typically, they pile a lot of debt on the company| at high interest rates, . excessive interest rates. care homes are under pressure like never before. care and finance l don't go together. it shouldn't be i for personal gain. it's people's homes, i people's livelihoods. the government's announced more funding. but is it time for more checks on where the money's going? it is the unacceptable face of capitalism. given the purpose of the sector is to look after literally the most vulnerable people in our society. as the bbc�*s social affairs editor, i hearfrom too many families worried about the care their elderly or disabled relatives receive and the cost of that care. i'm on my way to hear one daughter's experience of her father's care. what was it like growing up around here? lovely, lovely, everybody knew everybody. tess grew up in staffordshire. i have some beautiful memories there. there was six of us children and my mum had threejobs. my dad was a tyre fitter. money was not brilliant, but my dad always said pay your bills, save a little, enjoy. her mum died when she was young so her dad mick, was at the heart of keeping the family together. my dad had a really, good life. a proper, proper gentleman, you know, very quiet and very private. but last year when he reached his early 805, mick started becoming confused. are they nice, dad? they noticed a few changes in him, so i got him assessed at the doctors, and he'd got vascular dementia. tess found a residential and nursing home in cannock. windsor house says it helps residents maintain their independence and individuality. four days in, five days in, the cracks start to appear. his bed was never made. the toilet area was shocking. my dad's walking in that urine. i said my dad should not be walking in that. the local authority paid about £620 a week for mick's care. when the pandemic hit, restrictions on visiting meant tess saw little of her dad. but she checked on him regularly by phone. we decided to call after five o'clock to see how my dad was. and she said "he's fine, he's pottering around. "he's been a little bit sick." i said, "he's not end of life, is he?" "no, no, nothing like that. "you've got nothing to worry about. "we'll contact you and have you in." i said, "because i don't want my dad to pass on his own." and then... ..four hours later i got a call to say he'd died. on his own, nobody with him. since mick's death, the regulator has rated the home as "requiring improvement" and there's now new management. the home's run by four seasons health care, one of the uk's biggest care home groups. until recently, it was owned by private equity firms. these are companies that raise funds from private investors. typically, a private equity house brings together wealthy private individuals and institutions who are looking for a better return than they would get on other sorts of investment. nick hood is a business analyst. he says private equity investors typically buy businesses hoping to raise their value by making them more efficient. they take harsh decisions, they improve businesses, they create jobs, they create wealth. there are many examples in other sectors where private equity has been positive and has improved things. it's just in care where it doesn't seem to be working. jon moulton was an early private equity investor. what is the motivation for people who are involved in private equity finance? very straightforwardly. people get involved in private equity finance as they are in any other form of investment with a view to making returns. if you went back to when i started in private equity, anything under 30% was regarded as poor. his team brought together investors to buy four seasons in 1999 and sold it to another private equity group five years later, making more than £250 million. since then, the world's changed. after the financial crash in 2008, government funding was squeezed as part of austerity. now it's not so easy to make money. on the whole, they're not making a lot of money. perhaps they were at one stage. but they really aren't now. so, what does this mean for four seasons? we asked two experts to dig into their recent accounts. my name is vivek kotecha. i am a forensic accountant, particularly focused on the companies that operate in the health and social care sector. hiya, my name is christine colet walker, and i am - researcher at the university of surrey — my research focuses primarily on the financial structures - of social care companies. together, they've drawn a family tree of companies in the four seasons' healthcare group. now, if you think about tess's father, or somebody similar, they would probably be based in the company around here in the structure. so these are the ones that run the care homes, but we would have to go all the way over to the other side of the structure to actually see where that money then flows. so there's quite a lot of companies in between. 0k, what i want to do is show you the companies. i am going to let you unroll it. so, just so you know, that's four seasons and this is to give you a sense of the company structure and how many companies are involved. oh, my god! we are at the end of the table now. what's your reaction to seeing it set out like that? i'm gobsmacked, to be honest with you. no, i never knew it was this big a scale. ifeel like ripping all this up now. the four seasons group has a complicated structure. in 2019 it was made up of more than 160 companies. including two at the top of the structure based in offshore tax havens in the cayman islands and guernsey. once it goes offshore to one of these jurisdictions, it provides almost a kind of a protective cloak for them. it gives them some sort of anonymity which means that it's harder to follow where the money is going through their accounts. in the 17 years sincejon moulton's firm owned the group, it's been bought and sold three times to different private equity companies. and the structure's become more complex. i can barely follow it. it's had so many transactions, bits put into it, bits split out of it. i really don't even pretend to understand all that's happened. that's