Labour MOU for Steward allowed Barts campus to be hived off to property vehicle

A memorandum of understanding hammered out by the Muscat administration with Steward Healthcare, would have allowed the American hospitals concessionaire to sell the Barts medical and nursing training school to a real estate investment company. 

The non-binding MOU was approved by Cabinet in 2019, but never formally sealed because of the political crisis of December 2019, when Tumas magnate Yorgen Fenech was charged with masterminding the assassination of Daphne Caruana Galizia. 

According to the MOU, it was agreed that Steward could transfer the Barts Medical School into a “separate and distinct contract”, without any change to government’s ownership rights in the Steward concession agreement. 

MaltaToday understands the plan was to allow Steward to sell the property to American hospitals landlord Medical Properties Trust for their real estate investment trust portfolio, worth some €13.3 billion in hospital facilities.

The capital from the sale would be used by Steward to cover its loans, while the Barts property would be leased back from MPT.

Until 2020, Steward was owned by Cerberus Capital Management, which then sold a 90% stake to a management group led by Steward Health Care International’s owner Ralph de la Torre.

According to MPT’s filings with the United States financial regulator, Medical Properties Trust formed a new joint venture with De la Torre and other executives on Steward Healthcare International, which runs the hospitals in Malta. Steward in America received $200 million in cash for the sale of Steward International, while the Malta assets were valued at $27 million. 

Former tourism minister Konrad Mizzi disputed with MaltaToday assertions that he had been the minister to carve out the agreement with Steward. “That’s incorrect. The MOU was drafted and negotiated by an inter-ministerial committee comprising senior officials from both the ministry of health and the ministry responsible for projects [Mizzi’s tourism ministry PPP agency Projects Malta in its portfolio) and various advisors.” 

Mizzi insisted that the MOU in 2019 was subsequently presented to Cabinet and approved. MaltaToday is informed there were objections from health minister Chris Fearne, over what sort of ownership rights MPT would have on the Barts campus buildings once the 30-year concession expires. 

Mizzi said he did not have access to technical documentation and that he could not ascertain details about the matter MaltaToday was referting to. “Presumably this may be related to a mechanism to raise finance for project development,” he said, prompted by MaltaToday on the sale of the Barts school to MPT. 

The concession of three state hospitals to Steward’s predecessors, Vitals Global Healthcare, is the subject of a magisterial inquiry; with negotiations between Steward and the Maltese government on a potential exit price reportedly at a stalemate. The government is still bound to finance Steward’s labour force, to run the three hospitals. 

But a court case filed by Nationalist MP Adrian Delia, which he claims proves Steward has not fulfiled its concessionaire’s obligations, could potentially lead to the rescission of the Steward contract. If that happens, a new legal tussle could ensue, with Steward litigating for a €100 million penalty for government default.

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