Keith Schembri: ‘I’m not hidden hand in Vitals MOU’... but claim is contradicted by former CEO

Former chief of staff to Joseph Muscat denies having had part in controversial Vitals memorandum that paved way for hospitals privatisation

Former chief of staff Keith Schembri at a Cabinet meeting
Former chief of staff Keith Schembri at a Cabinet meeting

Joseph Muscat’s former chief of staff has claimed in an affidavit that he did not “negotiate” a memorandum of understanding signed with the Vitals Global Healthcare for the privatisation of three state hospitals.

Keith Schembri posted an affidavit on Facebook in response to a National Audit Office addendum to the original report on the MOU that economy minister Chris Cardona signed with foreign investors in October 2014, five months before the government eventually issued an international request for proposals.

The report shows that critical risks flagged by Malta Enterprise in a due diligence of investors that eventually obtained a concession to run three public hospitals were ignored by the government.

Cardona said he was not privy to the basis of the negative outcome, as this was confidential information that Malta Enterprise was prohibited from disclosing under the Business Promotion Act, unless otherwise instructed by the Prime Minister or by court order.

Significantly, Cardona’s testimony shifts the onus of responsibility for the hospitals deal onto the Office of the Prime Minister and Keith Schembri, the former chief of staff for Joseph Muscat.

Cardona told the NAO he was requested to sign the MOU on behalf of government but his ministry had no involvement in the identification of the hospitals concession project, the investors and the feasibility of the venture. The former minister said the MOU was signed at the Office of the Prime Minister.

But Schembri, in yet another denial peppering his political career, said his only involvement was to provide a room inside Castille where to sign the MOU at the request of Malta Enterprise. He acknowledged that only ME chief executive Mario Galea was involved in negotiations.

“I absolutely deny serving as some ‘hidden hand’ in this MOU… I only knew what I heard about Vitals during Cabinet meetings… I am being targeted for everything attributed to the actions of the government when Joseph Muscat was Prime Minister.”

However, even Malta Enterprise’s former CEO has reacted, saying his input into the MOU was to ensure that the provisions of the contract between the Maltese government and Barts, for which ME acted as a focal point, be transposed in the obligations of Vitals or whoever  runs the Gozo Hospital.

“It was a significant one which was however limited solely to this subject. One must not confuse Barts Medical School with Vitals as they are two totally separate and distinct projects.

“I categorically deny that I was ever involved in the ensuing hospitals deal as such matters were neither in the remit nor in the competences of Malta Enterprise. With reference to the reports and conclusions drawn up by the media and the statement to the media made by Keith Schembri, I categorically and strongly deny that I was involved in any negotiations prior to the signing of the MOU and/or negotiated the MOU itself except for what I have stated above.”

Malta Enterprise was tasked to carry out a due diligence of the investors and its involvement in the MOU was only to ensure that the construction of a medical school in Gozo was in line with what the agency had agreed with Bart’s Medical School. The government issued an international request for proposals in March 2015 on the basis of a proposal that was similar to that outlined in the MOU. The process was handled by Projects Malta, an agency under Konrad Mizzi’s wing.

The tender was eventually awarded to VGH, which comprised the investors that originally appeared on the MOU.

Public procurement process to give concession semblance of regularity

The MOU was not provided to the NAO by government in its original investigation on the VGH tender award, which was tabled in parliament earlier this month. The MOU was eventually passed on to the NAO after Prime Minister Robert Abela ordered it to be found.

The NAO had concluded that the VGH hospitals concession agreement was a done deal, even on the strength of the MOU that government had entered into with some of the investors.

In its fresh report, the NAO expressed “grave concerns” on the design of the RFP, more so after reviewing the MOU.

“The review of the MOU and the clear links that emerge between this and the RFP, render the likelihood that the RFP was designed with a pre-determined outcome in mind all the more probable. In the NAO’s opinion, the public procurement process was undertaken to lend the award of the concession a semblance of regularity and propriety when in fact the outcome of the process was a given,” the NAO concluded, reaffirming its original findings.

NAO's attempts to contact Schembri

Reacting to Schembri's remarks on how he received correspondence by the National Audit Office a day prior to the publication of the addendum, the NAO said it made various attempts to contact him by telephone as soon as his involvement in the MOU was flagged.

"This Office also sought to obtain the email address of Mr Schembri; however, enquiries made were unsuccessful. Thus, the NAO delivered a letter by hand to Mr Schembri’s residence on 21 July 2020. In addition, the same letter was sent by registered post on 22 July 2020," the NAO said in a statement.

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