Posts Tagged ‘Conflict of Interest’

From 2011: Private Eye on Unum’s Role in Shaping Government Welfare Policy

April 10, 2014

This is from the Eye for the 11th – 24th November 2011:

McGarry Unum pic

Jack McGarry, Chief Executive at Unum.

Welfare Reform

Mutual Benefits

Tricky questions are again being asked about the profits American insurance giant Unum stands to make from its massive media push on income protection cover, promoted as the answer to the latest tough welfare reforms.

Pulling stunts like persuading six bloggers to live for a week on the current average benefit of £95 and then write about it, Jack Mcgarry, chief executive at Unum UK (pictured), earlier this year warned: “The government’s welfare reform bill will seek to tighten the gateway to benefits for those people unable to work due to sickness or injury. Each year up to 1m people in the UK become disabled and the reforms mean that working people will be able to rely less on state benefits to maintain the standard of living they were used to prior to their illness”.

Well, Unum should know. Behind the scenes it has been helping Tory and Labour governments slash the benefits of disabled and sick people for years – going right back to Peter Lilley’s social security “Incapacity for Work” reforms of 1994. Lilley hired John Le Cascio, then vice-president of Unum, to advise on “claims management”. Le Cascio also sat on the “medical evaluation group”, which – according to Professor Jonathan Rutherford in the academic journal Soundings – was set upt to design and enforce more stringent medical tests.

At the same time, the UK wing of Unum was launching what it boasted was “a concerted effort to harness the potential” from predicted cuts in benefits, urging people to protect themselves with a “long-term disability policy from Unum”.

The Eye first questioned Unum about the possibility of a serious conflict of interest back in 1995. Dr Le Cascio said he didn’t “feel that way” and wouldn’t have taken the government job if he thought there was a conflict. That, of course, was ten years before Unum was found guilty in the US of “systematically violating” insurance regulations and fraudulently denying or “low-balling” claims using phony medical reports, misrepresentation and biased investigations (see Ad Nauseam, last Eye).

Fast-forward 16 years, and plus ca change. Unum’s tarnished reputation has done nothing to diminish its influence here and the Department for Work and Pensions (DWP) is still denying there’s anything amiss about Unum’s more meddling. In a lengthy reply last month to Norman Lamb, Nick Clegg’s chief adviser, the DWP neatly skirted questions about whether Unum was advising on welfare reform and about its unlawful activities in the US.

Yet Unum executives sat on both the mental health and physical function “technical working groups” set up under the Labour government in 2006, which reviewed and finally came up with the new, stricter “work compatibility assessments”, introduced for new claimants in 2008. In fact Unum and Atos, the huge French outsourcing company that holds the government’s multimillion contract to conduct the widely criticised assessments on behalf of the DWP (see in the Back, last Eye), were the only for-profit companies represented on the groups. Unum chief executive McGarry has now been appointed to the expert panel reviewing the sickness absence from work system announced by the government in February.

Prof Rutherford wrote that Unum had also been “building its influence” in a variety of ways over a number of years. He said that in 2001 Le Cascio was a key player at a ground-breaking conference at Woodstock near Oxford, title “Malingering and Illness Deception”. Malcolm Wicks, Labour work minister at the time, and Mansel Aylward, then chief medical officer at the DWP, were among the 39 delegates.

In the same year, Unum launched a public private partnership to act as a pressure group to extend influence in policymaking. And in 2004 it opened the £1.5m UnumProvident Centre for Psychosocial and Disability Research at Cardiff University. (The Centre has since be renamed and Unum says it no longer provides any funding – no doubt because of claims that academic integrity could be called into question by its influence).

Unum has been lobbying, sitting on expert groups and hosting meetings at party conferences of all colours ever since. And lo and behold, in May this year, Unum’s then medical officer Prof Michael O’Donnell jumped ship to become chief medical officer at Atos. He barely had time to catch his breath before giving evidence to the Commons committee looking at the welfare reform bill.

But Unum is once again denying any conflict of interest “since our current work with the DWP and our marketing campaign are different”. It said its current consultation work is about helping people return to work and its advertising campaign was educational and does not support tightening benefit changes.

Meanwhile disability activists who have fallen foul and been forced to appeal cuts in DWP benefits based on flawed Atos assessments, and campaigning groups like Black Triangle, think the whole thing stinks and are urging MPs to investigate.

So Unum is, like Maximus, another private contractor hired to implement government welfare policies, a company with a history of corruption in the US. And like many of the other companies involved in the government’s welfare reforms, it helps formulate the very same policies from which it stands to make a profit. Meanwhile, the sick and disabled are thrown off benefits due to their advice. And, as you’d expect, they’ve even got a connection of the past masters of cruelty, fraud and corrupt influence, Atos.

From 2011: Government Appoints A4E to Design Contracts for Private Welfare Schemes

April 8, 2014

This is another story from Private Eye, this time from 2011. According to the Eye for 30th September – 13th October 2011, the government was awarding A4E the contract for designing the rules under which A4E, amongst other contractors, would bid to provide public welfare and social services.

Welfare Reform

Contract Claws

The Cabinet Office has appointed A4E, one of the government’s biggest contractors, to design the kind of contracts for which it will itself bid.

A4E will design the “payments by results” rules for the welfare contracts funded by “social impact bonds”, the government’s new big idea for public services. By putting its main welfare contractor in charge of designing welfare contracts, the department is effectively repeating one of the central failure of the private finance initiative.

The contract is worth up to £300,000 and covers pilot schemes in four regions to help families with multiple problems. Private investors fund welfare and social work schemes and the government then pays the investors back over years based on the public money “saved” by unemployed people finding work or ex-offenders staying out of jail.

The Cabinet Office is seeking “more innovative financiers, with a bigger appetite for risk”, so it will take very tight contracts to prevent these aggressive investors getting big returns over long periods for ill-defined “savings”, as the PFI example shows. Asking A4E to guarantee the “robustness of the savings estimates” seems perverse as the firm has repeatedly failed to give good results on its existing welfare-to-work contracts (Eyes passim), and it has every interest in government contracts being as soft as possible.

A4E may be excluded from bidding for the contracts it is drawing up in Birmingham, Leicestershire, Hammersmith and Westminster (all Conservative councils); but exclusion is not automatic; A4E is being asked to guard against “cream skimming/cherry picking” and ensure “value for money” – but critics say that A4E is itself guilty of the former and does not offer the latter.

Such conflicts of interest and soft corruption are, of course, no strangers to welfare reform and the public-private contracts governments since Maggie Thatcher’s have pursued. The Skwawkbox today blogged on the close links between George Osborne and the company, which bought up many of the Royal Mail shares at a discount. Way back in the 1990s, one of big accountancy firms being employed by Major’s government to adjudicate the bids of companies competing for a government contract, then decided to bid themselves as they decided they were the best candidate. A4E in this instance is merely part of a long line of such cases. It was all part of the ‘sleaze’ of the Major years, of which a French politician said ‘You call it ‘sleaze’. In France we simply call it corruption.’ The point of such contracts in any case isn’t to guarantee quality of service, or provide transparency and accountability, but simply to award lucrative government money to big companies that will then reward the politicians concerned with directorships.