Steward, Vitals and Joseph Muscat... making sense of the revelations

A deal spearheaded by Keith Schembri and Konrad Mizzi

The NAO report makes it clear that the deal was being spearheaded by former chief of staff Keith Schembri and then tourism minister Konrad Mizzi. Correspondence submitted to the office showed that the CEO of Steward Health Care had written to Schembri as chief of staff, advising him that the health minister, Chris Fearne, had contacted him for an update on the transfer of shares between VGH and Steward (SHC).

The report also pointed to an “unorthodox dynamic” between the prime minister at the time, Joseph Muscat, and Konrad Mizzi, to the detriment of the health minister’s ability to negotiate with the SHC. The NAO said this delegation of responsibility was illogical, “creating weakness where there ought to have been none”.

Most notable was the €100 million side agreement secured by Steward Health Care in August 2019 in case of court-declared nullity of the concession agreement. The NAO described this as “a situation precipitated by the Minister for Tourism and engineered through his misleading of Cabinet”.

From collusion with VGH to discussions behind its back

When evaluating the bids submitted for the concession in 2015, the NAO came across a letter submitted by VGH as proof of access to finance in the bidding process. A sanction letter presented for the bid, issued by the Bank of India for ‘Malta Healthcare Projects’, was dated 13 March 2015. But the government’s Request for Proposals was published on 27 March 2015.

“The Office deemed this document as definite evidence of the VGH’s prior knowledge of the planned project and proof of collusion with the government or its representatives,” the report reads.

VGH were awarded the concession and three years later, government began discussing a handover of the contract with SHC behind VGH’s back. “The incongruity of this situation is evident in that the concession was, at the time, owned by the VGH, yet the evidence at hand indicated interactions occurring between the government and the SHC, to the exclusion of the VGH.”

The NAO pointed out that the government had requested a due diligence report on SHC well before receiving the request to transfer the VGH shares to SHC. Some risks were identified in the due diligence report, particularly concerns with respect to several senior executives at SHC who were considered as PEPs due to close ties with the political class, including former American presidents, congressmen and members of the Senate.

The lynchpin was Armin Ernst, who after stepping down from his top position at VGH turned up months later as the CEO of Steward Health Care, pushing for the American company to take over the Malta concession.

Muscat investigated over consultancy payments

An investigation by the Times of Malta, The Shift News, and OCCRP, an international organisation, revealed on Wednesday that a magisterial inquiry into the hospitals deal is also probing Muscat’s bank accounts and income declarations.

Investigators suspect that his consultancy contract with Swiss company SpringX Media, which he secured soon after stepping down from prime minister in 2020, could have been used to disguise payments from the Malta hospitals deal.

Muscat received consultancy payments from SpringX Media and Accutor Consulting, both registered at the same Swiss address.

However, Accutor Consulting used to be called VGH Europe. It was switched to Accutor Consulting in January 2018, shortly before Steward Health Care took over the concession to run three hospitals in Malta.

Under the full consultancy contract, Muscat was set to receive €540,000 across 36 monthly payments. But the payments stopped abruptly after four months, meaning Muscat netted €60,000 from SpringX Media and Accutor Consulting.

Muscat started receiving money from the consultancy in March 2020. At this point, he was still a sitting member of parliament. He resigned as an MP in October that year. That summer, Muscat had been questioned by police over a statement given by Yorgen Fenech, who is in court for masterminding the murder of Daphne Caruana Galizia.

In January 2022, police searched Muscat’s Burmarrad home and collected electronic devices as part of the ongoing inquiry.

Muscat insists the consultancy contract was above board, documented and had nothing to do with the Malta concession. He has denied ever receiving money from corruption and the former prime minister has now filed a court request to have the inquiring magistrate recuse herself, claiming that the information was leaked from the inquiry.

Nationalist MP submits new evidence in magisterial inquiry

A person claiming to be privy to the obscure dealings in the Steward hospitals deal approached Nationalist MP Mark Anthony Sammut between Wednesday and Thursday with evidence that suggests fraud in the deal.

On Thursday morning, the MP submitted four volumes of documentation to Magistrate Gabriella Vella, who is leading the inquiry into the hospitals deal.

This is the first time a witness has stepped forward to share information about the hospitals’ concession.

Sammut said the documents include agreements between the involved parties, emails, chats and messages exchanged between representatives of Steward Health Care, Vitals Global Healthcare, Labour politicians, people in high office, legal consultants of the Labour government and high officials from the public service.

The content of the documents was not made public, and it remains unclear whether the whistleblower is or was a public official.

Concessionaires spent big after securing the deal

Another revelation from the investigation showed that the concessionaires were spending big while the promised investments in the three hospitals never materialised. VGH shifted at least €21 million to Bluestone Investments, its Maltese parent company. Meanwhile, Bluestone’s accounts were being used for private spending on five-star hotels and luxury cars.

Indeed, the account was being used to spend hundreds of thousands of euros in beauty salons, private school fees, jewellery shops, and Netflix subscriptions. Half a million euros were spent on hotel and travel expenses, while €248,000 was spent at the local Mercedes Benz agents.

The financial data also shows a €6,300 stay at a Hilton in Montenegro, €25,000 in payments to Five Star Hotels Ltd, and a €3,500 payment at the Marina Hotel Corinthia in Malta.