Government will not appeal Steward hospitals judgment as it braces for political fallout

Government will not be appealing the judgment that annulled the hospitals concession agreement with Steward Healthcare, MaltaToday has learnt.

“The move is intended to close the chapter once and for all so that the Gozo, St Luke’s and Karin Grech hospitals are returned back to the State as quickly as possible,” government sources said.

On Friday night, Prime Minister Robert Abela said government will be asking for the 30-day timeframe for appeal be shortened and if anyone appeals, ask for this to be heard with urgency. He did not say whether government intended to appeal.

Abela was speaking after Judge Francesco Depasquale annulled the concession agreement with Steward, including all side letters, and ruled that steps be taken to return the hospitals to government.

The sources said government has no intention of appealing and a managerial team has already been assembled to take over the running of the three buildings once the case is definitely closed.

Steward Healthcare has intimated it will challenge the court ruling. In a strongly-worded statement on Friday, the American company questioned the rule of law in Malta and insisted the court overreached its remit.

However, Abela also has an interest in limiting the political damage from the court ruling, which butchered Steward and its predecessor Vitals, and expressed “serious concern” over how government officials “consciously” acted to strengthen the hand of the private companies in the deal.

The judgment has already led to stiff public exchanges between former prime minister Joseph Muscat, former education minister Evarist Bartolo and Health Minister Chris Fearne.

In the immediate aftermath of the ruling, Muscat shifted the onus of responsibility onto Cabinet, insisting he always acted in the best interests of the country. Bartolo later responded that Cabinet was being used as a “smokescreen”.

Fearne claimed the judgment exonerated him from responsibility, pointing out the relevant paragraphs in the judgment where it was noted how decisions on the hospitals concession were being taken behind his back by Konrad Mizzi.

In his testimony before the judge, Fearne had said that he had raised a complaint on Mizzi’s dealings with Steward and the matter was going to be discussed in Cabinet in November 2019 but on that day, Mizzi resigned.

Government sources said Abela is bracing himself for the flak his administration will receive on Monday when parliament is expected to hold an emergency debate on the judgment and the future of the concession.

Konrad Mizzi singled out

Depasquale did single out Mizzi in his voluminous judgment for “consciously” weakening the government’s hand in the hospitals concession saga to the advantage of Vitals and later Steward Healthcare.

Mizzi did not respond to a request for comment and has so far not commented publicly on the judgment.

Mizzi entered into multiple side agreements and accepted amendments to the original contracts, including a lengthy extension to the deadlines for the milestones to be completed by Vitals after missing their original timeframes.

And in one of his last acts as minister, Mizzi also entered into an agreement in August 2019 with Steward Healthcare accepting that the government take on the company’s debts and pay them a penalty fee of €100 million if the contract was rescinded by the law courts.

“These doubts [about the contract],” judge Depasquale ruled, should have also been raised by all those who were entrusted to safeguard the Maltese government’s rights.

“This includes Dr Konrad Mizzi, both when he was energy and health minister at the time the original agreement was signed, and more so when, despite no longer holding the health portfolio, signed various other agreements that amended the original one, and consciously weakened the government’s rights, which changes only benefitted Vitals and Steward, and certainly not the government and the citizen, who had to be the ultimate beneficiary of the projects entrusted to Steward and which never materialised,” the judge said.

In simpler words, the actions taken by government officials, particularly Konrad Mizzi, placed the government at the mercy of the foreign company that did not fulfil its contractual obligations.

The operator’s bathroom

The judge expressed astonishment how the government did not terminate the concession forthwith given that Vitals and later Steward failed to fulfil their end of the deal.

Depasquale highlighted that the ‘list’ of completed works that Steward submitted in court included a detailed exposition on renovations to the bathroom used by the telephone operator at the Gozo hospital.

“The photographic report [submitted by Steward] starts with a photo of a new helicopter allegedly bought in 2016, and continues with a refurbished bathroom used by the telephone operator at the Gozo Hospital, with details of all the ceramics that were installed,” the judge noted.

He went on: “The court is perplexed with the dearth of proof put forward by Steward, which probably reflects the dearth of investment and projects Steward has planned for the future.”

But for all the harsh words reserved for Vitals and Steward, to which the judge attributes bad faith and possibly criminal intent, Depasquale went relatively easy on the Muscat administration.

‘Ingenuity’

Apart from singling out Konrad Mizzi and despite expressing reservations on the conduct of public officials, the judge would only describe their actions as the result of “ingenuity”.

“The court is seriously concerned how public officials could ever consciously place such onerous obligations on government, and would like to believe that such obligations were assumed, possibly as a result of ingenuity, if not pressure so that the original project remain viable,” Depasquale said.

However, he did not mince his words in describing the actions of Steward and Vitals as “fraudulent and possibly criminal”.

The cancellation of the contract ends one of the dark legacies of the Muscat administration that continued to hound his successor.

It does not, however, end the separate magisterial inquiry that is probing the same contract for possible criminal behaviour by public officials and others.

Since 2020, Abela’s administration had been negotiating some form of settlement with Steward Healthcare but no progress was reached, with the American company asking for more money.

After walking away from the table, government insisted it will be waiting for the court ruling before taking any decisions on the hospitals contract.

Now that the court has rubbished the agreement the onus is on government to map out the way forward. Meanwhile, Gozo remains without a promised state of the art hospital, St Luke’s is in the same pitiful state it has always been and medical tourism is not an economic niche.