Skanska snubs government over hospital damage claims

Swedish engineering giant Skanska tells Attorney General Peter Grech it will not meet him to discuss the Maltese government's claim for damages on foundation works on Mater Dei Hospital

Skanska have cited the 'escape' clause in a closure agreement signed by the Foundation for Medical Services (FMS) in 2009 to exonerate itself from paying damages.
Skanska have cited the 'escape' clause in a closure agreement signed by the Foundation for Medical Services (FMS) in 2009 to exonerate itself from paying damages.

Skanska, the Swedish engineering giant that bills itself as the world’s leading construction group, has told Attorney General Peter Grech it will not meet him to discuss the Maltese government’s claims for damages on foundation works on Mater Dei hospital.

In a letter to Grech, Skanska ruled out any responsibility on the Mater Dei works – recently the subject of an inquiry over faulty cement foundations – saying that “SMJV (Skanksa-Malta Joint Venture) cannot be held liable for alleged defects.”

Six years since the opening of the €700 million state-of-the-art hospital, weak cement foundations were discovered by government architects, prompting urgent repairs to prevent a possible collapse of the accident and emergency department.

In its letter, SMJV made specific reference to the ‘escape’ clause in a closure agreement signed by the Foundation for Medical Services (FMS) in 2009.

The clause explicitly exonerated SMJV from any liabilities, claims or disputes.

Ann-Marie Hedbeck, general counsel to Skanska, ended her letter, which MaltaToday has seen, stating: “… it is Skanska’s opinion that the proposed meeting with the Attorney General would not be productive at this stage.”

The meeting was requested when the serious and potentially fatal shortcomings at the hospital were discovered.

Skanska says it is not liable for defective works

Skanska’s position effectively means that the Maltese government will now be constrained to take up a costly and lengthy legal battle with the Swedish giant if it wishes to recover any of the huge costs needed to repair the seriously faulty cement works at Malta’s public hospital.

Defective and inferior cement works were discovered at Mater Dei last year, when it was planned to build an additional floor to create badly needed ward space. According to reports the original concrete suppliers are likely to have made millions in savings from the concrete provided for the hospital’s building.

MaltaToday had revealed that the FMS’s waiver agreement had exonerated Skanska from any future claims, effectively leaving the Maltese taxpayer to foot a bill for repairs that could run into over €30 million.

The controversial waiver signed by FMS architect Paul Camilleri effectively exonerated Skanska from any claims for defects at the hospital. It is this clause which the government would have to fight in court.

Energy and health minister Konrad Mizzi has said that Skanska had first cited the waiver in 2011, when FMS had contacted the Swedish firm over faulty reservoirs found at Mater Dei.

“While the FMS had accepted Skanska’s argument back then, we will not, and we will keep on insisting that the waiver doesn’t cover the faulty concrete as it is a potential case of fraud,” Mizzi had said, describing the waiver in the 2011 agreement as “scandalous”.

The construction weaknesses were detected in an independent inspection by the quality assurance company ARUP.

“This was consistent with observed corrosion of reinforcing steel to columns in untreated undercroft zones,” Arup director Andrew Harrison had said at a presentation of the inspection findings at the Mater Dei auditorium. 

He said that Mater Dei’s structural situation was incomparable to other hospitals he had seen.

“The extent of the problem at Mater Dei is surprising and disappointing,” Harrison said. “It is highly unusual for concrete strength issues to exist in hospitals in this day and age.” 

The hospital blocks were designed to have, in technical terminology, a concrete cube strength of 30 megapascals (MPa). Yet the Accident and Emergency department was found to have a concrete strength of only 18 MPa, while that of Block D hit only 23 MPa. 

Block A (29 MPa) and Block B (27 MPa) fell narrowly below their specified strength, while Block C, Block E, the mortuary and the oncology hospital were on target. 

The impact of the “below-specification concrete” was assessed using a structural model of the building, to test the seismic resilience of the A&E building. Arup’s assessment highlighted that remedial measures were required to address performance under seismic conditions.

Before the summer recess, when answering parliamentary questions from the Opposition benches, Prime Minister Joseph Muscat confirmed that he had had a meeting with Swedish Prime Minister Stefan Lofven over a possible settlement with the hospital’s contractors, Sweden’s Skanska.

 “It is going to be an uphill struggle, but we are going to fight this case all the way,” Muscat pledged, adding that a freshly-called investigation into the inferior concrete is concluding its findings.

At the time Opposition deputy leader Beppe Fenech Adami questioned whether the government’s legal action and the police investigations mean that their harsh criticism of the waiver that the Foundation for Medical Services had conceded to Skanska was nothing but “propaganda”.

The Nationalist party’s other deputy leader, Mario de Marco had also argued that legal firm Camilleri Preziosi had advised the FMS back in 2009 that the waiver doesn’t absolve Skanska of responsibility with regard to defects in the hospital structure.

Konrad Mizzi had said he had taken this up with representatives of the law firm, insisting that the waiver was “unnecessary”.

“The reality is that the hospital cost us €700 million, three times as much as an acute hospital of that size costs across Europe. Not only did we pay in excess for it, but we paid for faulty material,” Mizzi said.