Issue link: https://maltatoday.uberflip.com/i/1219206
5 maltatoday | SUNDAY • 8 MARCH 2020 This is perhaps the more sus- picious aspect of the Vitals con- cession, because sources believe that millions have been paid out in third-party 'consultancies' as well as inflated expenses charged by contracts taken out with sup- plies like Technoline on medical equipment and medicines. Between 2016 and 2017, Mal- taToday has learnt, Vitals' total expenses ballooned from €45 million to €94 million. These costs mainly include €54 million in staff costs incurred from a staff complement of some 1,200 workers in 2017. But another €24 million in "other expenses" were also charged in 2017. Sources close to the concession believe millions in taxpayers' cash flew out in 2017 to third-party con- sultants. Bogus tender In fact, it is now established that despite the impression of a public competition, the peo- ple behind VGH – Canadian national Ram Tumuluri, Brit- on Mark Pawley, and Pakistani businessman Shaukat Ali – had long been slated by Castille for the project. Unknown to many was the fact that Shaukat Ali and his partners had signed a memorandum of understanding with Malta En- terprise back in October 2014 for the take-over of the Gozo hospital and possibly St Luke's and Karin Grech. By 2015, Shaukat Ali, through his company Pivot Holdings, had set up a joint company with Mark Pawley's Bluestone Invest- ments, to propose to the govern- ment a public-private partner- ship for the running of the Gozo hospital. Another clue into the expens- es incurred comes from Steward itself, whose president Armin Ernst recently penned a pointed letter to Prime Minister Robert Abela: in it he mentioned that Steward was dealing with is- sues of "non-conformity of the contract" of Shapoorji Pallonji as building contractor for the hospitals "with usual and good business principles"; as well as claims related to the financing of the VGH tender, and problems with former investors. In comments to MaltaToday, Steward has already declared that "defining the exact use of all funds during [2015/6/7] is not possible due to the convolut- ed nature of the organisational structure of the prior conces- sionaire and the lack of proper financial accounting, but a good picture has emerged." Questions have been asked on how the supervising health authorities failed to ensure the proper use of public funds by Vi- tals Global Healthcare. Steward has refused to be drawn into how Vitals' opera- tions have impacted the public purse. "To be clear, Steward was not hired as a retroactive polic- ing entity but to provide high quality healthcare to the people of Malta. Unfortunately, though, these losses are now part of the concession and need to be con- sidered going forward," it has previously told MaltaToday. Steward described Vitals com- pany structure as a complicated and shifting network "compris- ing a multitude of organisations in a multitude of countries. We restructured the concession into a simple and transparent organ- isational structure, that is 100% based in Malta." It also referred to the purchase of companies such as Techno- line and MTrace through the use of public funds, saying that it had unwound these companies to return the money to the hos- pital operations. 2018 accounts are expected to show a significant reduction in losses, with breakeven expected in 2019. The company is, however, seeking a renegotiated contract with the Maltese government, that includes a higher payment for beds as well as an added €4 million for the payment of sal- aries. MaltaToday understands the increased payments are es- sential 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 cred- itors from VGH times settled." NEWS Tumuluri's contract was that he be paid €600,000 annually, for the three years since the start of the concession – €1.8 million in total; as well as a €5 million bonus for the third year of the concession