Steward Healthcare, the company that manages three of Malta’s public hospitals, owes the Maltese government €37 million in unpaid VAT.
The discovery came through a letter filed by the Tax Commissioner earlier this month, wherein it was established that the total figure – €36,534,160 in outstanding VAT – was owed to the State, having accumulated over several years, The Shift News reported.
Amid several warnings by the Inland Revenue Department, subsequently ignored, the government will have no alternative but to proceed with legal action.
Steward Healthcare also has millions in outstanding payments, particularly those related to social security contributions.
Pressure had been piling on the hospital’s concession for some time, following several allegations of corruption and management since it was first granted to Vitals Global Healthcare a few years ago. Even Finance Minister Clyde Caruana has said that the deal simply isn’t working.
Steward Healthcare now becomes the latest example of high-profile names – and companies – not paying their taxes, following behind others who made national headlines recently.
Government MP Ian Castaldi Paris had been ordered to pay roughly €300,000 over unpaid taxes late last year, with now-resigned Nationalist MP David Thake accused of similar infringements after revelations that his telecommunications company – Vanilla Telecoms – had a pending VAT bill of €270,000.
Additionally, Malta’s two political party media companies – One and Net – are said to owe more than €5 million between them in unpaid VAT and have been warned to start to honour agreements to settle their dues.
What is the hospitals concession?
VGH had first been granted a controversial concession for the Gozo General Hospital, St Luke’s Hospital and Karin Grech Rehabilitation Hospital. Mizzi was the minister responsible for the project. It has been revealed that the government signed a Memorandum of Understanding months before a request for proposals was even announced.
The company was forced to sell off their operations to Steward Health Care just 21 months after starting amid growing financial debt, which stood at €36 million by the end of 2017. Its CEO, Ram Tumuluri, reportedly still made off with a €5 million bonus.
An un-redacted contract revealed that taxpayers were paying VGH around €188,000 a day (€70 million a year) to provide hospital beds to the state, €1.2 million a year for the Barts medical school and a further €1 million for a helicopter service.
Steward Healthcare was brought in to replace them. They were given certain assurances by the government, namely from former minister Konrad Mizzi and former Prime Minister Joseph Muscat when they were brought in to save the failing concession.
This included a massive €100 million buyout should the concession be rescinded and a secret €8 million bank guarantee (which has since been waived). The deal has created massive gaps in operations – with Steward staff being paid less than their state counterparts for doing the exact same job. Meanwhile, the government continues to fork out millions for a service that is not too dissimilar from Malta’s.
Do you think the government will take legal action against Steward Health Care?