Fearne on hospitals deal: ‘Things happened behind my back, but today I have full visibility’

Health Minister Chris Fearne said government is doing its utmost to recover funds in arbitration proceedings it has against Steward at the International Chamber of Commerce.

“There were things which happened behind my back during this deal, but I assure you I am well aware of what is going on now,” he told the House during parliamentary question time on Wednesday. He was replying to a parliamentary question by Nationalist MP Adrian Delia.

Fearne was speaking in parliament for the first time after the Appeals Court on Monday confirmed the original verdict that the contractual agreement was null because certain milestones were not reached but made it clear that the deal was underpinned by collusion between government entities and the private companies involved – Vitals and later Steward.

Speaking in parliament, the health minister said Vitals and Steward had three obligations: to provide health services at the three hospitals under its management, medical tourism and the construction of a new hospital in Gozo.

READ ALSO: Joseph Muscat shirks responsibility, blames ‘hidden vested interests’ for Steward hospitals deal failure

“The funds given to Steward by government went towards providing health services,” he told parliament.

“The money we pay for health services doesn’t go towards just wages. Money goes towards other services: operations, food, equipment, medical devices, medicines. These are very important, and without them the sector cannot move forward,” he said.

He stopped short of giving any details on arbitration proceedings, saying he was barred from giving any information by the International Chamber of Commerce.

On Monday, prime minister Robert Abela told parliament that the latest ruling bolsters the government’s position in the arbitration proceedings it has initiated against Steward at the International Chamber of Commerce, aimed at recovering the funds disbursed by the government.

He also refuted the claim that his government has not taken any steps to initiate proceedings for the recovery of funds paid to Steward, underlining that such a case has already been filed and is currently underway within the framework of the International Chamber of Commerce.

Last April, the government won an emergency arbitration proceeding brought to the International Chamber of Commerce by Steward Healthcare over the terminated concession to run three local hospitals.

According to the ICC website, this procedure offers a short-term solution for parties that are unable to wait for the constitution of an arbitral tribunal. Any emergency measure granted takes the form of an order.

The Muscat administration had granted on concession three public hospitals – the Gozo General, St Luke’s and Karin Grech – to the unknown outfit Vitals Global Healthcare (VGH) following a request for proposals. The Auditor General had cast serious doubts on the honesty of the tendering process given that the main investors in VGH had months earlier signed a memorandum of understanding with government for the part privatisation of the Gozo and St Luke’s hospitals.

VGH failed to make the promised €200 million investment to build a new hospital in Gozo and refurbish St Luke’s with the concession eventually passing onto the American healthcare company, Steward.

Immediately, Steward sought to renegotiate the deal and in summer 2019 entered into a side agreement with then minister Konrad Mizzi that put the onus on government to pay a penalty of €100 million if the courts annulled the contract. The side agreement was a reaction to the court case initiated by then Opposition leader Adrian Delia who sought the cancellation of the deal on the basis of unfulfilled obligations.

The case was decided in February when the court annulled the deal, including the side agreement. The decision was confirmed this week on appeal.

The promised Gozo hospital never materialised and St Luke’s, which had to serve as a hub for medical tourism, remains abandoned.

A magisterial inquiry initiated in 2018 following a complaint by NGO Repubblika is still ongoing and may yet indicate whether there is scope for criminal action to be taken against several public officials involved in the deal.