FIRB have indicated that they would welcome
information about corporations when the national interest is
involved. I respond by asking how I can find out which companies are
entering Australia. FIRB has never responded to my requests that I be
notified by them. The Connecticut fraud action has now been settled.
I enclose press reports and also the government auditor's reports in
my possession and ask them again to restrict Sun Healthcare's
expansion in Australia.
9 March 1999
V.K. Joice, Manager Tertiary
Industries Unit
Foreign Investment and Review
Board (FIRB)
The Treasury Building
Parkes Place
PARKES
ACT 2600
Dear Mr/Ms Joice
Multinational Health Care Organisations
Thank you for your letter dated 24 February 1999 in which you indicate the willingness of FIRB to consider information submitted by private individuals like myself.
I would be very grateful if you would advise me how I can find out which health care corporations have applied to FIRB to invest in Australia.
Has Quest Diagnostics for instance applied to FIRB now that it is buying the diagnostic laboratories division of SmithKline Beecham in America and as a consequence Australia? While Quest is a relatively new company spun off from Corning, we do not yet know whether this division of Corning was involved in operation labscam and whether in that case its directors are the same as those involved. Certainly pathology services in the USA have been one of the prime culprits in corporate fraud and in the payment of kickbacks to doctors.
I note from a letter I received that a company Omega Healthcare now operates in Australia. I also note a) that there is a US company of the same name and b) that there is a Columbia/HCA subsidiary also called Omega, presumably the same company. Inevitably one asks whether this is a local company or whether Columbia/HCA has come in through the back door, quietly using the FIRB process.
I remind you of a number of points.
1. That US corporations have now realised how unwise it is to advertise their intended investment in Australia until they have effectively secured FIRB approval. This information is no longer available to citizens.2. As you point out general hospital licences are granted and these hospitals operate under state legislation. A number of points are relevant to this.
a. Federal government agencies licence pathology laboratories and aged care facilities. FIRB has not advised the federal authorities that such facilities were being purchased or that the multinational company indicated its intention to enter this market. Federal departments are responsible for detecting and prosecuting fraud, yet they were not involved in decisions when companies accused of fraud entered Australia. In addition to this Federal authorities have used the myth of state responsibility to distance themselves from matters which should directly concern them. This rationalisation is very thin indeed.b. Fines for fraud in the criminal courts in the USA are insufficient to deter corporate fraud and there are excessive delays in bringing matters to the courts. Civil payments are much larger and for this reason the civil courts are used to prosecute fraud. A "no wrongdoing admitted" settlement and a neutral press release is traded for a larger fine. Governments may withhold payment for continuing services while the case is being prosecuted. The fine is often hidden by the company agreeing to forgo money which has been withheld by the government. They recover more.
c. With the possible exception of Victoria Australian states do not have the powers to reject licence applications on the basis of the probity provision when this must depend on non-criminal proceedings. They risk a legal challenge. (National Medical Enterprises threatened NSW in 1993) Commercial decisions in the courts do not set much store on probity issues. None of the states in Australia is in a position to risk such a challenge which would involve a multimillion court action against a corporate interest much wealthier than the state, an action based on documents and witnesses obtained from the USA, witnesses who cannot be forced to give evidence and who are at risk of corporate influence. No sensible state will try to reject hospital licenses under these circumstances. They are powerless.
3. FIRB processes are sadly deficient in that there are no requirements that corporations disclose matters relevant to their conduct, no penalties when they fail to do so, and no action is taken when they are later found to have mislead FIRB.
4. FIRB which is primarily a business group advising on business issues is poorly equipped to evaluate issues of probity in health care corporations, and would have little insight into the consequences of corporate misconduct for sick citizens.
5. In 1993 I wrote to the treasurer pointing out the serious deficiencies in FIRB and state regulations. Unknown to me the health department in Western Australia had also highlighted these deficiencies in 1993 and advised their minister to set up a process between state and federal bodies to address these problems. I have written to government about this issue and pressed for a senate review since I received a copy of this report in 1995. It is now 6 years since these deficiencies were drawn to the attention of authorities and despite several examples where the system has been abused nothing has been done about it.
6. FIRB has the federal powers and resources needed to properly investigate these international matters and also the legal authority to act in the interest of citizens without fear. The safety of our health system is consequently entirely dependent of the FIRB process and on FIRB acting in the interest of the states and their citizens. This is in spite of its deficiencies.
Sun Healthcare
Sun is an example of where the FIRB process fell down very badly. The relevant state advised against Sun's entry into Australia, was overruled by the FIRB process and was then unable to take any action to withdraw licences. This is in spite of widespread allegations that Sun Healthcare was at the centre of a massive US scandal involving the neglect of vulnerable frail elderly simply for profit. This was confirmed by a US government investigation, a US senate hearing and state action in California. The health department in Victoria has since carried out a probity check and found the company wanting. Since then a fraud investigation in Connecticut has revealed even more unconscionable conduct by senior executives in the company. These are the people which the FIRB process allowed into the country, knowing that they planned to enter the aged care "marketplace". These people will be responsible for the welfare of vulnerable citizens, particularly the aged. FIRB should have been well placed and resourced to determine all of these matters.
I receive material and search for reports concerning developments in the US health scene, and the specific conduct of particular companies in which I am particularly interested because of their current or threatened involvement in Australia. I simply do not have time to do more. My contacts are also busy and it would be a great imposition to ask them to ferret out information without some very specific reason. It is simply not possible for me to supply FIRB with information about all of the hundreds of corporations in the USA, many with a poor track record which might be interested in buying Mayne Nickless. If you indicate to me which companies have applied then I will do my best to assist.
I. To assist you I enclose the latest reports about the settlement of fraud in Connecticut. You will note the denial and conflicting interpretation given by the company. To assist you in resolving this I enclose some of the documents used by Connecticut authorities in this case. I ask that the FIRB now take steps to restrict Sun Healthcare's operations and force it out of Australia.II. I include some recent files with reports on healthcare. You will have to search for Columbia/HCA and any other companies in which you are interested. They are in rich text format and should retain formatting if loaded into a Word Processor such as Microsoft Word.
I have looked at my archives but the many hundreds of files are not sorted in a format which I could easily send you. The content is mixed and contains comments which I would not want to publish and some may even be defamatory. I simply cannot supply all these. I would have to know what I was looking for. There is so much that would not be relevant. There are also files archived about corporations in which I have not taken a particular interest but there is no immediate way of telling which they are. If I am to help you then I must have more information
Yours sincerely,
