment banking at Morgan Stanley which acted as financial adviser and lead manager for the 2006 flotation and yielded a 300% return on its investment in Southern Cross for its private equity group owner Blackstone and its directors a year before the share value collapsed.

The 2006 flotation valued the company at £423 million and raised £175. It is normal for advising banks to charge a fee of at least 1%.

Mr Godsiff has also written to Heath Secretary, Andrew Lansley MP asking him if the Government will undertake a financial review of other care sector providers to ensure that they are fit for purpose.

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