Looking Back 2023: Of a hospitals scandal and an impending magisterial inquiry

It all started when a group of investors signed a dubious memorandum of understanding with the economy ministry in 2015. Some of those investors would later secure a concession to run three public hospitals. The same concession would later be sold to another company.

But it all fell apart in 2023, when a judge laid out his sentence on whether the government’s dealings with Vitals Global Healthcare, and later Steward, were done in good faith. All contracts connected to the deal were cancelled, and the judge suggested ‘fraudulent intent’ behind the whole deal.

Now the government has taken back ownership of the hospitals, and the court ruling was reconfirmed on appeal.

Court annuls all hospitals contracts

Mr Justice Francesco Depasquale delivered a damning, 138-page ruling on the hospitals deal last February. The memorandum of understanding that investors signed before the granting of the concession was “evidence of its fraudulent intent”. The €100 million buy-out clause for Steward was “possibly criminal”. And the concession milestones? “A complete farce.”

According to the judge, Vitals should have disclosed information about the memorandum of understanding before it was granted the concession. Doing so would have rendered the company ineligible for the tender.

Depasquale also criticised Steward Healthcare, questioning whether they entered into the contractual agreement in good faith – especially since the Steward companies failed to defend in court that there was no breach of the contractual obligations on their part.

The government was not spared by Depasquale either. The judge slammed the government’s “amateurish” checks before signing the contract, saying it appeared as if there was no intention of evaluating the proposals in the first place.

He also put the spotlight on Konrad Mizzi, for signing various agreements to the benefit of Vitals and Steward, “and certainly not to the benefit of the government and the citizen”.

Steward was quick to take the ruling to the Appeals Court. But eight months later, the land’s highest court dismissed the appeal, and it was again scathing in its remarks on the deal.

“The fact is, however, that they failed in their duties towards the country, they failed to seek the remedies that they should have sought and it had to be the plaintiff to take the initiative so that in the interests of the country, used those remedies to impugn the concession contract and the other contracts tied to it,” the three judges presiding over the case said in their ruling.

Separately from local court proceedings, the Maltese government opened arbitration proceedings against Steward Healthcare in front of the International Chamber of Commerce last April. This case is expected to be determined by the end of 2025.

Auditor-General publishes third report on hospitals concession

Three months after the contracts were annulled, the National Audit Office (NAO) published its third report on the hospitals concession deal, and it was just as damning as the judge’s ruling.

The audit showed that Konrad Mizzi had granted Vitals authorisation to transfer the concession to Steward Healthcare before seeking Cabinet’s endorsement.

The Auditor-General also accused Mizzi of misleading Cabinet on the side agreement he concluded with Steward, by which the government would be liable to pay the company €100 million if a court annulled the contract.

The report was the third instalment in a series of audits into the concession. The NAO said it was gravely concerned by the “unorthodox dynamic that persisted between the prime minister [Joseph Muscat] and the Minister for Tourism [Konrad Mizzi], to the detriment of the Minister for Health [Chris Fearne]”.

The NAO said the government allowed itself to be exploited when the health concession was delegated to the tourism minister, since it created a weakness that was leveraged by Steward.

Hospitals saga gives PN fresh impetus

It was Adrian Delia who, as PN leader, filed a court case in 2018 against the government and Vitals Global Healthcare asking for the contracts to be annulled and the three hospitals to be returned to the public.

After five long years during which he was driven out of the party leadership by a rebellion, Delia’s lone stance against the hospitals deal was vindicated in 2023.

The hospitals saga became a key part of the Nationalist Party’s campaigning throughout the year, dedicating the Workers’ Day mass meeting and a protest in October to the hospitals saga.

Now, the PN has opened a case against the State Advocate for failing to recover the €400 million paid to Vitals and Steward through the deal.

Joseph Muscat tries to replace Vitals inquiry magistrate

But the hospitals saga also saw former prime minister Joseph Muscat return to the public arena in a bid to exculpate himself from alleged wrongdoing. With a magisterial inquiry on the hospitals deal yet to be concluded, Muscat had already faced a police search at his home in January 2022.

In 2023, he upped the ante on the magistrate. He twice appeared on Smash TV to air his grievances about the inquiry. He has also used official court avenues to try and replace the magistrate overseeing the inquiry.

In court, Muscat is claiming his rights were breached after Magistrate Gabriella Vella said online comments published by her father and brother on Muscat were free expression. Muscat insists this is grounds for recusal on her part.

He also argued that leaks from her inquiry undermine her judiciousness.

It had been revealed by the media that Muscat received overseas consultancy payments after he left politics from a company with links to Steward Healthcare. Subsequently, it was revealed that Muscat had also received payments from a Swiss company Accutor that was originally called VGH Europe.

Muscat has denied any wrongdoing, insisting the work was legitimate and is accounted for.

Four years on from the filing of Repubblika’s request for the inquiry, the conclusion of this process is now understood to be close at hand.