Konrad Mizzi Misled Cabinet To Create ‘Exploitative’ €100 Million Steward Deal, New Audit Reveals
Former Tourism Minister Konrad Mizzi has been accused by the Auditor General of “misleading” the cabinet over a shady deal with Steward Healthcare that forced the government to pay €100 million if the hospitals contract was cancelled.
Auditor General Charles Deguara strongly condemned Mizzi’s actions, claiming that he “engineered” the side deal through his misleading of Malta’s Cabinet, Times of Malta reported.
According to the latest National Audit Office report, control of the concession was centralised between then Prime Minister Joseph Muscat’s office and Mizzi, to the “detriment” of Health Minister Chris Fearne, who was left out of key decisions on the hospitals concession.
“The delegation of responsibility for a health concession to the Minister for Tourism was deemed illogical by the NAO and provided a convenient opportunity for the exploitation of Government, creating weakness where there ought to have been none, a weakness all to readily leveraged by the SHC (Steward Health Care),” the NAO audit revealed.
The report also found that the deal offered Steward a €100 million payout if a court annulled its contract with the government to run the St Luke’s, Karin Grech and Gozo hospitals.
This exact scenario occurred in February, with Judge Francesco Depasquale striking down the contracts on fraud grounds, including the €100 million agreement “engineered” by Mizzi.
The Auditor General emphasised Mizzi’s failure to cooperate with his office, as well as former Prime Minister Joseph Muscat’s “limited disclosures” and former Chief of Staff Keith Schembri’s “curt replies”.
These factors, together with “allegations of duress” claimed by Vitals then-director, as well as the dual role as a VGH CEO and later Steward CEO by Armin Ernst, corroborates the NAO’s understanding that the concession remained one distant from “the standards of accountability and transparency expected of government”.
The report further revealed that between 2016 and 2021, €52.7 million was paid to Vitals and €214.9 million to Steward.
A further €188.5 million was spent by the government on salaries, taking the total payments under the contract to €456 million. The first attempt to renegotiate the concession with Steward stalled due to the “political upheaval” that persisted in late 2019, resulting in Muscat’s and Mizzi’s resignation.
The government and opposition disagree on when and how the report should be debated in parliament.
Parliamentary Secretary Andy Ellul suggested that the House pause its business for an hour and then discuss the report immediately, while Opposition whip Robert Cutajar suggested a debate on Tuesday and Wednesday.
The Labour Party accused the PN of refusing to have the report debated in the House today by calling a press conference instead, implying that the opposition leader wanted to speak on his own and make allegations without anyone giving him pushback.
Mizzi took to social media to deny the claims made against him.
“Today’s NAO report on the hospitals’ concession alleges that I misled Cabinet when discussing the lender’s debt and the sum of €100m that would be payable to Steward in the event that the concession would be declared null and void by a court.”
“Some context is necessary. 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.”
“This was deemed necessary following discussions with the Ministry of Finance, Bank of Valletta and other stakeholders.”
“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.”
“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.”
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