Experts, official testify in Vitals case as court hears evidence on investment gap, concession termination

Experts and senior government officials told the court on Wednesday how data collection, financial discrepancies and mounting concerns over Steward Healthcare shaped the government’s path toward terminating the hospitals concession.

The court presided by Magistrate Leonard Caruana resumed hearing the Vitals case on Wednesday, with former ministers Chris Fearne and Edward Scicluna present in the dock.

Martin Bajada was the first to testify, explaining his role as an expert during the Vitals inquiry.

He told the court he had twice been asked to assist technical expert Keith Cutajar on specialised matters.

Bajada also confirmed that he had compiled all email correspondence belonging to the accused, former ministers Chris Fearne and Edward Scicluna.

Permanent secretary presents ministry documentation

Joseph Chetcuti, Permanent Secretary at the Ministry for Health and Active Aging since 2022, then took the stand.

He presented samples of quarterly reports submitted by Vitals and Steward Healthcare, covering staff movements and related expenses.

Chetcuti also exhibited two reports prepared by Grant Thornton prior to 2022 analysing the consortium’s investment in the hospitals. Grant Thorton had been commissioned by the Health Ministry to analyse Steward's claims.

While Steward had claimed it invested around €61 million, Grant Thorton's assessment revealed that the actual value of works carried out was €42 million, a €19 million discrepancy. Chetcuti testified that no payments were made to Steward and the issue was dealt with in arbitration before the International Chamber of Commerce (ICC).

Chetcuti also filed correspondence between the ministry and Steward, redevelopment plans by Steward for the hospital sites, the 2022 ratification notice sent by the ministry, Steward’s 2023 reply, the contract termination letter, and the government “step-in” circular issued to employees after the takeover.

Creation of the Internal Audit Department at the Ministry for Health

Chetcuti confirmed he had served in several government roles under both Scicluna and Fearne.

He said Scicluna had provided “crucial support” during his seven years in the public service, while he developed a strong professional rapport with Fearne as the Minister’s permanent secretary.

Chetcuti testified he had proposed setting up an Internal Audit Department within the Ministry.

Fearne had encouraged him, replying: “Go ahead and set it up today rather than tomorrow.”

The Health Ministry became the first ministry to establish such a unit.

However, he acknowledged that because the department was still in its infancy, it likely would not have detected wrongdoing by Steward, noting that three audits by the National Audit Office had also found no evidence of misconduct.

Chetcuti described both Fearne and Scicluna as having worked with “the highest level of correctness expected of them.”

External experts and the procurement process

Chetcuti also explained how procurement financing and approvals function within the ministry. He said the ministry had an obligation to verify whether Vitals were fulfilling their contractual obligations.

He referred to external advisers involved in the Vitals concession, including consultant Joseph Zarb Adami, tasked with assessing Vitals’ performance, as well as auditors from Grant Thornton who were engaged when required.

Steward had initially refused, citing GDPR concerns

To verify invoices, the ministry demanded detailed employee data, particularly for Steward staff. Steward had initially refused citing privacy concerns but the ministry obtained clearance from the Data Protection Commissioner although Steward continued to raise procedural objections. Steward had presented a bill for €11 million, however, Chetcuti testified that this was not paid and the dispute was ultimately resolved during the ICC arbitration.

Chetcuti testified the ministry had serious concerns about Steward’s compliance with contractual obligations.

Steward had never submitted the required €9 million performance guarantee. There were also doubts about the company’s financial strength.

Officials feared Steward would struggle to raise funds for new hospital projects.

Chetcuti added that Fearne, who was health minister at the time, had “fought hard with them [Steward]” over these shortcomings.

The ministry sought legal advice from Camilleri Preziosi on whether the concession could be terminated.

The firm advised that the deficiencies alone were insufficient grounds for immediate termination and recommended issuing a ratification notice instead.

The termination of the concession

Around December 2022, the Ministry entered into good-faith discussions with Steward, granting a 90-day deadline to regularise its position.

At the same time, the court judgment in the Vitals case filed by Adrian Delia was imminent.

The ruling annulling the hospitals deal was eventually delivered by Judge Francesco Depasquale.

Following legal advice, the ministry opted not to appeal that judgment and instead proceeded directly with termination of the concession.

The termination notice was issued on 24 March 2023.

After the transition process, the hospitals returned fully to government control in May 2023.

Chetcuti appeared ready to end his testimony with a reflective remark, beginning to say: “If you allow me, in life I have learned that…”.

However, the court moved directly to further cross-examination.

The prosecution also requested verification of the legal qualifications of expert Miroslava Milenovic.

The prosecution was led by AG lawyers Francesco Refalo, Rebekah Gatt and Shelby Aquilina, and Inspector Wayne Rodney Borg. Lawyers Alex Sciberras and Stephen Tonna Lowell appeared for the defense.

The case will continue on 4 March at 1pm.