Malaysian billionaire implicated in Australian retirement home scandal

Lee reportedly holds a 22.6 per cent stake worth A$400 million (RM1.301 billion) in Australia’s largest listed retirement village operator, Aveo.

In a 1.20 minute documentary published on Four Corner’s Facebook page yesterday, a former Aveo resident John Lander said that the model of the business is a get rich quick scheme.

“This model to me is a ‘get poor quick scheme’ for the individual investor in a property or retirement village, and it’s a get rich quick scheme for the operator of the retirement village,” said Lander, 72, who lost A$78,000 (RM254,378) in retirement, after investing in one of the homes.

A series of multimedia articles titled as ‘The Retirement Racket’ including the documentary which were also published in The Sydney Morning Herald, claimed that Aveo makes lucrative money when a resident exits the home.

Part one of the series claimed that with 89 retirement villages around the country, which house more than 13,000 retirees, Aveo collects an exit fee when a resident dies or leaves.

The fee is based on a percentage of the purchase price on a sliding basis over the number of years of occupancy and in the company’s most recent Freedom Aged Care contracts, the exit fee charged by Aveo after just two years is 40 per cent of the value of the property.

The report also said that Aveo is the most aggressive listed operator in the country, which charge fees that eat up a lifetime of savings within just a few years and has a target turnover of 10 to 12 per cent of residents each year.

Which means Aveo would make $90 million in exit fees each year if it hits target and the average exit fee is assumed to be approximately $75,000 per unit.

It was reported that Aveo’s majority stakeholder is Malaysian conglomerate Mulpha International Berhad, which is 40 per cent owned by the Lee family.

Mulpha is Malaysia’s largest real estate investor and developer in Australia.

The report said Aveo declined to be interviewed for the story but it released a statement saying it does not generate a profit from ongoing service fees and it does not churn residents.