Konrad Mizzi refutes NAO’s conclusion he misled Cabinet but ignores Fearne’s testimony

Former minister Konrad Mizzi says the NAO’s conclusion that he misled Cabinet on €100 million penalty is false but ignores Chris Fearne’s testimony

Konrad Mizzi (centre) during one of the PAC meetings in which he was grilled by MPs
Konrad Mizzi (centre) during one of the PAC meetings in which he was grilled by MPs

Konrad Mizzi has described the Auditor General’s conclusion that he misled Cabinet on the Steward deal as “pure conjecture, irresponsible and blatantly false”.

The National Audit Office concluded in its third report on the hospitals concession that Mizzi misled Cabinet when he discussed an additional government guarantee to absorb Steward’s debt and pay them €100 million if the contract was cancelled by a court.

In a short Facebook, Mizzi insisted a lengthy discussion had taken place in Cabinet in August 2019 on additional safeguards requested by Bank of Valletta if the Steward hospitals concession was annulled by the courts.

But Mizzi’s post ignored the fact that the NAO’s conclusion was based on a reading of the memorandum the former minister had presented to Cabinet and the testimony of Health Minister Chris Fearne.

Mizzi wrote: “On the 26th August 2019, I had briefed Cabinet that terms for credit facilities from BOV were discussed and that BOV was seeking additional safeguards. The memorandum to Cabinet clearly stated that in the event of a court declaration of nullity of the concession, government would become liable to pay the lender’s debt and would trigger a government event of default… Lengthy discussions took place in Cabinet on the implications of both lender’s debt and a government’s event of default, and I answered all questions raised by my peers, as the then prime minister who chaired the meeting himself confirms.”

He then proceeded to rubbish the NAO over its conclusions. “On the other hand, the NAO admits that it is not privy to discussions held by Cabinet. NAO’s conclusion is therefore pure conjecture, irresponsible and blatantly false.”

In its report, the NAO said the memo that Mizzi presented to fellow ministers in August 2019 clearly specified the government’s role as guarantor for the loans made available by BOV to Steward but was “less clear” about the implications if a court annulled the contract.

“In the memorandum to Cabinet, the Minister for Tourism failed to specify that the materialisation of such an event would imply that the government would be liable to pay Steward €100 million and the sum of the lenders’ debt, which by the Minister for Health’s estimations was substantially higher than the facilities made available by the BOV and cited in the memorandum,” the NAO said.

It also added that in submissions before it, the Prime Minister and the Health Minister indicated they were not aware of the implications of that endorsed by Cabinet.

The NAO also highlighted the fact that Mizzi ignored requests to put forward his perspective on the concession and this crucial submission to Cabinet in 2019.

“The omission of key facts and the understatement of others led the NAO to consider whether Cabinet was misled by the Minister for Tourism. The NAO was not privy to the discussions held by Cabinet and any clarifications that could have been provided by the Minister for Tourism… Nevertheless, based on the evidence at hand, that is, the memorandum to Cabinet and the testimony of the Minister for Health, the NAO is of the opinion that the Minister for Tourism misled Cabinet,” the NAO concluded.