Issue link: https://maltatoday.uberflip.com/i/1211430
5 maltatoday | SUNDAY • 16 FEBRUARY 2020 MATTHEW VELLA VITALS Global Healthcare amassed millions in debt through a complicating offshore struc- ture and used taxpayers' money to purchase companies, accord- ing to Steward Malta. Steward, the US healthcare company which took over the 30-year concession to run three state hospitals from the now-de- funct Vitals Global Healthcare, said it had to carry out "foren- sic-type" accounting in a bid to establish reliable audits for the years 2015 to 2017. A company spokesperson said accounts for the first three years of the concession were submit- ted this week to the MFSA, af- ter "nearly two years of profes- sionally supported forensic-type accounting to establish reliable audited positions… these ac- counts have been disclosed to the Ministry for Health in full transparency as is required in the concession." MaltaToday is informed Stew- ard will now be given just over €700,000 from a tranche of €4.3 million that the government paid in salaries for staff at the St Luke's, Karin Grech and Gozo hospitals, for finally submitting the accounts. But questions remain as to how VGH, a consortium of in- vestors brought together by the Pakistani business consultant Shaukat Ali Chaudry and run by Canadian businessman Ram Tu- muluri, incurred such high levels of debt and to whom is the debt payable. "It is correct that throughout the period 2015/16/17 signifi- cant losses of over €25 million had been incurred by VGH. De- fining the exact use of all funds during that period is not possi- ble due to the convoluted nature of the organisational structure of the prior concessionaire and the lack of proper financial ac- counting, but a good picture has emerged," the spokesperson said. "It is not Steward's responsi- bility but was the task of the su- pervising health authorities to ensure the proper use of public funds by the previous entity. To be clear, Steward was not hired as a retroactive policing entity but to provide high quality health care to the people of Malta. Un- fortunately, though, these losses are now part of the concession and need to be considered going forward." The company said it had now been tasked with rectifying prior failures and implementing what it said was "a high quality, sus- tainable health care system" in Malta. "To that end, Steward has un- wound the existing complicated and shifting structure compris- ing a multitude of organizations in a multitude of countries. We restructured the concession into a simple and transparent organ- isational structure, that is 100% based in Malta. "Previous purchases of com- panies through the use of public funds are being unwound and the money is being returned to the operations and clinical enter- prises of our health facilities." Steward now says it has man- aged a "truly remarkable opera- tional and financial turnaround since taking on the concession", a state of play it says will become evident once filings for 2018 and 2019 are submitted. "These accounts will show a significant reduction in losses for 2018, while aiming to reach a breakeven point with the con- clusion of 2019 accounts and receipt of still outstanding dues from the government under ex- isting agreements. This is due to Steward's deep experience in taking on struggling entities and transforming them into high quality health institutions. The government of Malta has been continuously updated on the rapid progress and has been ap- preciative and supportive." The company is, however, seek- ing a renegotiated contract with the Maltese government, that includes a higher payment for beds as well as an added €4 mil- lion for the payment of salaries. MaltaToday understands the in- creased payments are essential for the company's cash flow. "Steward has, to date, spent over $30 million to turn the con- cession around and has no cash flow problems. In fact Steward has been recognised by the gov- ernment for a remarkable turna- round of the VGH failure and fi- nances. Multiple capital projects have been completed and credi- tors from VGH times settled. "Adjustments of certain terms of the contract are necessary to secure the viability of the conces- sion and financing of the capital projects in the long term, a fact that has not been disputed by ministries or government over the last year while continuously reviewing financial data provid- ed by Steward Malta." Steward says it has drastical- ly decreased overhead expenses which do not contribute to pa- tient care, and that it had intro- duced high-standard accounting and auditing procedures. The company also said it was cancelling contracts found to not be providing value to hospi- tals and patients, implementing transparent and efficient supply chain management, improving the poor IT infrastructure and applying private-enterprise level review of use of funds. "In the end, the success of the concession will be judged by how we improve infrastructure of the hospitals, secondary/tertiary care processes, and the overall health of Maltese citizens. We want it no other way. Besides the herculean turnaround effort, Steward has invested heavily in- to improvement of the sites and services offered." It said it had provided a state- of-the-art medical school in Gozo, which will house the Barts' Medical School in Malta. "Recent public statements that a highly advanced 8,500sq.m science facility should only cost $3-6 million is obviously beyond absurd," the company said. Steward has also defended it- self from claims that it has fell behind on deliverables, citing the updating of the Orthotics and Prosthetics service at St Luke's, a new fleet of transport vehi- cles, the new laboratory and Or- thopaedic department at Gozo General Hospital, an improved round-the-clock air-ambulance service, and a new 28-bed ward at Karin Grech Hospital. Later this week Steward will present finalised designs for the new hospitals. NEWS Questions on how Vitals amassed millions in debt Defining exact use of all funds not possible due to convoluted nature of Vitals structure