[WATCH] Konrad Mizzi: Vitals pre-tender MOU was for project government ultimately rejected

A pre-tender memorandum of understanding with Vitals investors was for a project in Gozo the government ultimately rejected, minister says • Steward Health Care to start managing hospitals from next week

Tourism minister Konrad Mizzi
Tourism minister Konrad Mizzi
Konrad Mizzi on the pre-tender agreement with Vitals

Tourism minister Konrad Mizzi has admitted that an agreement with Vitals Global Healthcare investors was signed months before the issuance of the hospitals' privatisation expression of interest, but for a project the government ultimately rejected.

Mizzi, who was health and energy minister at the time, said the project was not taken on.

But documents presented in court by a VGH shareholder have revealed that at least five months before the expression of interest, the VGH investors knew they were about to take control of at least two state hospitals.

Asked whether the MOU was evidence that the hospital tender had been tailor-made a priority for Vitals, Mizzi said that the memo was signed between Malta Enterprise and VGH and focused on the development of a Gozo campus for Barts Medical School.

"The Vitals proposal was to have a bigger Gozo hospital. Government decided this was not needed, as we wanted a medium-sized hospital. We informed Vitals we were not interested in that particular project," Mizzi maintained.

"The request for proposals which was issued was based on the needs of the country. We needed a hospital of the right size to compliment Barts, together with a new rehabilitation and geriatrics hospital."

Questioned on whether a performance guarantee existed, the minister said that: "from day one, Vitals had a €9 million bank guarantee - a performance bond with the government, which the government can withdraw at any time if there are performance issues. It is still in place, and will remain so till May 2018 and need to be replaced by another guarantee if it is removed."

The guarantee is placed with an international bank, he said, but he couldn't remember which bank it was.

Steward Health Care, which will take over the VGH concession for the three hospitals, will be on the ground start transitioning into taking over the management of the hospitals, Mizzi said. 

The agreement stipulates that construction deadlines would start when the permits go through with the Planning Authority.

Asked if he was aware that Vitals were facing mounting financial difficulty, Mizzi said that VGH were obliged to adhere to the concession agreement. "The health ministry is there to ensure all performance goals are met. The moment we were approached regarding a change in shareholders, we took legal advice, checked what the contract stipulated, undertook an extended  due diligence, and Cabinet then acted accordingly."

He said that the concession agreement set out that if the controlling interest of the hospitals changed in the first five years, government approval was needed.

He emphasised that the hospitals would be transferred back to the government after 30 years. "The only aspect which can be extended [to 99 years] is the private hospital agreement," Mizzi said.

Regarding the reason for the sale by Vitals to Steward, after only 21 months since the concession, Mizzi said that the government was "not involved" and that it was "a deal between two parties", adding "go ask the seller [for the reason]".

"We are there to ensure the concession agreement is honoured to the letter and that the hospitals go to a company which is capable of doing the job," he claimed.

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