Opaque Steward ownership distances Americans from Malta fall-out

The opaque ownership of Steward International, the concessionaire of three Maltese hospitals, has been called into question by an investigative financial research group from Delaware.

Viceroy Research called out Steward Systems, the American healthcare providers, and Medical Properties Trust, who rent out hospital real estate to Steward, over a convoluted ownership structure they believe serves to distance them as much as possible from the alleged corruption and fraud that could have taken place in the Maltese hospital concession of 2015.

Steward is awaiting the outcome of a court case filed in Malta by the Nationalist MP Adrian Delia, which could force the rescission of the controversial privatisation deal.

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But since 2020, the ownership of the Maltese concession has criss-crossed Europe, from Malta to London, and now Spain, in a company called Steward International that officially, no longer belongs to Steward Systems, but to Steward International’s CEO Ralph de la Torre.

Viceroy, short sellers that investigate financial wrongdoing, argue that Steward International is ultimately traceable to the same offices of Steward Systems, and that Medical Properties Trust has inflated the asset value of Steward International.

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The intense speculation on Steward International’s true ownership has been ongoing since May 2020, when the holding company that ran the Maltese concession carved out a new ownership structure.

At the time, Steward System announced it had divested itself of its international arm in a $200 million with CEO Ralph De La Torre – for all intents and purposes, an employee – and Steward International was registered as a UK company.

Then, Medical Properties Trust – Steward’s landlord in the USA – acquired a 49% stake in an unspecified ‘joint venture’ with Steward International’s management, De La Torre, for $205 million.

Steward International argued that this deal – a “collection of rights, intellectual property and subsidiaries” – was not connected to the Maltese concession. That concession, which is the operation of the hospitals – not ownership of land or buildings – at the time was valued at just $27 million with low ground rent for the Maltese government.

Steward International, now a company registered in Spain, had told MaltaToday it alone is the concessionaire, and was “fully independent” and unrelated to either the joint venture or Steward Systems in the USA.

Viceroy’s research shows the opposite, suggesting Medical Properties (MPT, but in stock exchange abbreviations referred to as MPW) has overpaid on the joint venture transaction to provide Steward with cash so that its hospitals appear to be paying back its rents. “MPT appears to have overpaid by 640%,” Viceroy’s researchers insist.

“MPT appears to have entirely funded the joint venture with $205m, for which they received a minority stake of 49%. The joint venture acquires Steward International for $200m, resulting in a $173m gain-on-sale to Steward… This is consistent with revenue round tripping. The only winner otherwise is Ralph De La Torre. The transaction is entirely uncommercial.”

Steward International ownership

MPT has never disclosed the name of the joint venture entity with De La Torre. “This is an enormous red flag. Off-balance sheet entities create the potential for theft, round-tripping, or even hiding losses, and should be heavily scrutinised,” Viceroy say.

The researchers analysed Maltese, UK and Spanish company statements, to find that the parent company of Steward International – registered now in Madrid – is Manolete Health Management LLC in Delaware.

This company was created in April 2020 along with a series of other ‘Manolete’ companies – one of them is MPT’s own subsidiary MPT Manolete Opco in Delaware. Even De La Torre had his own Manolete firm created in London, before immediately dissolving it.

Viceroy believes MPT Manolete Opco holds the 49% stake in the joint venture that controls Steward International in Spain, while the remaining 51% is held by a Delaware company, also called ‘Steward Health Care International Investors LLC’, whose registered office is the same as that of Steward Systems.

“Steward Malta crucially appears to share staff and offices with Steward Systems,” Viceroy’s researchers said, who also believe that both the circumstances surrounding the joint venture and, what MPT paid “are completely fabricated and intentionally opaque. This behaviour is consistent with money laundering and revenue round-tripping.”

Asked for comment on the Vicereoy research, Steward International insists it is not controlled by MPT but has not specifically denied claims about the opacity of the ownership structure, designed to keep Steward International under the control of Steward Systems.

“Manolete and Steward Health Care International are two separate companies, with separate operations, management and corporate structure. MPT does not in any way own or control Steward Health Care International, and saying otherwise is wrong and intentionally misleading.  Viceroy’s statements are transparently and knowingly false; they plainly have the effect, or are intended, to cause serious and unjustified reputational harm to Steward International; and Steward International will not hesitate to take steps necessary to protect its patients and its reputation.”

MaltaToday queries in 2022

When in early 2022, Steward Malta was asked by MaltaToday about the joint venture, a spokesperson said that assets, rights and international property had been sold to the joint venture “ahead of the 2020 transaction”, but that the name ‘Steward Health Care International’ and subsidiary Steward Health Care International-Malta, were sold to the Madrid-based Steward Health Care International.

“This company now owns and runs the Maltese operations and is a fully independent company not related to Steward Health Care Systems LLC [Steward Systems] or the joint venture. As it is a fully independent entity, Steward Health Care International is not in a position to respond to questions relating to the ownership or the activities of the joint venture or Steward Health Care Systems LLC, nor the activities of its shareholders. Any questions on these matters must be addressed to the relevant parties...”

Viceroy insist these claims are untrue.

“This entire recollection of events appears to be completely fabricated and backdated by Steward and MPT,” Viceroy say in their report.

“At the date of acquisition, Steward Health Care International Ltd owned Steward Malta. Steward Health Care International Ltd [in the UK] was never transferred to a JV and de-registered in February 2022…

“Steward Spain, the current owner of Steward Malta, appears to be held by Manolete Health Holdings: the JV holding vehicle. MPT appears to hold its 49% stake in the JV via MPT Manolete Opco; the remaining 51%, purportedly controlled by Ralph De La Torre, is Steward Health Care International Investors LLC.

“‘Commercial connections’ between MPW and Steward Malta appear relatively straight forward. Steward Malta’s UBO operates out of Steward System’s headquarters and shares staff and management with Steward Systems.”