Armin Ernst to stand trial over hospital concession corruption charges

The Court of Magistrates has ruled that there is sufficient prima facie evidence for Armin Ernst, former CEO of Vitals Global Healthcare and later Steward Health Care Malta, to stand trial on charges of fraud, bribery, money laundering, and misappropriation linked to the controversial public hospitals concession.

The court delivered the decree on Monday, finding that “sufficient grounds exist” for Ernst to be indicted. The ruling follows a series of hearings focused on whether the prosecution’s evidence met the legal threshold required at the prima facie stage.

Ernst, who has pleaded not guilty to all charges, was arraigned in September before Magistrate Montebello. He faces a €20 million freezing order on his assets and a €70,000 court bond obliging him not to comment publicly on the proceedings.

The charges follow a years-long investigation into the privatisation of St Luke’s, Karin Grech and Gozo General hospitals, which were first granted to Vitals Global Healthcare in 2015 before being transferred to Steward Health Care in 2018, both deals since annulled by the courts.

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Earlier this month, defence lawyers José Herrera and Matthew Xuereb filed submissions insisting that no valid prima facie case exists. They argued that the prosecution’s case rests almost entirely on the Harbinson Forensics report, a voluminous expert analysis prepared for the 2019 magisterial inquiry into the hospital's deal.

The defence described the report as “an information exercise” comparable to police intelligence rather than admissible evidence, noting that it was never tested by cross-examination. They further pointed out that the document contains a non-disclosure clause stating that it was intended solely for use by the inquiring magistrate and should not have been relied upon in subsequent proceedings.

Moreover, it was argued that the report fails to establish a credible or coherent sequence linking the accused to the alleged offences, citing Maltese case law, which holds that prima facie findings must rest on credible, admissible and logically consistent proof.

The court rejected the defence’s arguments, ruling that the Harbinson report forms part of the process-verbal of the magisterial inquiry and must be received as evidence at this stage.

The court emphasised that its function at the prima facie level was not to assess credibility or admissibility but merely to determine whether sufficient grounds exist for the case to proceed to trial. The detailed evaluation of evidence, the court said, is reserved for the Criminal Court once the indictment is filed.

The court also clarified that experts appointed during an inquiry cannot be cross-examined during the compilation stage, unless specifically authorised by the court. 

Even if the expert later ceased his practice or his firm entered liquidation, this did not invalidate the examination or conclusions he drew while appointed by the inquiring magistrate, the court noted.

The decree summarised extensive evidence collected during the 2019 inquiry into the hospital’s concession, which stemmed from applications filed in 2019.

According to the inquiry findings, substantial payments running into millions of euros were channelled from concession funds through companies linked to Shaukat and Asad Ali, Ram Tumuluri, and Accutor AG. The inquiry also traced a €2.5 million transfer made by Steward to Accutor, most of which was allegedly diverted to private beneficiaries.

Emails seized during the investigation showed Ernst authorising payments “to support political and government interactions”, while other correspondence revealed him liaising directly with former OPM chief of staff Keith Schembri, who was described in the inquiry as having “a vested interest in the outcome.”

The court said that “at first glance, the evidence raises a reasonable suspicion that the accused, having been heavily involved in the management of concession funds and in the transfer of Vitals to Steward, was complicit in fraudulent activity” identified by both the National Audit Office’s 2020 report and the Court of Appeal’s 2023 judgment, which confirmed that the concession was “fraudulently contrived.”

The court concluded that there were sufficient reasons for Ernst to be committed for trial both personally and as representative of the companies Steward Malta Ltd, Steward Malta Management Ltd, Steward Malta Personnel Ltd, Steward Malta Assets Ltd and MiTrace plc.

It also ordered prosecutors to bring forward evidence of banking transactions between Steward Health Care System LLC in the United States and entities connected to the concession, including Accutor AG, covering the period 2017 to 2022, to ensure the “fullest investigation” of the case.

The defence has signalled it will continue to contest the committal decree, arguing that the Attorney General’s case relies on an untested and inadmissible report rather than probative evidence.

Magistrate Rachel Montebello presided. Defence lawyers José Herrera and Matthew Xuereb represented the accused. Police Superintendent Hubert Cini and Inspector Wayne Rodney Borg prosecuted alongside AG lawyers Shelby Aquilina and Rebekah Gatt.