5 ms·

Without access to their books, it's hard to evaluate their actual profit. But, later in the article there is this quote: "The Adolfsens claim that theirs is 3.

by rmxt 11y ago

Without access to their books, it's hard to evaluate their actual profit. But, later in the article there is this quote: "The Adolfsens claim that theirs is 3.5 percent, but Herning calls that figure “highly unlikely. All the other refugee companies that I’ve looked at have a much higher profit margin.” She says that in handling revenue from nursery schools and nursing homes, the Adolfsens have played a shell game, shifting profits from one business within their conglomerate to another. “I wouldn’t be surprised if they were doing that for Hero as well,” she says." Also, quick searches seem to indicate that for-profit prisons (in the US at least), an analogous industry, have profit margins significantly north of 3.5%. [1] I wouldn't be surprised if the actual profit margins for the refugee care companies, when all subsidiaries are included, are between 5-10%. I don't know if there's a perfect solution to refugee care that optimizes spending and societal harmony, but private enterprises running the show with close government oversight (and no shell games), seems like a somewhat happy middle ground. [1] http://www.cnbc.com/id/48675641 http://www.cnbc.com/id/48675641

theodorton 11y ago
Their revenue and profit prior to taxes for 2014 was 549M and 27M. Corporate Tax for 2014 was 28 % so 19.4M profit after tax which gives a 3.5 % net profit. http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-flere-språk/Z0IIRBZ5/ http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-f...
- vidarh 11y ago
  The point made in the article (and the comment about) is that they have a history of playing a shell game with their companies to obscure where they're actually making their money (and possible to maximize tax benefits). Without seeing their actual accounts, those numbers are meaningless as you don't know whether or not they've bought all kinds of overpriced services intended to shift revenue somewhere else, for example.
rayiner 11y ago
Who cares if the profit margin is even double that (10-20%). Almost certainly still cheaper than the government getting into the hospitality business, and has the benefit of not creating a permanent bureaucracy.
- rmxt 11y ago
  I am not particularly concerned with the "above-the-table" profit margin. I am concerned with the possibility that using private contractors is prone to abuse, a loss of accountability (shell games) and a race to the bottom for quality of service in a venture where human quality of life is (or should be) the primary goal. Sure, the prime contract might be locked-in to a small profit margin, but I find it hard to believe that the same owners don't have their hand in the pot somewhere lower down in the supply chain. Which would lead to them making more than the prime contract 3.5% profit margin might suggest. Then again, it's not like public-private partnerships (or project delivery methods in general) are brand new concepts. Governments have somehow managed to get roads and schools (infrastructure) built for a pretty long time. (Not without complaints of overruns and abuse: see any megaproject in the United States.) Though perhaps there is something to be said for the qualitative difference and value of human life that distinguishes a "race to the bottom" for building a road, compared to providing temporary shelter and food for actual human beings. I agree that it's good that a government saves itself from getting into a "non-core" business so to speak. But I think that without strict oversight from government, refugee support services could turn into yet another field where shady business practices are the norm.
  - vezzy-fnord 11y ago
    I am uncertain as to why you hold the actions of private individuals in such contempt, but give the government a free pass when it is just as prone to abuse, lack of accountability and poor service. Why is one a devil and the other an angel?
    - gnopgnip 11y ago
      In general there is a formal process that use to remedy the situation with the government that is not available with a private company. Consider getting a parking ticket. At a private lot you are ticketed in error. You call the number listed but they refuse to accept they made an error even if you have proof you paid for parking. Or if you get a parking ticket from the city you can protest the citation by mail, then if it is not overturned you can request an appeal.
digi_owl 11y ago
> (and no shell games) A massive pipe dream. Norway has already seen the kinds of shenanigans that can come from private "service" providers on government contracts. a couple of years back a chain of private schools were found to be siphoning off funds that was earmarked the students. This by setting up companies on Luxembourg that acted as service providers for the schools.

by rmxt 11y ago

theodorton 11y ago

Their revenue and profit prior to taxes for 2014 was 549M and 27M. Corporate Tax for 2014 was 28 % so 19.4M profit after tax which gives a 3.5 % net profit. http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-flere-språk/Z0IIRBZ5/ http://www.proff.no/selskap/hero-norge-as/stavanger/tolker-f...

vidarh 11y ago
The point made in the article (and the comment about) is that they have a history of playing a shell game with their companies to obscure where they're actually making their money (and possible to maximize tax benefits). Without seeing their actual accounts, those numbers are meaningless as you don't know whether or not they've bought all kinds of overpriced services intended to shift revenue somewhere else, for example.

rayiner 11y ago

Who cares if the profit margin is even double that (10-20%). Almost certainly still cheaper than the government getting into the hospitality business, and has the benefit of not creating a permanent bureaucracy.

rmxt 11y ago
I am not particularly concerned with the "above-the-table" profit margin. I am concerned with the possibility that using private contractors is prone to abuse, a loss of accountability (shell games) and a race to the bottom for quality of service in a venture where human quality of life is (or should be) the primary goal. Sure, the prime contract might be locked-in to a small profit margin, but I find it hard to believe that the same owners don't have their hand in the pot somewhere lower down in the supply chain. Which would lead to them making more than the prime contract 3.5% profit margin might suggest. Then again, it's not like public-private partnerships (or project delivery methods in general) are brand new concepts. Governments have somehow managed to get roads and schools (infrastructure) built for a pretty long time. (Not without complaints of overruns and abuse: see any megaproject in the United States.) Though perhaps there is something to be said for the qualitative difference and value of human life that distinguishes a "race to the bottom" for building a road, compared to providing temporary shelter and food for actual human beings. I agree that it's good that a government saves itself from getting into a "non-core" business so to speak. But I think that without strict oversight from government, refugee support services could turn into yet another field where shady business practices are the norm.
- vezzy-fnord 11y ago
  I am uncertain as to why you hold the actions of private individuals in such contempt, but give the government a free pass when it is just as prone to abuse, lack of accountability and poor service. Why is one a devil and the other an angel?
  - gnopgnip 11y ago
    In general there is a formal process that use to remedy the situation with the government that is not available with a private company. Consider getting a parking ticket. At a private lot you are ticketed in error. You call the number listed but they refuse to accept they made an error even if you have proof you paid for parking. Or if you get a parking ticket from the city you can protest the citation by mail, then if it is not overturned you can request an appeal.

digi_owl 11y ago

> (and no shell games) A massive pipe dream. Norway has already seen the kinds of shenanigans that can come from private "service" providers on government contracts. a couple of years back a chain of private schools were found to be siphoning off funds that was earmarked the students. This by setting up companies on Luxembourg that acted as service providers for the schools.