quite something to say. you're an expert in this. you invested in four seasons and yet you can't find your way through the company. no, it is not limited to the care home sector. there's plenty of aspects of government and regulation that you can't follow either. the way they're financed is, to a large extent, not very material to somebody going into a care home. that's easy to say, from a financier�*s point of view, but if i am putting a relative into a care home, i think i am entitled to know where the money is going. to know how much of it is going to front line care. behind this complexity there are clues as to where some of the money is going, and the trail leads to extraordinary levels of debt. each time four seasons changed hands, the new owners borrowed money to buy it. and some of that debt sits on four seasons' books. by 2017 the group owed more than £1 billion. one of the parts of the four seasons story is that they have been struggling now for a while repaying their debts. 2017, the four seasons group had about £29,000 of debt per care home bed that they operated. and the interest charge per bed per week was £1118. so, at that time about 20% of the average weekly fee was going on interest payments. if you take that interest payment off, it is a big chunk of money. what do you think about that? i know my dad was funded, but they are taking money out of his pot to pay off their interest. eventually the four seasons group was unable to pay the interest on some of its debt. in 2019, two key companies in the group were placed in financial administration. part of the debt is unlikely to be paid back, but the group still effectively owes £625 million. the care homes continue to operate. this is, you know, obviously going to be of significant concern for those families who have loved ones who live in those care homes because it appears to be in a very financially vulnerable and fragile position as a company. even four seasons' original private equity owner is worried. my concerns don't lie with private equity. l they lie with the levels of debt used in some l of these transactions. the instability and concern that that generates - is the biggest problem. four seasons health care says... private companies provide more than 80% of care home beds in the uk. three of the biggest groups four seasons, care uk and hc—one, are or have been owned by private equity firms. they have nearly 39,000 beds between them. like the whole sector, the majority of private equity backed care homes are rated good or outstanding by the regulator. but also like the rest of the sector around a fifth arejudged inadequate or requiring improvement. it is difficult to take because my dad worked all his life for what he had got. we tried to put him in a home and the one he ended up in was the best of a bad bunch. people like my father, who has done all the right things, and then... ..i feel very angry about it. dale's father, norman, spent his working life in lancashire. his company helped build the country's first motorways. he started work when he was about 15 and he sort of worked until he was about 68. he was very much a family man. he had a very strong work ethic. he was very much a family man. he had a very strong work ethic. by the summer of 2018, his health was deteriorating. my dad had had a stroke, so he ended up in hospital. he was quite ill with dementia, so we ended up looking for a care home. the family opted for ashton view near wigan. it?s run by hc—one, the biggest care provider in the uk. that in the middle there, that?s the floor that my dad was on. norman had recently sold his home and had money in the bank, so he had to pay the bill of around £1,000 a week himself. sometimes he was dressed in clothes that weren?t his. i once went in and he had a woman?s blouse on. so his dignity had been gone a little bit. he?d changed. i was just looking at a shell. his room was, we were told some of the furniture will be renewed and like six, 12 months later, it was still the same furniture. there was a chair in there that had a big hole in it. i thought a prison cell might look a little bit better than this. it wasjust sad. they were also worried about the state their dad was in. i was mortified when i looked at the bottom of his feet because they were as black as tarmac. i got an apology off the care home manager at the time. but that was like a small snapshot to me of what was what was going on. it was horrible. you?re a good boy, aren?tyou, eh? in october last year, dale was contacted by wigan council. they told him they were investigating allegations of poor care, some involving norman. the regulatorfound there had been problems with staffing and medication and said the home "required improvement". a month later, after two falls and a stroke, norman was admitted to hospital. hc—one wrote to dale. while he was on his deathbed, the communication i got was telling me that his care fees were going up. i found it difficult to understand why somebody who'd been in a care home, i'd not got a call from a manager, not a person in that care home. so, no—one checked, but they sent you the bills? yeah. norman died in hospital. he was 91. hc—one say improvements have been made at the home, they?ve been noted by the regulator and there?s a new manager. it apologised to the family and says, their experience... how much over time did norman end up paying for his care? he spent £125,000. when you're paying a lot of money for his care. of money for his care, i was expecting a little bit more quality. dale wants to know if enough of the money hc—one charges in fees goes on care. we asked the company for a breakdown of the £1,196 a self—funder now pays per week at ashton view. they told us... my dad worked all his life for what he'd got. and all i seeing, it wasjust disappearing down down a tunnel. i don't know where it was going because i couldn't see it. 10,000 miles away in australia, jason ward works for an international taxjustice group. he's been taking a closer look at hc—one's recent accounts ' and how it manages its debt. it took many months, it's an incredibly complicated