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Joseph Muscat Made €100 Million Promise To Steward After Pressure From Exposed Maltese Bank

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Joseph Muscat walked into the room to face off against Adrian Delia. This wasn’t the political leaders’ debate that Malta has been denied for so long, but a court sitting over a long-standing controversy.

Delia has sued the government over its long-term leasing of three Maltese hospitals, St Luke’s, Karin Grech and the Gozo Hospital, to Vitals Global Healthcare, a group of investors which ended up running into financial difficulty and selling its shares to the US company Steward.

An experienced litigator, Delia was well in his element, firing questions at Muscat to hone in on the point that VGH burned through €250 million of public funds with no visible benefit to Maltese patents.

Yet scandal and time out of politics haven’t damaged Muscat’s charm and the gift of public speaking, and he put up a decent show to fend off Delia’s questioning.

Here are the main points from today’s sitting:

 

1. Late €100 million promise to Steward followed pressure from local bank

Delia grilled Muscat about a controversial addendum to the contract which former Tourism Minister Konrad Mizzi signed in August 2019, essentially promising Steward Healthcare €100 million and the passing on of all its debt to the government in case its contract gets rescinded.

Muscat says a local bank had warned the government it was exposed to the deal and urged it to issue a state guarantee to safeguard the lands it had issued the concessionaire.

However, the former PM noted that state guarantees have proven controversial in the past, an ostensible reference to the guarantee granted to Electrogas.

“I don’t have the details with me but we found a way of ensuring that if this court decides to rescind the contract, the government will immediately take possession of all the assets and pay the bank, and this without falling into the trap of state aid.”

2. ‘We only wanted to save the healthcare system’

Muscat stood by the government’s decision to enter into a partnership with the private sector for the refurbishment and management of the three hospitals, arguing it was necessary to ensure long-term sustainability to the healthcare system.

“The health sector was collapsing; there wasn’t enough money to buy medicine let alone to carry out a massive infrastructural investment. When the previous [PN] government wasn’t coping with the health budget, one of its low-hanging fruit so to speak was for it not to buy medicines, which resulted in medicines out of stock.”

“It might not be fashionable to say so nowadays, but I believe in the private sector and that it has a crucial role to play in all sectors. With the EU scrutinising us like a hawk on how we use public funds, it was clear that the only way accelerated and sustainable development could be carried out in the health sector was with the involvement of the private sector.”

3. Muscat confirms over €250 million paid to VGH

The former Prime Minister confirmed the government agreed to pay VGH €265 million over a period of five years, out of which €127 million was paid on staff salaries. Out of the €138 million left over, €20 million was paid on VAT and the remaining €118 million on other costs, including medicines, medical equipment, outsourced labour, and electricity bills.

He struggled to explain what investment Vitals, and later Steward, carried out, besides the construction of a medical school in Gozo, an orthotics and prosthetics unit at St Luke’s/Karin Grech, an air ambulance in Gozo, and a clinical lab, a new orthopaedics ward with eight beds, and an expanded ITU in Gozo. 

4. Muscat sees nothing wrong with MOU issued before tender won

Muscat dismissed concern over the fact that the Economy Ministry had signed a memorandum of understanding with the VGH investors months before the same investors won a government tender.

He said Cabinet heard a presentation about the project envisaged in the MOU, but wasn’t satisfied that it was in line with their vision for the Maltese healthcare system. The MOU was therefore scrapped and a tender issued, which the same investors behind the MOU won.

“It doesn’t matter if they were the same people behind Vitals; they ended up bidding in a procurement process. Just because the MOU was with the same people who bid for the project, doesn’t mean there was anything incorrect.”

Cover photo: Steward Healthcare 

You can follow the full live blog of the court proceedings here

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Tim is interested in the rapid evolution of human society brought about by technological advances. He’s passionate about justice, human rights and cutting-edge political debates. You can follow him on Twitter at @timdiacono or reach out to him at [email protected]

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