Debt St Philip’s may owe government to be deducted from lease payment - Fenech

As government is expected to present parliament with the lease agreement for St Philip's Hospital this evening, Finance Minister Tonio Fenech said that any debt the hospital might owe government will be deducted from the €850,000 yearly payment.

The issue was raised in parliament by Labour MP Leo Brincat, who asked Fenech to confirm whether St Philip's Hospital owed government money in terms of national insurance contribution, utility bills, taxes and other expenses.

However Fenech said that the departments involved were precluded by law in revealing such information.

"However, if such debts exist, the full amount will be deducted from the first payments government will owe according to the contract," he said.

This evening the Public Accounts Committee will start reviewing the €12.4 million lease-and-buy option for the private St Philip's Hospital.

While the highest possibility is that the contract would be already signed before it is presented this evening, PAC chairman and Labour MP Charles Mangion has called for this evening's meeting to focus on the contract. If the agreement is not yet signed, then the PAC will be presented with a draft copy.

The controversial contract of the hospital, whose director is former PN candidate Frank Portelli, came under fire by the Opposition, Independent MP Jeffrey Pullicino Orlando and Nationalist backbencher Franco Debono who also tabled a motion calling for the suspension of the negotiation process.

Government however ignored Debono's request and made it clear that it would forge ahead with the signing of the deal.

This decision sparked a harsh reaction by Pullicino Orlando who insisted that such a decision was "in contempt of parliament and the people".

However last week, the House agreed to a three-hour debate on government's decision to go for the private hospital. The debate was not conditional on a vote.

The debate from the Opposition's side criticised government's decision to go for a private hospital that needed "substantial investment" before it is reopened. It also argued that once this investment takes place, it goes without saying that government should also buy it.

As per contractual agreement, government will pay €850,000 per year with an option to buy it for €12.4 million from the third year.

Government still to submit plans to MEPA

The finance minister has told MaltaToday that government has yet to submit designs and plans to the Planning Authority to obtain the permit to use St Philip's Hospital for rehabilitation purposes.

Fenech said this process might take more than three years, even though MEPA has informed government that it was possible for the private hospital to be used as a rehabilitation facility.

"Government's condition to buy St Philip's is that it can be used for rehabilitation. MEPA said this was possible but a number of studies, including a traffic impact assessment, must be carried out.

"If the permit for rehabilitation is not issued, government might then opt to convert it into a residence for the elderly," Fenech said.

He said that government went for the lease option because of the "element of uncertainty" with regards to the permits. He insisted that "probably in three years the permit wouldn't even be issued, let alone having already invested in it... this is Malta we are living in and we all know how long the process takes".

Fenech insisted that government sought the best possible deal. "It's a far cry from whoever's saying that the deal was done to appease Frank Portelli... and we had no illusions that we were going for this hospital without facing parliament," he added.

Asked why government chose to reply to an expression of interest instead of issuing one, Fenech insisted that "logically" since the hospital was on the market government submitted its request.

"Government answered a call because there was a call. Our original plans were to build a new hospital but we then asked what would be more worth it. To build a new hospital would have cost us €52 million while buying and extending St Philip's will cost us €25 million."

Referring to calls to suspend the negotiation process, Fenech said "government wasn't ready to play a political game just because Frank Portelli is Frank Portelli".

He reiterated that government wasn't obliged to go to parliament before it rents a property. "Government rented several properties but we never went to parliament before signing the contract. We were never asked to go to the PAC before and the law doesn't ask us to do so."

This is not a political game - PL

Meanwhile the Labour Party criticised Frank Portelli for having insinuated that the PL's opposition stemmed from partisan issues. In comments to MaltaToday, Portelli said he couldn't understand the sudden opposition by the Labour Party given that "three Labour MPs had expressed their astonishment over the delay".

He however refused to name the three MPs but added: "Joseph Muscat is not in control of his people ... he may have good intentions but the road to hell is paved with good intentions."

Rebutting this statement, a spokesman for Labour said: "It surely transpires that Portelli exercises a lot of it [control on GonziPN."

He added that it was "saddening that while we have so far handled the whole issues from an objective perspective, Dr Portelli chose to make extremely partisan comments".

Portelli last week revealed that he was ready to add a new clause in the contract allowing a future government to terminate the contract without incurring any fines.

Asked whether a Labour government would terminate the contract, the spokesman said: "We are neither privy nor part to the contract, thus we cannot negotiate such a clause."
"However, if Frank Portelli wants to put his money where his mouth is, he could unilaterally include a clause whereby any future government can rescind the contract without penalties," the spokesman added.

Labour went on to add that given the offer proposed by Portelli, one might conclude that the present draft includes penalties.

"This fact makes the vetting of the contract by the PAC and the Auditor General even more pressing," the spokesman insisted.

The PL also denied "holding discussions" with Portelli about the hospital when asked to confirm that three Labour MPs had in fact approached Portelli to express their views.