Sweden's Million-Dollar Refugee Industry

Meet the companies profiting from the refugee influx.

With its long corridors and high-ceilinged rooms, “Sanatoriet,” a residence housing some five hundred asylum seekers in the three-thousand-resident southern Swedish town of Broby, looks a whole lot like a hospital. That’s because the hundred-year-old building used to be one. By 2012, however, it had stood unused for years. That’s when Jahangir Hejazi spotted a business opportunity and took it over.

“My intuition told me we’d get a wave of humans,” explains Hejazi, an Iranian who fled to Sweden as a teenager and went on to work for the Swedish Migration Agency. He was right. In 2012 Sweden received 43,887 asylum seekers; by 2014 the number had grown to 81,301, and last year 162,877 people applied for asylum.

As a former Migration Agency official, Hejazi also knew that the agency had no means of accommodating all the asylum seekers: it only has space for some thirty thousand people in the apartments that it owns and rents across Sweden. In the past, the Migration Agency housed all asylum seekers in its own residences—dorm-style accommodation scattered across the country. But in the 1990s, the government decided that the Migration Agency should rely on the private sector for refugee accommodation in case of a surge. In the past decade, the agency has occasionally rented accommodation from private companies. But the current influx of refugees has created housing needs of different proportions altogether.

Other countries, too, rely on private companies for refugee housing. In Austria, lodging for arriving asylum seekers is operated by the Swiss company ORS (which is, in turn, owned by a private equity firm). The company made headlines last year when news emerged of scandalous conditions at its camp in the Austrian town of Traiskirchen. Nearly four thousand asylum seekers were kept at the camp without enough room or even enough beds for everybody. Even pregnant women were reported to have to sleep outdoors on cardboard boxes. In Norway and Germany, too, private companies operate refugee housing for the government. In the eastern German town of Radebeul, for example, a former Stasi officer is now making a quick fortune housing asylum seekers.

And in Britain, all asylum seekers are housed by private companies, primarily in deprived cities. In an exposé last month, the Times of London reported that many asylum seekers are housed in ramshackle conditions by a multimillionaire operating under a contract with G4S, the security giant. Oddly, his company—named Jomast—also paints the doors of properties housing refugees red, making the residents an easy target for abuse by locals.

But nowhere is the refugee industry more prominent than in Sweden, which last year received more asylum seekers per capita than any other European country and where even venture capital firms now own refugee housing. “It’s a totally crazy situation, with gold diggers buying up conference centers far out in the countryside and stacking asylum seekers in corridor-style living with no access to activities, no access to infrastructure,” says Sven Otto Littorin, a former employment minister.

For the past several months, the Migration Agency’s staff in charge of finding housing have frantically been buying lodging for the migrants, and the market has responded in style: some three hundred companies, most of them founded in the past three or four years, now sell space in properties ranging from conference centers to camping sites, youth hostels and former hospitals. Some residences are smaller, with as few as fifteen beds, while others are as large as Jahangir Hejazi’s former hospital. A two-year-old company called Accumul8or Invest recently signed a deal with the Migration Agency to house over 1,200 asylum seekers on a ship.

As refugee numbers skyrocketed last year, the Migration Agency had to accept virtually every bidder—and pay the maximum fee allowed by law. It does inspect the residences, but as its contracts only oblige the operator to provide food and lodging, there is little the inspectors can do. They can’t force the providers to serve better food, buy larger beds or organize activities. Sometimes, however, inspectors report unsatisfactory conditions. The Migration Agency’s contracts demand sanitary conditions, regular cleaning of communal areas, and observance of fire safety regulations. “The owners almost always fix the problems,” says Björn Andrén, the Migration Agency official in charge of housing for asylum seekers. “They’re eager to keep getting their millions.”

With most operators making hefty profits, the issue is not that the Migration Agency pays them too little. The problem is not even that asylum seekers are suffering, although spending months in shared rooms with no diversion is clearly taxing. Instead, the moral conundrum is that asylum seekers have created a gold rush where taxpayers pay private companies enormous amounts to care for refugees—money that could be spent on the refugees already in Sweden or on those trying to reach Europe.