VGH hospitals bid accepted five months before tender began, Auditor General tells court

Auditor General Charles Deguara has testified that his office’s investigation into the hospitals concession to Vitals Global Healthcare had established that the tender was issued five months after it had already been awarded to VGH. Deguara told the court today that “the fact that there was a memorandum of understanding before the requests for proposals had even been issued was not acceptable.”

Magistrate Leonard Caruana heard key testimonies as the compilation of evidence against the former Deputy Prime Minister, Chris Fearne, the former Finance Minister and incumbent Central Bank Governor, Edward Scicluna, and 13 others in relation to the fraudulent hospitals concession continued on Tuesday.

Former permanent secretaries Alfred Camilleri and Joseph Rapa, current permanent secretary Ronald Mizzi, adjudication committee members James Camenzuli, Manuel Castagna, and Robert Borg, financial controller Kenneth Deguara, and five lawyers: Kevin Deguara, Jean Carl Farrugia, Aron Mifsud Bonnici, Deborah Anne Chappell, and Bradley Gatt are facing charges alongside Fearne and Scicluna.

The 15 defendants are charged with fraud, with Fearne and Scicluna being additionally accused of misappropriation and making fraudulent gain by abusing their position. Money laundering is also amongst the charges facing other defendants.

From the witness stand, Auditor General Charles Deguara was asked about concerns highlighted in his report about the adjudication of VGH’s bid and the concession’s subsequent transfer to Steward Healthcare.

On the witness stand, Auditor General Charles Deguara was asked about concerns highlighted in his report about the adjudication of VGH’s bid and the concession’s subsequent transfer to Steward Healthcare.

Lawyer Michael Sciriha asked what aspects had been investigated by Deguara’s office. “Legal, accountability, or the individuals’ roles?”

The Auditor General replied that his office had, in fact, not issued one report, but three, amounting to almost 1100 pages in total, examining the deal from the initial tendering process all the way up to the final transfer to Steward.

He insisted that his office’s job was to investigate the good governance aspect. “The tender was granted on the basis of adjudication, but we look at good governance: were resources used well, were the procedures followed and so on.” Deguara said.

Deguara pointed out that the work had been carried out by a team of specialists in various areas.

Sciriha asked the witness whether they had scrutinised the preparatory and preliminary adjudication that had taken place, before the deal was inked. “Of course….the fact that there was a memorandum of understanding before the requests for proposals had even been issued, was not acceptable. It’s all in writing.” Deguara replied.

The witness explained that the evaluation had been carried out by Projects Malta, but the negotiations and the contracts with Vitals had been handled by the Tourism Ministry, he added. When Vitals was granted the concession, and also when later, it was handed over to Steward Healthcare, the Tourism Ministry had the principal say. 

The RFP was issued five months after it was already awarded, a fact Deguara told the court that he had informed Chris Cardona, then Economy Minister, about.

Answering a question from Sciriha about whether Bradley Gatt was mentioned as being involved in the project, Deguara said that he did not recall ever coming across Gatt’s name during his investigation. “If he is’t a public official, I don’t think he is mentioned.”

“When we audit something, we audit the public part of it. We are the government’s auditors,” Deguara explained, but promised to check his records and revert at a later stage.

Deguara identified the Tourism Ministry, at the time under then-minister Konrad Mizzi, had played a crucial role in the process, and described Mizzi “the driver behind the initiative, pushing for the concession.” The RFP was developed by Ganado Advocates, with Deguara noting that it was unclear who provided them with information.

Company Confusion

A former Police Sergeant gave evidence about a search he assisted with, conducted at Kevin Deguara’s residence in September 2021, under the instruction of Inspector Anthony Xerri.

On the witness stand, the officer acknowledged that although the search was linked to DF Consultancy Services Limited, at the time he had not made a distinction between DF Consultancy Services and DF Advocates.

Debate over restrictions on movement and freezing orders

The defence raised concerns about travel restrictions and once again insisted on justification for the multi-million euro freezing orders imposed on the defendants.

Lawyer Franco Debono also argued that the defendants, who had cooperated and had not interfered with the investigation, should not face restrictions on their movements. Prosecutor Francesco Refalo clarified that the prosecution was not seeking curfews or travel restrictions but merely notification of movements.

Upcoming court dates and further testimonies

The court scheduled the next sittings for July 8, 10, 11, and 16, with ten witnesses set to testify at each session. The court aims to make a decree on prima facie by July 24. Among those set to testify are editors from major local newspapers, officials from various departments, and legal experts.

Freezing order arguments

The court heard defence lawyers stress that the prosecution's reliance on reports and expert findings did not meet the necessary legal standards to justify the imposition of freezing orders of such magnitude.

Debate about restrictions on public statements

The defence strongly opposed the prosecution's request to restrict the defendants from making public statements about the case, arguing it would unfairly prevent them from rebutting incorrect assertions, while others could freely allege whatever they wanted. The lawyers stressed the importance of allowing defendants to defend themselves publicly, in view of the extensive media coverage and public interest in the case.

The lawyers contended that the prosecution’s request amounted to a gagging order, preventing the defendants from responding to public accusations and insults.

The lawyers insisted prohibiting the defendants from making public statements about the case “is a gagging order.”

He asked, especially in the light of yesterday’s news about Steward Healthcare’s smear campaign against Fearne, what good could be achieved by preventing the defendants from speaking about the case in public.

Earlier today, police inspector Wayne Rodney Borg had, in fact, testified about this point, telling the court that lifting the ban posed no danger to the case.

De Marco pointed to “the people out there who were insulting the defendants, their lawyers and everyone.”

“I worry when you have a prosecutor not asking that those people be censured, that their incorrect statements be prevented. That is what could lead to a breach of the right to a fair hearing.”

The prosecution was trying to gag the defendants and their lawyers, charged De Marco. “It is incorrect, disloyal and very unfair,.”she said, adding that European court judgments had established a requirement of a legitimate aim based on evidence in order for a court to uphold such requests..

Debono added that the prohibition was “almost an incentive” to those who wanted to abuse the fact that the defendants cannot reply.

After hearing the lawyers’ submissions, the magistrate announced that he would be issuing a decree on the requests from his chambers.

The proceedings are set to continue with more testimonies and legal arguments in the coming weeks.