Legal fall-out from hospitals swindle far from over

Although a judge has now rescinded the contract and ancillary agreements between the Maltese government and Vitals Global Healthcare/Steward Healthcare, on the grounds of “fraudulent and possibly criminal” behaviour on the part of the commercial entities involved, there may well soon be more serious legal repercussions for the individuals who negotiated the Vitals/Steward hospitals privatisation deal.

An ongoing magisterial inquiry into allegations of corruption being involved in the recently rescinded hospitals deal is believed to be nearing its final stages, raising the prospect of criminal charges, as well as a separate litigation on the part of Steward to extract a €100 million penalty in their favour.

The magisterial inquiry started in May 2019, after anti-corruption NGO Repubblika filed an application requesting an inquiry into the privatisation of the three public hospitals, citing “reasonable suspicion of money laundering, bribery and other serious crimes.”

In that application, the NGO had also identified the individuals it suspected of being behind those crimes: now-former ministers Konrad Mizzi, Chris Cardona, Edward Scicluna as well as businessman Ivan Vassallo.

This claim would appear to have been borne out by testimony heard during sittings in the ultimately successful civil case filed by former Opposition leader Adrian Delia, challenging the emphyteutical concession of the three State-owned hospitals to Vitals Global Healthcare, and later Steward Healthcare.

The judge hearing that case had heard witnesses from various government bodies testify that nobody had carried out due diligence on the parties to the contract before it was signed, because it was “already a done deal decided by former minister Chris Cardona and [Vitals Global Healthcare’s CEO at the time] Ram Tumuluri.”

Following the application requesting the magisterial inquiry, Repubblika’s lawyer, Jason Azzopardi, had subsequently filed a second application in 2019, alerting the court that the day after the NGO had formally requested the inquiry, “Tumuluri placed nine of the previously hidden Jersey companies involved in the Vitals Global Healthcare (VGH) concession’s web of offshore companies and contracts into liquidation.”

In requesting the inquiry, the Repubblika lawyer asked the inquiring magistrate to issue, amongst other things, an urgent European Investigative Order, so as to preserve the evidence and avoid the stultification of any eventual magisterial inquiry.

EIOs are legal instruments meant to facilitate cross-border evidence-gathering in criminal investigations. Once issued by a judicial authority in an EU member-state, the issuing country is empowered to make use of evidence gathered during criminal investigations carried out in other EU member-states.

EIOs are based on the principle of mutual recognition, which means that the executing authority is, in principle, obliged to recognise and ensure execution of the other country’s request.

It does not look like the EIO was issued, however.

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, the likely time frame being described as “months.”

According to figures published this week by the Medical Association of Malta, the taxpayer forked out €390 million to Vitals Global Healthcare and then Steward Health Care under the now annulled concession, for the companies to run the hospitals and pay medical personnel previously under government employ.

The rescission of the contract could be a first step towards recovering the millions taken by the concessionaires if the governmnet files civil proceedings. But that is a matter compounded by one legal certainty: Steward expect that it recoups a €100 million penalty inscribed in its favour by former minister Konrad Mizzi in the event that a Maltese law court actually rescinds its contract – a secret side-letter that seems to have predicted the outome in the Delia case.