Hospitals inquiry: The political protagonists in the crosshairs

The magisterial inquiry into the hospitals deal kicked off in 2019 after rule of law NGO Repubblika sought an investigation into the part-privatisation of three state hospitals.

The inquiry initially focussed on the role of Konrad Mizzi, Chris Cardona and Edward Scicluna played in the deal.

The primary focus at that stage was the manner by which the 99-year concession for the use of St Luke’s, Karin Grech and Gozo General hospitals was granted to Vitals Global Healthcare in 2015.

The obscure company was made up of investors with little or no track record in managing healthcare facilities, who won the public tender in dubious circumstances.

Media reports, including those by Daphne Caruana Galizia back in 2015, had shown how the same investors who won the contract for the running of three hospitals had already signed a memorandum of understanding with the government.

This information was confirmed by the Auditor General in the first damning report on the hospitals deal released in July 2020.

First NAO report: Damning report finds collusion between Vitals and government on hospitals deal

The National Audit Office probed the award of the concession and determined that there was collusion between Vitals and government. The NAO flagged the lack of due diligence carried out on Vitals and described the feasibility study as superficial. It pinned the lack of good governance on Konrad Mizzi.

The inquiry into the hospitals deal was initiated in 2019 on Repubblika’s initiative (Photo: James Bianchi/MaltaToday)

In a second report released in December 2021, the NAO detailed the extent of the Vitals fiasco, outlining how the then defunct company achieved none of its milestones when it took control of three state hospitals.

Second NAO report: Mizzi could not face NAO as damning report details extent of Vitals fiasco

A third NAO report published in May last year that focussed on the transfer of the hospitals concession to Steward Healthcare from Vitals in 2018, found that Konrad Mizzi misled Cabinet when negotiating with Steward.

Third NAO report: Konrad Mizzi misled Cabinet when negotiating hospitals deal with Steward – NAO

Throughout this period, media reports revealed, how there was a money trail between a Swiss-based company with links to Vitals and former prime minister Joseph Muscat.

And last year, the Maltese court rescinded the hospitals contract in a civil case initiated by the Opposition MP Adrian Delia. In a scathing judgment confirmed on appeal, the deal was branded fraudulent.

It is plausible to believe that along the years, Magistrate Gabriella Vella kept widening the remit of her inquiry as new information emerged in the public domain. She may have also come across new information.

Her findings, were presented to the Attorney General on 25 April. The AG received 78 boxes of evidence from the magistrate.

Vella’s conclusions remain under wraps. The magistrate would not have found guilt, because her job is to preserve all evidence. However, on the basis of evidence collected she can recommend that criminal action be taken against several key players in the deal.

The decision to prosecute now lies with the Attorney General and the police, who could also be tasked to carry out further investigations if needed.

We look at the political protagonists linked to the hospitals deal and whose names may be flagged in the inquiry findings.

Joseph Muscat

The former prime minister who resigned in January 2020 was ultimately responsible for the actions of his government. The hospitals deal was one of his administration’s flagship projects. Although initially the inquiry was not about him, revelations in the Times of Malta in November 2021 that Muscat received payments from a Swiss company with links to Steward Healthcare put him in the magistrate’s crosshairs. The payments for consultancy services started after Muscat stepped down as prime minister.

READ ALSO: Joseph Muscat received €60,000 from Swiss firm linked to Steward Healthcare

Former Prime Minister Joseph Muscat

At the time, he was still an MP. Muscat denied any wrongdoing and insisted the work was legitimate and declared. However, following this media report, the magistrate had ordered a police search of Muscat’s Burmarrad home in January 2022 from where electronic devices were confiscated. In May 2023, an investigation by OCCRP, Times of Malta and The Shift News claimed Muscat was being investigated over two payments from a Swiss firm previously called VGH Europe.

READ ALSO: Joseph Muscat netted payments from Swiss firm formerly called VGH Europe

Konrad Mizzi

Konrad Mizzi was handed the health portfolio in a Cabinet reshuffle in 2014 when Muscat relieved Godfrey Farrugia of his ministerial duties. Mizzi was the main architect of the hospitals deal. He continued handling all dealings related to the concession even after he lost his health and energy portfolios in 2016 when the Panama Papers scandal erupted.

Konrad Mizzi was Health Minister back in 2015 when the deal was originally signed (Photo: James Bianchi/MaltaToday)

Mizzi also oversaw the transfer of the concession to Steward Healthcare in 2018 and was the primary negotiator with Steward on side agreements reached prior to the end of the Muscat administration. The Auditor General’s report suggested that Mizzi negotiated contractual changes with Steward behind the back of health minister Chris Fearne.

Mizzi received major flak for the manner he behaved on the deal in all three NAO reports.

Chris Cardona

The former economy minister’s publicly known involvement in the deal appears to be limited to the initial stages when some of the Vitals investors had approached government with a proposal to take over St Luke’s Hospital. Malta Enterprise, which was under Cardona’s purview, had entered into a memorandum of understanding with the investors.

Former Minister Chris Cardona (Photo: James Bianchi/MaltaToday)

This MOU was even used by the investors as a bargaining chip when talking to financial institutions in a bid to seek finance for their plans. Eventually, the blueprint of the proposed investment used by the investors was adopted, almost lock stock and barrel by the government in its request for proposals – which was the public competitive process to choose the eventual concessionaire for the three hospitals.

Edward Scicluna

The former finance minister, who is now governor of the Central Bank of Malta, came in the crosshairs because his ministry would ultimately give the financial go-ahead for such projects to get off the ground. The NAO had concluded the due diligence on Vitals was lacking and very superficial, which begs the question as to why the finance ministry did not come down heavily on the project given the commitment of millions of euros in public funds it would entail.

Governor of the Central Bank of Malta and former finance minister Edward Scicluna (Photo: James Bianchi/MaltaToday

Additionally, Scicluna, like the rest of the Cabinet, had failed to stand in the way of the side agreement Mizzi had reached with Steward Healthcare in the summer of 2019 that meant the American outfit would have to be paid €100 million by the government of the contractual agreement was annulled by the courts.

Keith Schembri

The former chief of staff in the Office of the Prime Minister has denied any direct involvement in the negotiations over the hospitals deal. However, Schembri was Muscat’s enforcer and the go-to person in government. It is highly unlikely that Schembri’s fingerprints are absent from this deal. Indeed, Schembri had good relations with some of the Vitals investors.

Joseph Muscat's Chief of Staff Keith Schembri (Photo: James Bianchi/MaltaToday)

Lawyer Wasay Bhatti, who ran the two Swiss companies from which Muscat was paid consultancy fees after he stepped down from PM, had also bragged about his proximity to Muscat and Schembri. One email exchange, in which Yorgen Fenech, who is charged with masterminding Daphne Caruana Galizia’s murder, sought Bhatti’s assistance to transfer funds in foreign jurisdictions, reference was made to “a common friend”. This friend is presumably Keith Schembri.