The price of Joseph Muscat’s legacy

Former Prime Minister Joseph Muscat has often claimed to have ‘paid the highest price possible’, for the corruption that engulfed his brief administration.

In strictly political terms, that might be somewhat factual: for having tendered his resignation as prime minister in December 2019, there is no further ‘political price’ for him to pay.

But in terms of the full cost that will eventually have to be borne for that corruption – not by Muscat himself, but by the entire country – it quite frankly pales to insignificance. That much can be seen by the United States’ interest in Keith Schembri and Konrad Mizzi, now designated for a travel ban over allegations of corruption in the Electrogas power plant contract.

The fact remains that Malta is still bound by several contracts and policies forged under Joseph Muscat’s government: at least two of which – the Vitals hospital concession; and the Electrogas power-plant at Delimara – entail hefty price-tags of their own.

Meanwhile, a third – the IIP (‘Golden Passport) scheme – may have contributed greatly to the country’s coffers... but at an incalculable cost to our international reputation.

Such is the fall-out from these arrangements, in fact, that Prime Minister Robert Abela is now desperately trying to scramble his way out of the mess created for him by his predecessor.

On Vitals, for instance, Abela has warned that he is ready to take legal action if concessionaires Steward Healthcare fail to meet their contractual obligations. But the same contract also places obligations on the Maltese government: including a €100 million ‘escape clause’, which would have to paid to Steward should the contract be annulled for any reason whatsoever.

This was, in fact, an agreement hammered out by Energy Minister Konrad Mizzi, in a side letter that he apparently kept secret even from his own Cabinet colleagues (Abela himself declared that he only got to know about it from the media).

Apart from the aforementioned escape penalty, the same letter also obliged government to almost double its budgetary allocation – adding €40 million, to the original €50 million of the contract to Steward.

But all things considered, even that must be viewed as a minor (albeit expensive) footnote. The reality is that Malta has already forked out millions for services that were never delivered, thanks to a contract that was roundly condemned by the National Audit Office.

The NAO’s report found that government had signed the original Memorandum of Understanding with several investors – who eventually formed Vitals – months before an international request for proposals had even been issued.

In any case, Vitals failed to obtain the necessary bank financing it required to kick-start its project – whilst also racking up millions in debt, with nothing to show for it and sold the concession to US giant Steward Healthcare Group.

Yet to this very day, the Maltese government is still caught up in intense negotiations with Steward: with government sources reportedly arguing that “there is no way the government will accept the terms of the deal that Steward was working on with the Muscat administration.”

Not only, then, did the promised ‘three new hospitals’ fail to ever actually materialise – resulting in a general weakening of the national healthcare service – but government now also risks having to pay an extra €100 million just to get out of that one, Muscat-era contract.

In many ways, however – not least, because one of its shareholders is now accused of murdering Daphne Caruana Galizia – the legacy of the Electrogas may prove far more expensive, in the long run.

It is no secret that this contract – also roundly criticised by the NAO – was from the outset mired in corruption. It is now the subject of a Public Accounts Committee hearing (in which Konrad Mizzi first refused to testify; and later, refused to answer any questions) over suspicions that the entire project was intended to siphon off millions into Yorgen Fenech’s 17 Black; and thence onto Panama companies owned by Keith Schembri and Konrad Mizzi himself.

As such, Malta’s entire energy sector – from the mode of energy production and distribution, to the sources of our imported fuel – is now dependent on a a highly irregular contract: with political ramifications that may even threaten the country’s energy security.

Malta now has to make a political case, in Europe, that any gas pipeline funds would not be benefiting Electrogas directly. And while Energy Minister Miriam Dalli may have a point, when she argues that the specific funding applied for – i.e., to change the gas pipeline into a hydrogen-capable version – is not, in itself, ‘related to Electrogas’ (indeed, the Commission itself has so far indicated that it agrees); nonetheless, it remains clear that the problems now faced by the Abela administration – in at least two critical public sectors (health and energy) – are all down to the sheer reputational damage caused by the Muscat administration.

So while all the main actors who carved out these controversial projects – Joseph Muscat, Keith Schembri and Konrad Mizzi – have all exited the political field, in one way or another... the effects of their legacy will be with us for years to come.

And that – far more than any number of prime ministerial resignations – is the real ‘highest price possible’.