Mizzi could not face NAO as damning report details extent of Vitals fiasco

Disgraced former minister Konrad Mizzi did not deign to meet the National Audit Office to defend his role in the controversial privatisation of three state hospitals which he presided over.

In a show of utter disregard for the NAO’s verification process of the multi-million Vitals Global Healthcare concession, Mizzi refused to appear before the NAO to discuss his pivotal role in the concession.

The report was tabled in the House of Representatives on Tuesday afternoon.

Mizzi was health minister when negotiations with the VGH commenced; was a member of the Steering Committee tasked with overseeing the concession; and was the signatory representing government on all contracts entered into with the VGH

“Mizzi’s failure to attend to the several requests made by the NAO constituted a serious failure on his part in terms of the level of accountability expected of a former minister of government and in terms of the standard of good governance that ought to have characterised a project as material and as important to the national health services as was this.”

In an uncompromising excoriation of the contract, the NAO said the failures of Labour’s privatisation of the state hospitals was down to the selection of VGH as the concessionaire, “a poor choice that set the stage for what was to come.”

“The negotiations that quickly followed selection were similarly flawed, conditioned to an extent by the structural anomalies and organisation of the Ministry for Energy and Health and the general ill-preparedness in terms of what was sought by government through this concession.”

The defunct Vitals Global Healthcare achieved none of its milestones when it took control of three state hospitals in a controversial, multi-million privatisation deal.

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The NAO report found that the unknown investors in VGH, led by Canadian boss Ram Tumuluri, was unable to secure financing and this became the crucial shortcoming on which all subsequent failures followed.

“All VGH’s commitments regarding the envisaged improvements to infrastructure and services were rendered unattainable in view of this failure.”

But the NAO said it was the Labour government’s acquiescence to these evident inadequacies that also mirrored VGH’s failures. “Instead, the government’s representatives, while bypassing Cabinet, endorsed multiple waivers of the requirement to secure financing, thereby perpetuating the failure that this concession came to represent.”

The NAO said the negotiations between the Muscat adminsitration and Vitals remained opaquely concealed to the auditors, due to a lack of documentation kept and conflicting accounts.

The NAO found deviations and other inclusions in the contracts that changed the scope of the concession, and altered the risk for the Maltese government, as well as the profitability of the project.

“Graver still was the government’s failure to consult with critical stakeholders. This omission resulted in the concession failing to meet its intended objectives, be it the health-related improvements originally envisaged and the classification of the concession as off-balance sheet, which failure implied that the VGH’s capital expenditure on the project was registered on the government’s accounts,” the NAO said.

The NAO said the Labour administration quickley revised VGH’s deliverables, in a way that was “consistently adverse to government, with a significant reduction in services without any change in the compensation due.”

Most glaring was a mismatch of labour resources allocated to the VGH by the government with the charge that was to be recovered. The discrepancy arising from this mismatch was borne by the government.