Vitals paid ‘irregular’ €1.3 million to backtrack on hospitals obligations

Taxpayers’ money was used to prop up Vitals Global Healthcare’s obligations to the Maltese government, when it was unable to fulfil the conditions of a multi-million 30-year concession to run three state hospitals.

The National Audit Office’s investigation found that the unknown company of investors, fronted by the equally mystersiou Ram Tumuluri, had as early as June 2016 shifted back all cleaning, security and support services to the government.

Instead of incurring such costs, health and energy minister Konrad Mizzi engineered a “side letter” so that the government pays for these services – a total of €1.3 million – which the NAO said was “irregular and unwarranted”.

The side letter was signed in June 2017 but made effective with retrospective effect from 1 June 2016.

This agreement amended conditions for Vitals’ labour supply contract, which included payments due well an above the €1.3 million paid.

These included €5.6 million for salaries, €1.1m in reimbursemet to Vitals for the payment of government creditors, for a total of €8.16 million.

“The NAO contends that the payment of €1,305,688 to the VGH, facilitated through the Side Letter... was irregular and unwarranted... (for) such services were to be provided by the VGH and therefore costs accordingly borne.”

Indeed, Vitals was obliged to ensure “best industry standards” on cleaning, security and support, but Konrad Mizzi backtracked on the obligation and conceded to pay for such ancillary services directly.

The NAO confirmed that €1,305,688 was paid in relation to subcontracted resources through this Side Letter.

Government’s exposure to these ancillary costs came to a close in June 2017.

Disgraced former minister Konrad Mizzi did not deign to meet the National Audit Office to defend his role in the controversial privatisation of three state hospitals which he presided over.

In a show of utter disregard for the NAO’s verification process of the multi-million Vitals Global Healthcare concession, Mizzi refused to appear before the NAO to discuss his pivotal role in the concession.

Mizzi was health minister when negotiations with the VGH commenced; was a member of the Steering Committee tasked with overseeing the concession; and was the signatory representing government on all contracts entered into with the VGH

“Mizzi’s failure to attend to the several requests made by the NAO constituted a serious failure on his part in terms of the level of accountability expected of a former minister of government and in terms of the standard of good governance that ought to have characterised a project as material and as important to the national health services as was this.”

In an uncompromising excoriation of the contract, the NAO said the failures of Labour’s privatisation of the state hospitals was down to the selection of VGH as the concessionaire, “a poor choice that set the stage for what was to come.”

“The negotiations that quickly followed selection were similarly flawed, conditioned to an extent by the structural anomalies and organisation of the Ministry for Energy and Health and the general ill-preparedness in terms of what was sought by government through this concession.”

The defunct Vitals Global Healthcare achieved none of its milestones when it took control of three state hospitals in a controversial, multi-million privatisation deal.

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