It’s all about PPPs

The sinister thing about the Vitals contract is that the idea and the principle are good but the way it was put into practice is completely unacceptable

One hopes the investigation by the Auditor General will uncover some - if not all - of the mysteries  behind the Vitals contract
One hopes the investigation by the Auditor General will uncover some - if not all - of the mysteries behind the Vitals contract

Last Wednesday, the issue of the way the Government set up a public private partnership (PPP) to run the Gozo Hospital, plus St Luke’s and Karin Grech Hospitals was discussed in Parliament. I need not go into the gory details but one must distinguish between the idea of a PPP - that the previous PN governments adopted successfully in the case of homes of the elderly - and the way it was applied in the infamous Vitals contract.

The sinister thing about the Vitals contract is that the idea and the principle are good while the surreptitious way it was put into practice is completely unacceptable - more so because the Government is hiding details that the voter should know about. One hopes that the Auditor General now enters into these details in his investigation.

The PPP idea is, of course, a remnant of Thatcherism, the concept being that the private sector can provide a better and cheaper service than the public sector. There is something in this, of course, and that is why PPPs survived Thatcherism. A PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risks in the project.

In theory the private party makes a profit in the long term, while the public authority spends less on the service the PPP provides if it were to do it on its own. Investment made by the private partnership is recouped over the years and the public authority is also relieved of the pressure of sudden large investments straining its budget unduly.

It is ironic that in Malta the House of Representatives was discussing the Vitals contract, at the same time that in the UK the press was discussing the threat of a particularly enormous PPP contractor - Carillion - going bust.

The company is hoping for an eleventh-hour rescue to save it from collapse amid fears for the future of a host of major government projects and day-to-day services.

In 1999 Carillion was a tarmac construction business and later diversified into outsourcing, taking on contracts to run public service projects, ranging from prison and hospital maintenance to cooking school meals. Last year a third of its revenue – £1.7 bn – came from state contracts. In the UK alone it employs more than 19,000 people.

Today it has contracts with the NHS and with roads and railways authorities; and maintains houses for 50,000 members of the armed forces plus having a £680m contract to provide 130 new buildings in Aldershot and Salisbury for troops returning from Germany.

It is also involved in education – cleaning and providing meals for 875 schools - besides maintaining 50% of UK prisons. Quite an all rounder!

Three years ago, Carillion was valued at £1.6bn. Yet today this behemoth private company is in danger of collapsing. After taking hits of more than £1bn on unprofitable contracts, banks are unwilling to inject more money without a government bailout for a company with debts of £900m.

The Labour Opposition in the UK has called for a public inquiry into the rapid decline of Carillion, whose chairman is an adviser on “corporate responsibility” to Prime Minister Theresa May, and signed an open letter in 2015 from business figures urging people to vote Conservative.

Trade unions have branded Carillion a “textbook example of the failures of privatisation” and urged the government to step in to guarantee jobs and services.

Opposition MPs are expected to question the government on why it awarded Carillion lucrative public sector contracts, including £1.4bn of work on the HS2 rail project, even after it became clear the company was struggling. Any similarity with the Vitals case is, of course, pure coincidence!

This is one of the serious dangers of privatisation: the private partner going bust and the govermnent having to spend extra money to bail it out because the services that the company provides cannot be withdrawn.

How a company without any experience in the field and with no assured bank loans, such as Vitals, was entrusted with a PPP agreement obliging it to invest in and run such a large part of Malta’s health sector points out to a serious lack of due diligence from the Malta Government side. One is even unsure whether the contract was vetted by officials in the Ministry of Finance, before it was signed.

Only the artful dodger behind the deal can actually tell us why the Maltese Government treated Vitals in the way it did.

One hopes the investigation by the Auditor General will uncover some - if not all - of the mysteries behind the Vitals contract.


Going too far (2)

The #MeToo movement continues to spread all over the globe. It has its followers in China as well. It has been 12 years since Luo Qianqian, according to what she is saying, was pounced upon by her PhD supervisor while she was studying in Beijing.

Brigitte Bardot
Brigitte Bardot

Luo, now in her mid-30s, recalls bursting into tears at the unwanted advance. Her teacher, who denies the claims, withdrew but later touched her hand as he implored her to keep quiet. “I was too terrified to speak,” she remembers.

On 1 January Luo published an eloquent online denunciation of her alleged experience: “[There’s] no longer any need to be afraid … we need to stand up bravely and say ‘No!’

On the other side of the coin, this week it was the turn of legendary French actress Brigitte Bardot to denounce the #MeToo movement and the increase in Hollywood figures complaining of sexual harassment. Bardot did just that in an interview with French magazine Paris Match.

In the interview, Bardot asserts that for actresses specifically, “the vast majority of cases” are “hypocritical, ridiculous, without interest.”

The 83-year-old actress who stated that she has never been a victim of sexual harassment said “I thought it was nice to be told that I was beautiful or that I had a nice little a**,” she said. “This kind of compliment is nice.”

She went on to say that actresses “come on” to producers to get roles, “and then, so they’ll be talked about, they say they were harassed.”



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