‘Barts exists’ and the man who stood in Steward Health Care’s way

“Barts exists”, Joseph Muscat proclaimed in a Facebook post on 10 July, intended to publicise the graduation of 35 international students from the Gozo-based medical school. 

It was an attempt by the former prime minister to praise, what ostensibly ended up being the only major investment carried out by Steward Health Care. 

Works on the Gozo medical school campus were finished in the summer of 2019 to be used by the Barts Medical School run by London’s Queen Mary University. 

The Facebook post in which Joseph Muscat eulogises the success of the Barts Medical School

The hospitals magisterial inquiry showed how in August that year Steward Health Care sought Konrad Mizzi’s support for its plan to hive off the Gozo campus to a property trust – a move supported by Muscat himself. 

But in his eulogy, Muscat failed to mention that if he had his way five years ago the Barts campus would not belong to the Maltese government today. And the man to put a spoke in the wheel at the time was Chris Fearne.

Fearne objected to property transfer 

The irony in Muscat’s Facebook post is that it came two days after court evidence showed that former deputy prime minister Chris Fearne had objected to the Barts property sale. 

It was Cabinet secretary Ryan Spagnol who on the witness stand in the ongoing criminal proceedings against Fearne and others confirmed the minutes of a Cabinet meeting held on 10 September 2019. 

In that meeting Fearne had raised his objections to the arrangement that was being developed that would have effectively dispossessed government of the land in question. 

Sources, who at the time were close to government, have told MaltaToday that Fearne raised the issue on Cabinet’s agenda without giving prior notice. 

Labour ministers, including Chris Fearne (third from right) with Steward CEO Armin Ernst (second from right) and former prime minister Joseph Muscat at the official opening of the Barts campus at the Gozo General Hospital

“Word had reached Chris [Fearne] that Steward and Konrad [Mizzi] were manoeuvring to hive off the Barts campus into a trust, putting into question the government’s control of the property once the concession is up,” the sources said, adding: “He [Fearne] raised the issue when ‘other matters arising’ came up as an agenda item.” 

At the time, despite having been health minister since 2016, Fearne was not privy to ongoing discussions that were happening between Steward and Konrad Mizzi. 

In an arrangement criticised by the Auditor General, Mizzi continued to be the government’s point man for the contractual arrangements on the hospitals concession after he was removed from health minister when the Panama Papers scandal erupted in 2016. 

But despite Cabinet’s agreement in September 2019 that the property granted on concession to Steward should remain in government hands, the magisterial inquiry into the deal shows that talks between the American company and Mizzi on the Barts property transfer accelerated in the following months. 

Eventually, a non-binding memorandum of understanding between government and Steward was presented to Cabinet in November but this was never actioned. In December 2019, political turmoil in the wake of Yorgen Fenech’s arrest as a person of interest in the Daphne Caruana Galizia murder saw Konrad Mizzi and Keith Schembri resign, followed by Joseph Muscat, who formally stepped down in January 2020 after the Labour Party chose his replacement.

Barts transfer and political support fund 

But the Vitals inquiry report makes a notable association between the requested transfer of the Barts school and instructions given by Steward CEO Armin Ernst for the creation of a “political support fund” held by Swiss company Accutor. 

Over the course of several months, starting in September 2019, Steward paid up to €1 million into this fund, which investigators believe was used for nefarious reasons. 

The inquiry established that after stepping down from prime minister, Joseph Muscat received several payments from Accutor for consultancy work. He contends there was nothing illicit about this and all work is documented. 

But even Konrad Mizzi and Keith Schembri developed commercial relationships with Accutor.  Investigators found it highly suspicious that the three men would end up independently of each other carrying out work for Accutor. 

The implication is that the arrangements Muscat, Mizzi and Schembri had were intended as kickbacks over the hospitals concession. They are facing charges related to corruption, fraud, money laundering and participating in a criminal conspiracy. All three have pleaded not guilty. 

The inquiry notes that in the days immediately prior to setting up the political support fund, Armin Ernst was in contact with Konrad Mizzi and the Office of the Prime Minister in relation to two matters that Steward required assistance with. The first required Konrad Mizzi’s initial support for the transfer of ownership of the multi-million-euro property at Barts Medical School to Steward's second largest institutional investor. The second was the acquisition of a Maltese passport for Steward International’s chief Ralph de la Torre.