structure we've pieced together. we've looked at a huge amount of the company filings over a number of years now. what they are doing is not untypical for other private equity owned care companies. his report has been given exclusively to panorama. in 2020, the hc—one group had 81 companies in its corporate structure. the firms near the top are largely based in the cayman islands. the whole thing is owned by private equity investors. one of the main firms is led by a saudi businessman and the other is based in the united states. the hc—one group also has debts. it borrowed around £300 million in 2017 to buy more care homes rather than rent them. a bank lent most of the money at around 9% interest plus fees. but £80 million was borrowed at 15%—18% interest from commercial lenders, including one of hc—one's private equity owners. it transfers money from its care home operations through a number it transfers money from its care home . operations through a number of different means through offshore related party transactions mostly via the cayman islands. and that includes interest payments on its debt. within three years, the £80 million debt had grown to £120 million. it's a cost paid to themselves via cayman islands structures and this is a very common private equity tactic of moving money out of the operating company and to the ultimate investors in a way that maximises their profit and limits its liabilities. hc—one says the £80 million loan wasn't used to extract value overseas or deliberately reduce earnings. it says the bank wouldn't lend all the money it needed and that 15% was the market rate available at the time. it says it pays full tax in the uk and that... we still don't know the full picture. and the full picture is not knowable because, ultimately, the cayman islands has a zero—tax rate and also has very little transparency. it should surely be the case that these structures should be transparent. they should either bring them on shore or else they should be required to disclose the full finances of the entire group. it's as simple as that. hc—one says it's a "private company delivering an essential public good". it says it consolidated its debt in 2021 with an "independent and publicly listed health care investor", reduced debt by "£66 million" and is cutting the number of companies in the group to 37. as the pandemic took hold, hc—one, like all other care home providers, was hit hard. and like other companies, hc—one wrote to councils asking for financial help. but two days after the letter was sent, the accounts report a £4.8 million dividend payment. and at the end of the day, they're begging for more money from cash strapped local authorities, people are cashing in on the value of their homes to fund that care. it's pretty shocking and disturbing. in the months that followed, hc—one received £18.9 million of government pandemic support. it just doesn't sit well with me ethically or morally that amount of dividend while your dad eats a cheese butty for his tea. hc—one says "no shareholder dividend has been paid since 2017". it says the £4.8 million reported dividend represents... they were selling leases on individual rooms to investors for up to £75,000 each, with an assurance of high returns. but now the home stands empty. the regulator in northern ireland, concerned about the financial plans and who had responsibility for running the home, ordered its closure. within two weeks, new homes had to be found for the residents. one of my clients, i was taking her down the lift and she turned one of my clients, i was taking her down in the lift and she turned around and said to me, "i don't want to go." yeah, it's heart—breaking. the carers' families were devastated. care and finance don't go together. yes, you need to make money to make the business viable and that, but it shouldn't be for personal gain. it's people's homes. it's people's livelihoods, it's notjust like closing a shop. for many decades, the private sector has played an important role in providing care. but now there are calls for an investigation into whether the market is operating in the best interests of consumers. and for the government to introduce more checks on how care home fees are spent. there's a real opportunity now to lay down a long—term plan for the sector and to channel private sector investment in the way we want. and that could be a very positive thing. at the moment, it's the wild west out there. and, until we give that clarity, i don't think we're going to get the positive type of investment that we really need. the department of health and social care says it expects... "local authorities to ensure providers are offering good quality care, improving workforce conditions, and are investing in services". for the families, what matters most is that the money spent delivers good quality care for those who need it, when they need it. i would not only invite those people at the top to spend a month as a resident. i would invite them to spend six months as a carer, doing personal care, just so that they can actually see what is actually funding their lifestyle. what do you think they would make of it— they would last 24 hours to be honest. looking back at the care that my dad received, it is quite upsetting. my dad ended up in a room i'd say ioft by 8ft with a tatty old bed, wardrobe, set of drawers with all stuff in from the previous resident. it's heartbreaking, really, because they should be living their best life. this is bbc news. our top stories... a virtual summit amidst the build up of russian troops on the ukrainian border. president biden outlines �*deep concerns' — vladimir putin demands a halt to the expansion of nato. leaked footage sparks a row over what appears to be british officials joking about a covid christmas party last year — breaching lockdown rules — at number 10 downing street. and celebrations as same—sex marriage becomes legal in chile. the meta versus a version of the internet that we are inside. and diving into the metaverse — facebook is the latest high tech company to go there.

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