Did Steward deal leave Malta better-off by €63m? Not really

Culture Minister Owen Bonnici told parliament on Monday that the Steward hospitals arbitration ruling showed that Malta was better-off by €63 million as a result of the deal.

He was speaking during the special session that discussed the ruling of the International Chamber of Commerce’s tribunal handed down last week.

Bonnici appears to have taken his cue from the front-page article of the General Workers’ Union Sunday newspaper it-Torċa with the heading: ‘Not €400 million stolen but €63 million saved.’

But is there any truth in the claim that Malta was better-off by €63 million?

The short answer is: Not really. The ‘better-off’ argument was made by Steward but shot down by the government’s own expert witness at the tribunal.

But let us first examine how the figure came about.

In its submissions before the ICC, Steward provided two assessments of the value of healthcare services it provided the Government of Malta—the low value at €604.4 million and the high value at €667.6 million.

The low value assessment was what the government actually paid Steward according to contractual provisions. The high value assessment was based on the value of services offered at Mater Dei Hospital. The difference between the high assessment and what government actually paid was €63.2 million.

The tribunal considered the actual sum paid by the Maltese Government (the low value) as “the most reliable” (Article 925 of the judgment) for determining the value of the healthcare services received by the government during the lifetime of the concession agreement.

The ICC tribunal was not impressed by the claim made by Steward that the value of its services should be increased by €63m to reflect the cost of similar services at Mater Dei

At face value it would seem that the government did truly save €63 million from the Steward deal when the healthcare services provided by the concessionaire are benchmarked with Mater Dei costs.

However, the ICC assessment of Steward’s claim did not stop here. In Article 965 of the ruling, the tribunal stated that it is “not impressed” by Steward’s argument that the value of healthcare services rendered under the agreement “should be increased to reflect the higher sums the Government of Malta paid for comparable services at Mater Dei”.

Difficult to compare services

Indeed, in Article 967 the tribunal argued that it “finds it difficult without precise expert evidence to compare the healthcare services provided at the hospitals [part of the concession] with those dispensed at Mater Dei”.

“The latter [Mater Dei] is a newly built and more advanced hospital, which inherently offers a different and better mix of services compared to the Hospitals [Gozo General, St Luke’s and Karen Grech] under review,” the tribunal said.

But it was not just the tribunal that reached such a conclusion. Government’s own witness, Joseph Zarb Adami, a former clinical director at Mater Dei and a consultant to the Health Ministry, was asked by the tribunal whether Mater Dei could serve as an appropriate benchmark for evaluating the performance of Gozo General Hospital.

His testimony was reported verbatim in Article 968 of the ruling: “GGH [Gozo General Hospital] could never be [Mater Dei]. [Mater Dei] has different resources and different jobs. It is not GGH. (…) MDH is a different hospital. It has much, much more resources, for example [Mater Dei] has to be available all the time to carry out emergency head surgery, emergency surgery in children, emergency cardiac surgery, traumatic surgery, which Gozo didn't (…).”

This means that the cost of the services offered by Steward in its hospitals, primarily Gozo General and Karen Grech, could never be compared with the cost of those same services had they been rendered at Mater Dei.

The €63 million in savings really and truly never existed because the comparison with Mater Dei could never be made—a position outlined by government’s expert witness and upheld by the ICC tribunal.

The tribunal judgment found that Malta still owed Steward a little less than €5 million, rejecting both government’s claim to recoup €488 million from the company and Steward’s bid to be compensated to the tune of €158 million for contract termination.

READ ALSO | Government sought €488m from Steward and lost