Labour braced for Steward fall-out over penalty, fraud investigation

Maltese government faces a potentially damaging court judgement that could lead to a €100 million penalty and a criminal investigation into alleged corruption surrounding the VGH deal

The Maltese government is bracing itself for the court judgement that could spell out an unprecedented €100 million penalty in favour of the American healthcare giant Steward, should the controversial hospitals privatisation deal be rescinded.

There is trepidation at the top echelons of Robert Abela’s administration, as the outcome of a court case filed by the Nationalist MP Adrian Delia for the rescission of the former Vitals hospitals privatisation could open up the government to a new €100 million penalty, but even something more controversial: a criminal investigation into the alleged corruption surrounding the VGH deal, touching upon the former Muscat administration.

Mr Justice Francesco Depasquale is expected to deliver his judgement in the coming weeks. Senior government sources are aware that Steward Health Care have “weaponised” the case filed by Delia, by admitting in defence submissions in a London court in a case by former Vitals investor Ambrish Gupta, that the VGH concession had been obtained fraudulently.

Those sources told MaltaToday that a court decision recognising any validity in such a statement, could lead to a request to the Maltese police to commence investigations into the role of former prime minister Joseph Muscat, and former minister Konrad Mizzi in the privatisation of the three hospitals in favour of Vitals Global Healthcare.

VGH ended its stewardship of the three hospitals in December 2017, with millions paid out to former founder-investors Ram Tumuluri, Mark Pawley and other medical shareholders.

After Steward took over the concession, it became embroiled in a case against original investors Medical Associates of North Virginia Inc in London, during which it alleged that MANV investor Ambrish Gupta was involved in irregular and collusive practices with the government of Malta.

Adrian Delia, the plaintiff in the rescission case, believes the admission has fuelled the legal justification to nullify the contract.

The fall-out will prompt the Abela administration to counter the political bombshell of the court judgement, with a legal challenge on Steward’s contractual obligations over the concession, and whether it is liable to pay not just a €100 million default penalty but also the entirety of Steward’s accumulated debts in Malta.

“We are aware of this probability, because there is a contingency plan to walk in and take over the entire operation,” a government source told this newspaper.

In March 2020, MaltaToday revealed the existence of a ‘side-letter’ crafted by Konrad Mizzi – ostensibly never approved by the Cabinet back in 2019 – that gave Steward an “escape clause” on a golden plate, turning any termination of its concession by a court of law, into a government default.

That means that even if the hospitals concession agreement is simply rescinded by a court of law, it will be deemed as a government default and the State would have to pay Steward a penalty of €100 million.

Steward was accused by Adrian Delia of wanting to leave the island, but not before picking up the €100 million cheque.

Five years since he filed the case calling on the courts to rescind the privatisation deal, Delia too hopes he can reap the political benefits of the fall-out by claiming a political victory that has become all too rare for the Nationalist Party and the MPs that ousted him in 2020.