Fate of Vitals hospitals concession rests with judge as lawyers deliver final arguments

A court case in which former Opposition leader Adrian Delia is asking the court to rescind the hospitals concession agreement with Steward Healthcare is nearing its end.

Lawyers for Delia and the defendents delivered their final arguments on Tuesday with the fate of the agreement now in the hands of Mr Justice Francesco Depasquale. Judgment is expected in January.

Three public hospitals had been given to Vitals Global Healthcare on concession, however, the obscure company failed to live up to its obligations and the concession was eventually transferred to American company Steward Healthcare.

Delia initiated court proceedings in 2018 to force the cancellation of the emphyteutical concession agreement and have the hospitals returned to the public on the basis that Vitals and their heirs, Steward, did not fulfill their contractual obligations. Moreover, Delia has argued the contract itself was vitiated because Vitals had been in talks with government before the competitive process was launched.

In his final arguments today, Delia's lawyer, Edward Debono insisted that witnesses from various government bodies had testified that nobody carried out due diligence on the contract because it was “already a done deal decided by former minister Chris Cardona and Ram Tumuluri”.

In the case, which has been ongoing since 2018, Delia had asked the courts to declare the agreement between the Maltese government and Vitals Global Healthcare (VGH) – since then superseded by American company Steward – null and void, in view of the fact that Steward had failed to adhere to the obligations laid down in the contract. 

Steward acquired the 30-year concession to run the three state hospitals as a private concern in December 2017 from Vitals Global Healthcare, a then unknown consortium of medical entrepreneurs who had been granted the concession in 2015. But VGH racked up millions in debt with nothing to show for it, eventually negotiating a buy-out of some €15 million from Steward.

The case was filed by Delia as Opposition leader against the Prime Minister, VGH, the Attorney General, the CEO of Malta Industrial Parks, and the chairman of the Lands Authority’s board of governors. Steward Healthcare later replaced VGH.

In his concluding arguments this morning, Debono submitted that public land is only granted to the private sector for a reason prescribed by law and that ancillary agreements which had been quoted during previous sittings are also part of the contract, which if not honoured give rise to the recission of the main contract.

“The law says that public land cannot be given to the public sector without parliamentary approval unless it is for the public good… Why was it granted to Vitals? It doesn’t make sense if the other agreements are not an essential part of the contract for ground rent.”

He reiterated his argument that the defendants’ contractual obligations had not been fulfilled.  “In Gozo all they have done is dig a hole in the ground. The hospital hasn’t been built, Barts was built by Barts and not VGH… Karin Grech Hospital is not much better. St Luke’s hospital is good only for rats. They did nothing,” Debono argued.

“Then they had the cheek to declare that the Vitals contract which their predecessors had signed is the fruit of corruption. How can you come here today and declare that you are a different juridical person to Vitals. So up to 2015 there was corruption and then after that there wasn’t anymore? A share transfer had taken place and so the new company had put on Vitals’s shoes… the juridical personality is the same because only the name has changed.”

The lawyer told the court that in 2013, before the request for proposals was issued, former minister Chris Cardona had already agreed with Ram Tumuluri that the contract would be awarded to Tumuluri’s company, Vitals. “It is a public document in the contract.” The rest of the deals were a mise en scene, said the lawyer.

“Witnesses from various government bodies testified, saying that nobody carried out due diligence on a €2 billion contract because it had already been agreed,” the lawyer submitted. “The Office of the State Advocate should not be here defending criminals, the ex-Prime Minister and the AG. The State Advocate should be defending the State from the criminals and the filthy business that they started.”

Debono argued that it was “the right and duty” of the Attorney General and the Lands Authority to exercise their powers when they are confronted with such a situation.

“Who is there to protect the national interest? Of all our parliamentarians, only one MP defended this right,” submitted Delia’s lawyer, adding that in spite of the fact that the contract was signed by INDIS, the land was still public land and the obligations of the AG to protect public property remain the same. “Where is Victoria Buttigieg? Where is the director of Lands? Who is stopping them from defending the rights of the Maltese people?”

Debono told the court that Steward had claimed the contract was tainted with corruption, as had the Auditor General - a public entity set up by the State. “What is the logical conclusion of all this? That this contract can continue as if nothing happened, that this is still a valid contract? Did we not give them this property for them to do something with it?” 

“Besides this, as we have fraud, this overrides everything. If the court finds that what is being said by Vitals, by Steward, by the Auditor General is true, how can it not declare that fraud has taken place and rescind the contract?... Does Konrad Mizzi have no shame? Did he think that fraud is going to reduce the courts to something that will order Malta to pay €100 million to fraudsters?”

“It’s as if our society has forgotten that we should behave correctly. It’s almost become acceptable that some people make wealth unjustly. But it is not right, and it is the poor, those with no voice, who suffer.”

State Advocate rebuffs request for contract to be cancelled

State Advocate Chris Soler retorted that this case dealt with a dispute arising from the assertion that the defendants had failed to fulfil their contractual obligations, whereas the law itself doesn’t permit the rescission of a contract on this ground.

Soler also submitted that Delia did not possess the requisite juridical interest to be the plaintiff in this case.

Quoting from case law, Soler said that the court must rigidly remain within the parameters of the law, adding that the wrong legal procedure had been used in this case.

“The underlying assumption is incorrect. The transfer took place in line with applicable policy,” he said. 

Besides the lack of juridical interest and locus standi, Delia was also procedurally incorrect in that the case wasn’t filed against the contracting authority - in this case the Health Ministry. The Permanent Secretary of the Health Ministry should have been the defendant, not the Prime MInister and the AG, Soler argued.

Lands Authority should not have been party to case - lawyer

Lawyer Stefano Filletti, representing the Lands Authority in these proceedings, highlighted the fact that the corruption allegations had not been mentioned in the application for this case and had only arisen during the course of proceedings. He challenged those responsible to take ownership of their project.

The Lands Authority should not have been made a party to this case, said the lawyer, arguing that before this contract was published, two legal notices had been issued which clearly state that the powers and obligations of the Commissioner for Lands over all of the property in question was being divested from the Commissioner for Lands in favour of another competent authority.

“So what is the Lands Authority’s involvement in this case? In the testimony of every witness, the role of the Lands Authority was conspicuous by its absence. Peter Mamo, as Head of the Lands Authority only appeared on the final contract as the representative of the Government of Malta… He confirmed that at no stage of the preparation, was he spoken to. He told us that the in the entire process, other authorities were involved, and that he was assured that the process was concluded correctly. So he only confirmed that the contract was drafted in the manner required by the applicable law and proceeded to sign the contract.”

The practice of the Commissioner for Lands also appearing as a party to such contracts was established by an ordinance dating back to a time when Malta was still under British rule, Filletti submitted. “But if the legal notice is divesting the Commissioner of his powers, rights and obligations and handing them to other people, how can he be held responsible for their actions?

“If you have a project, take ownership of it yourself. That is good governance.”

Mishmash of contradictions

INDIS Lawyer John Bonello argued that the plaintiff was saying that the court should declare that someone else should have protected something “and in the same breath that this concession is wrong and should be rescinded. With respect, this is a mishmash of contradictions.”

The land is currently the responsibility of INDIS Malta, said the lawyer, adding that the analysis of this contract had been performed by an entity which is not a party to this case. "If the process of assessing the bids and recommending a direct concession is the issue, the entity which did so should be a party."