READ ALSO: The Vitals inquiry – here’s what you need to know

‘Transaction not possible without government consent’ 

In a letter dated 8 August 2019 Armin Ernst wrote to Konrad Mizzi regarding the proposed transfer of ownership of Barts Medical School to Medical Properties Trust, Inc. (MPT). 

MPT was a New York Stock Exchange listed real estate investment trust and in Ernst's words Steward's 'second largest institutional investor'. 

Ernst explained to Mizzi that the proposed transaction would assist in arranging finance of the 'wider Project'. Ernst also commented: “Needless to say, the proposed transaction will not be possible without the government's continued support, cooperation and consent which will enable us to proceed in negotiations with MPT. Steward appreciates the opportunity to work collaboratively with the government on a matter of such national importance in the spirit of a true public-private partnership.”

READ ALSO: The American who knew a lot: Armin Ernst

Just three days after this letter, Ernst gave instructions for the creation of the political support fund.  

“After this time, there appears to have been a period of rapid progression to a stage where the issue was presented to Cabinet. This may indicate that the issue had received undue intervention and support by Ministry of Tourism and OPM via the persons of Konrad Mizzi, Keith Schembri and Prime Minister Joseph Muscat,” the inquiry says. 

It goes on to suggest that one possible interpretation of the evidence is that Steward's requirement for assistance and consent in the matter “warranted the creation of the political support fund for €1 million”. 

Investigators believe it was not a coincidence that “two days after the first payment of €125,000 from Steward ta Accutor, Accutor's chairman and OPM's Chief of Staff [Keith Schembri] began communicating via WhatsApp over the next 12 months”. 

The inquiry found that over the entire period that the eight payments for €1 million were made by Steward to Accutor, no less than six WhatsApp groups were active. Schembri was in “frequent, and sometimes daily” contact with Accutor’s chairman Wasay Bhatti. 

Investigators believe that the political support fund was placed with Accutor AG to administer as agents but remained “under the control of Keith Schembri and possibly on behalf of OPM and Ministry of Tourism”.

Steward’s attempt to smear Fearne 

According to evidence that has been presented in court so far, Fearne stood in the way of Steward’s attempt to carve out the Barts property from the concession. 

Even after the change in administration in January 2020, Steward continued to negotiate with government in an attempt to siphon off more money and make the concession bankable. At this point, the negotiations were taken over by Fearne. 

Sources privy to those negotiations have told MaltaToday that Steward kept bringing up agreements and commitments it claimed to have made with Fearne’s predecessor in a bid to extract more money from the government. 

Fearne was proving to be a stumbling block, which culminated in Steward’s surreptitious move to finance a smear campaign against the former deputy prime minister. 

An investigation by the Organised Crime and Corruption Reporting Project in collaboration with Times of Malta and the Boston Globe has revealed how Steward paid private investigators to dig up dirt on Fearne. When they found none, they concocted a fake story implicating Fearne and his political aide Carmen Ciantar in a case of bribery over the sale of a Maltese passport to a Russian. 

The investigators then tried to plant the story in the media and when no reputable organisation played ball, the stories surfaced in obscure Pakistani and Ukrainian news portals. 

Last week, the Speaker of the House asked the police to afford Fearne and his family protection, calling the Steward-funded smear campaign an attack on Maltese democracy. 

He also asked the Foreign Ministry to raise the matter with the US embassy, given that Steward is an American company. 

Investigations by the Maltese police into the smear campaign and its perpetrators are ongoing. 

Fearne has also been charged in connection with the hospitals deal and stands accused of making fraudulent gain and enabling others to benefit from this. He has pleaded not guilty and his defence is trying to show that someone who stood in Steward’s way and refused to accede to the company’s demands could not have aided and abetted wrongdoing. 

Only last week, the Auditor General testified in court that in his three-part investigation of the hospitals deal he found no wrongdoing by either Fearne or Edward Scicluna. 

The case against them and many others is ongoing.