Ministers fear government paralysis after hospitals inquiry casts wide net

Labour ministers are fearing government paralysis in the wake of what appears to be criminal action against senior public officers recommended by the magistrate in the hospitals inquiry. 

Although the inquiry has not been made public, several members of Cabinet who spoke to MaltaToday on condition of anonymity, suggested that the magistrate cast a wide net. 

“I am not privy to the inquiry’s conclusions but from what I am gathering the magistrate recommended that action be taken against anyone who was involved in this deal irrespective of whether they are suspected of the serious crime of corruption and money laundering, or signed off on documents in their normal course of duty,” a minister said. 

The first sign of this wide net came last Thursday when Deputy Prime Minister Chris Fearne offered the Labour Party parliamentary group his resignation if he was suspected of wrongdoing by the magistrate. He was given a resounding applause instead. 

“It was shocking and sad to hear that Chris Fearne, whom everyone could vouch for, should be indicated as a suspect when he had nothing to do with the deal,” another minister said. They added: “Hearing his voice crack as he spoke just amplified the unfairness of having a politician like him who is approaching the final lap of his political career being put in the same basket as those directly involved in the deal.”

Fearne’s pre-emptive strike 

Deputy Prime Minister Chris Fearne believes his name could be on the list of people suspected of wrongdoing despite having received a clean bill of health from the National Audit Office

But another minister described Fearne’s move as a pre-emptive strike to try and “dictate the narrative” if he is charged. 

On Friday then Fearne went public on Facebook with the predicament that he could be charged, insisting he did nothing wrong and had nothing to fear. While emphasising his respect towards the judiciary in a telling remark, Fearne insisted he was only speaking for himself. Sources close to the PL interpreted Fearne’s comment as a way of distancing himself from former prime minister Joseph Muscat, former minister Konrad Mizzi and former OPM chief of staff Keith Schembri. 

It is unlikely Fearne will be charged with the more serious crimes that sources have suggested will be levelled against Muscat, Mizzi and Schembri. 

Indeed, Fearne and Central Bank of Malta governor Edward Scicluna, the former finance minister when the deal was struck and the concession transferred to Steward Health Care, could be charged with dereliction of duty. 

The two men had not been flagged by the National Audit Office in its broad three-part investigation into the hospitals deal. The NAO had also commented on how Mizzi continued dealing with Vitals and Steward even though he was no longer health minister after 2016. The NAO also found that Mizzi had negotiated and concluded side agreements with Steward behind Fearne’s back. In a telling incident flagged by the NAO, Steward CEO Armin Ernst had emailed Keith Schembri for guidance since Fearne was on his back asking for an update in the negotiations that were being led by Mizzi.

Public service paralysis 

But the inquiry is likely to recommend criminal action be taken against several high-ranking public officers, apart from politicians, and this is cause for administrative concern. 

A minister spoke to MaltaToday about the fear of paralysis if public officials are charged because they signed off on documents. 

“This will undoubtedly affect how civil servants discharge their duty and it risks leading to over caution that could stifle government work,” they said. “I already have difficulty convincing my permanent secretary to get certain things done, let alone if someone is charged because they would have signed off on documents without being privy to the mess someone else is involved in.” 

Prime Minister Robert Abela has come out guns blazing against the magistrate, accusing her of engaging in ‘political terrorism’ and being part of a nebulous ‘establishment’ that wants to undermine the Labour government

On Friday, the Prime Minister hinted at this fear in comments he gave to journalists after exiting the law courts where he is party to a law suit filed by the Nationalist Party to recover the €400 million spent by government on the now defunct deal. 

Abela said he would use his discretion as to whether public officials should be removed on the basis of recommendations for prosecution made by the inquiry, if they “are only guilty of working for different administrations and were loyal servants to the State.” 

The Prime Minister also insisted that the political decision as to whether a minister should resign was at his discretion. Abela said he would be using that discretion “in favour of all those who work honestly and with integrity towards implementing the electoral manifesto.”

Muscat tries to set agenda 

The inquiry led by Magistrate Gabriella Vella started in 2019 on the initiative of rule of law NGO Repubblika. It was initially tasked to look into the handling of the hospitals deal by former ministers Chris Cardona, Edward Scicluna and Konrad Mizzi. 

However, subsequent revelations in the media implicated Joseph Muscat in a money trail with a Swiss company that had links to Steward. On the back of this development, the magistrate is understood to have widened the scope of her investigation that culminated in a police raid on Muscat’s Burmarrad house in January 2022. 

Joseph Muscat wrote to the Police Commissioner telling him he was willing to answer any questions

Muscat has denied any wrongdoing and maintained that all consultancy work was legitimate and declared. 

On Friday, in an attempt to set the agenda, Muscat wrote to the Police Commissioner to tell him he was willing to go to the depot to answer any questions he may have. 

There is growing expectation that the police will at some point be calling in for questioning the suspects indicated by the magistrate and it is very likely they will be doing so under caution.

Flagship of failure 

The transfer of three state hospitals – St Luke’s, Karin Grech and Gozo General – to Vitals Global Healthcare, an obscure company, took place in 2015 after government issued an international request for proposals. However, it had emerged that some of the VGH investors had already signed a memorandum of understanding with the government on the part-privatisation of St Luke’s in the months that preceded the RFP. 

The concession agreement meant that VGH had to invest in a new general hospital in Gozo, refurbish and Karin Grech and St Luke’s in a project that would also attract medical tourism. Government agreed to buy back beds for use in the public health service. 

However, in 2018 after the company went bust, the 99-year-long concession was transferred to Amercian company Steward Health Care. 

Nonetheless, none of the major contractual milestones were ever reached. The big investments the concessionaires had to make never materialised while the government paid them millions every year for the service rendered in the existing Gozo hospital and Karin Grech. 

Former Repubblika president Robert Aquilina (left) and the NGO’s lawyer Jason Azzopardi had presented a detailed request in 2019 in which they asked for a magisterial inquiry into the hospitals deal

Significantly, in the summer of 2019, the government entered into a side agreement with Steward that ensure the investors would be paid €100 million if the law courts struck down the deal. The move negotiated by Konrad Mizzi, who was accused by the NAO of misleading Cabinet on the nature of this agreement, was to pre-empt any decision the courts would take on a civil case that then Opposition leader Adrian Delia had initiated to rescind the contract. 

Last year, the civil courts annulled the concession contract and all its side agreements, ordering that the three hospitals be returned to the government. 

What had to be a flagship project of the Muscat administration ended up being a flagship of failure with dark clouds of corruption and money laundering hanging over it.