Issue link: https://maltatoday.uberflip.com/i/1445232
3 maltatoday | SUNDAY • 23 JANUARY 2022 NEWS Evasive on €540k claim Meanwhile, on Friday, Mus- cat was evasive on claims made by Matthew Caruana Galizia that the contract with Accutor had a value of €540,000. The son of slain journal- ist Daphne Caruana Galizia claimed the contract was for €15,000 per month with a dura- tion of 36 months. He said pay- ments only stopped after UBS closed Accutor's accounts. In comments to MaltaToday Muscat said the contract with Accutor was "open ended" and both sides had the option to terminate it. The agreement was stopped during the pan- demic, he said. "The final agreement was not for a 36-month period and was stopped during the pandemic… there is no link to the hospitals deal. I have provided the au- thorities with details of work I carried out," Muscat said, add- ing no money was due to him. When pressed to say wheth- er the contract was worth €540,000, Muscat insisted he had "nothing to add" and that his answers were clear enough. The VGH deal VGH was awarded a 30-year concession in 2015 to run three state hospitals – St Luke's, Ka- rin Grech and Gozo General Hospital – with a commitment to invest millions in refurbish- ment and the building of a new hospital in Gozo. However, the company went belly-up and in 2018 sold the concession to American outfit Steward Healthcare. In the summer of 2019, the Maltese government agreed to pay Steward €100 million if the contract was cancelled by a court of law in a side agree- ment signed by Konrad Mizzi. The agreement was a reac- tion to an ongoing court case initiated by former Opposition leader Adrian Delia in which he is asking the courts to can- cel the concession agreement because it is vitiated. Damning NAO reports The National Audit Office published a damning report two years ago on the tendering process that led to the conces- sion being awarded to VGH, a company with no track record in healthcare. It concluded there was "collusion" to award the concession to VGH. A red flag highlighted by the NAO was a memorandum of understanding government had signed with some of the VGH investors before the re- quest for proposals had even been published. The NAO also revealed how VGH investors had sought fi- nancial guarantees for their project from an Indian bank before government's interna- tional call for proposals was out. A second NAO report pub- lished last December that cov- ered the operational period of VGH, found that the unknown investors, led by Canadian boss Ram Tumuluri, were unable to secure financing. The failure meant that VGH could not live up to its com- mitments to improve the hos- pitals infrastructure. But the NAO said it was the Labour government's acquiescence to these inadequacies that also mirrored VGH's failures. "Instead, the government's representatives, while bypass- ing Cabinet, endorsed multiple waivers of the requirement to secure financing, thereby per- petuating the failure that this concession came to represent," the NAO said. ksansone@mediatoday.com.mt Doing media: Joseph Muscat streamed his reaction to the police raid on his Facebook page, followed by some 90,000. He is expected to make more announcements as his affairs come under a magistrate's lens CONTINUED FROM PAGE 1 With a magisterial inquiry into the original Vitals Global Healthcare concession now even embroiling former prime min- ister Joseph Muscat, Steward officials could face the prospect of being dragged further into the ongoing investigation. Steward is running three State hospitals, Gozo, Karin Grech and St Luke's, as part of the 2014 deal crafted by the Muscat ad- ministration with the unknown Vitals Global Healthcare to run the hospitals on behalf of the State. €100 million exit price Adrian Delia, who as Opposi- tion leader filed a case against the Maltese government as well as Steward Healthcare to request the rescission of the hospitals' privatisation, thinks Steward's endgame is a bid for a €100 mil- lion penalty secretly inked by former minister Konrad Mizzi in a 2019 side-letter. MaltaToday revealed the exist- ence of the side letter in March 2020, showing how the Maltese government was exposed to a hefty bill should the concession ever be rescinded. The agreement was hammered out in August 2019 when Mizzi gave Steward an "escape clause", that turns any termination of its concession into a government default. The wording was part of an agreement in which the govern- ment acknowledged a €28 mil- lion loan from Bank of Valletta to Steward as "lender's debt". But the agreement laid down that should the hospitals' con- cession be terminated by a court of law – for whatever reason, and even if Steward is in breach of contract – such an event would be a government default. And that would mean that all debts incurred by Steward would be passed on to the government, with the American company eli- gible for a €100 million contrac- tual pay-out for its equity. Government insiders baulked at the agreement, claiming the loan facility and Mizzi's commit- ment to Steward was unknown to Cabinet colleagues. Apart from placing the hospital lands under Steward's control as guarantees for the debt, the agreement gave Steward unprec- edented generosity by accepting that should the concession be re- scinded by any law, public order or decision, judgement or decree – effectively any government or court decision – such an event will be "a non-rectifiable govern- ment of Malta event or default." Delia and 'fraud' admission Steward is also embroiled in another court case, challenging a former Vitals Global Health- care investor, Ambrish Gupta, of expectations of a €6 million payout. But the concessionaire is claim- ing the original Vitals concession was obtained fraudulently. Delia insists this admission means the hospitals privatisation contract has to be rescinded. That would mean that a court decision upholding his request would also attack Steward's claim for its €100 million payout. Budgetary outlay to Steward Despite the negotiations be- tween the Maltese government and Steward, an additional €40 million was allocated to the health budget for Steward, over and above €50 million first al- located to the company in last year's 2021 Budget. The health concession agree- ments for the Gozo and Karin Grech hospitals, where the State pays Steward Healthcare for the labour resources that work at the state hospitals, were in 2021 costed at €35.6 million and €13.6 million respectively. These budgets have now been increased by €26.5 million, and €13.9 million, respectively. The supplementary allocation brings the total payment ad- vanced to Steward in 2021 to €89 million. The financial vote was ap- proved in the House on the same day a damning National Audit Office excoriated the procure- ment methods employed in se- lecting the now-defunct Vitals Global Healthcare. mvella@mediatoday.com.mt Steward want €80 million exit price St Luke's Hospital, one of three hospitals run by Steward Healthcare