Issue link: https://maltatoday.uberflip.com/i/1214775
2 maltatoday | WEDNESDAY • 26 FEBRUARY 2020 NEWS MASSIMO COSTA EDWARD Scicluna has insisted that the police have sufficient resources when it comes to in- vestigating and prosecuting fi- nancial crimes. The Finance Minister, howev- er, underlined that the "monop- oly" police had when it came to prosecuting such crimes was something which didn't exist in other countries, and said that an agency dedicated to taking such cases to court was being set up. Scicluna was answering ques- tions from MaltaToday – follow- ing a conference on the Europe- an Bank for Reconstruction and Development on Tuesday – in light of a warning by MFSA chief strategy officer Christopher Buttigieg last week that Malta risked grey-listing by the Finan- cial Action Task Force (FATF) if it didn't show it was enforcing financial crime laws. Buttigieg warned that such grey-listing would be a "very se- rious" outcome for the country. But Scicluna dismissed any worries that the police faced staff and resource shortages when it came to prosecuting financial crimes. He said that, on being appointed Finance Minister, he had offered the chief of police all needed funds in this regard. "It's not a matter of resourc- es. When I was made Finance Minister in 2013 I had told the Police Commissioner that the Economic Crimes Unit had to be strengthened. I acknowledged that it was expensive to find the required expertise and said I was ready to sign a cheque for any funds required," Scicluna said. He said that Malta was in dis- cussion with the UK Home Office to set up a local agency which would take on investiga- tions from the FIAU, continue pursuing them and subsequent- ly prosecute. The agency would be responsible for prosecuting money laundering on a massive scale, involving millions of euro, he said. "The monopoly in Malta whereby the police is the sole entity charged with prosecuting such crime... you don't find this in any other country," he said. Scicluna did not give a date when the creation of the agen- cy would come to fruition, but said that it had to be set up "sooner rather than later", since the country's reputation was at stake. The Finance Minister said the MFSA was one of the main in- stitutions which was responsible for ensuring that grey-listing by the FATF "does not happen." He said Malta was working very hard to implement the 35 recommendations given to Mal- ta in last year's Moneyval report. "We've welcomed all the rec- ommendations and are confi- dent that within the year time window we were given we will show Malta takes things serious- ly and is addressing the short- comings identified by Money- val," Scicluna highlighted. Within this time, he said he hoped the "court and police will also show that they deliver." "That will be the cherry on the cake: convincing those who are still doubtful that we're not just all words, but we also act," he said, adding that by doing so Malta would avoid being grey-listed by the FATF. mcosta@mediatoday.com.mt Police have sufficient resources to prosecute financial crimes, finance minister insists CONTINUED FROM PAGE 1 Yet it was in that third year of operation that VGH, a busi- ness owned in part by BVI-reg- istered Bluestone Investment and minor investors, folded and sold off its concession to the US healthcare giant Steward. Sources close to the conces- sion revealed that directors' remuneration at Vitals sky- rocketed from 'just' €1 million in 2016, to just over €6 million in 2017 – the difference being Tumuluri's third-year bonus. That same year, the VGH concession was paid €75 mil- lion to run the three hospitals, incurring over €94 million in expenses, generating losses of some €18 million. Questions are now being asked of how far did the gov- ernment and the ministry of health manage to retain some form of oversight on the oper- ations of VGH. The former concession- aire amassed millions in debt through a complicating off- shore structure and used tax- payers' money to purchase companies, according to Stew- ard Malta, which said it had to carry out "forensic-type" ac- counting in a bid to establish reliable audits for the years 2015 to 2017. VGH, a consortium of inves- tors brought together by the Pakistani business consultant Shaukat Ali Chaudry and run by Tumuluri, incurred such high levels of debt that it was unable to acquire financing to keep the concern going. Yet the two entrepreneurs in 2016 were using their tax-fund- ed concession to pitch their business acumen in Norway, where they sought out €50 mil- lion in equity for a renewable energy project. The two men were looking to sell a 24% stake in a renewable energy project outside Malta, and claimed their Malta healthcare PPP was valued at €2.8 billion. But in 2016, Steward Malta's auditors said that VGH was al- ready facing a "material weak- ness [that] may cast a signif- icant doubt on [its] ability to continue as a going concern." The warning was made in the accounts for VGH for that year, when the concessionaire post- ed a net loss of €6 million, with total liabilities exceeding assets by €8.9 million. "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 na- ture of the organisational struc- ture of the prior concessionaire and the lack of proper financial accounting, but a good picture has emerged," a spokesperson for Steward had previously told MaltaToday. Steward says it has spent $30 million to turn the concession around and has no cash flow problems. But it is now seeking a renegotiation of terms in the concession, which have been already partly hammered out in Castille under the aegis of former prime minister Joseph Muscat. Muscat himself ac- companied Steward to a meet- ing with his successor, Rob- ert Abela, and deputy PM and health minister Chris Fearne, to make a case for Steward's rene- gotiated contract. "Adjustments of certain terms of the contract are necessary to secure the viability of the con- cession and financing of the capital projects in the long term, a fact that has not been disput- ed by ministries or government over the last year while contin- uously reviewing financial data provided by Steward Malta." Steward says it has drastically decreased overhead expenses which do not contribute to pa- tient care, and that it had intro- duced high-standard account- ing 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 lev- el review of use of funds. According to letters seen by MaltaToday, Steward was al- lowed to declare it had the backing of its American parent Steward. Then minister Konrad Mizzi signed the letter, and ob- tained a waiver from Cabinet on a €9 million performance guarantee the company had to put up against the completion of its milestones. Vitals' hospitals debts grew in 2017 Finance minister Edward Scicluna