Issue link: https://maltatoday.uberflip.com/i/1499488
8 maltatoday | WEDNESDAY • 17 MAY 2023 NEWS NEWS THE National Audit Office on Monday published its third damning report on the hospitals concession deal that cost public coffers €456 million until 2021. The latest report was tabled in parliament on Monday after- noon. It covers the transfer of the hospitals concession to Stew- ard Healthcare in 2018 and the American company's subsequent management of the contract. The strongly worded report, among other findings, showed former minister Konrad Mizzi had granted VGH authorisation to transfer the hospitals conces- sion to Steward Healthcare be- fore seeking Cabinet's endorse- ment. It also shows how Joseph Mus- cat's Cabinet was not kept abreast of developments. EXCERPTS OF THE DAMNING REPORT 1. An ill-defined concession "The negotiations undertaken were intended to rectify a con- cession that was ill-defined in the tendering process, to mitigate the effect of selection of the VGH – a Concessionaire with no experi- ence or resources to undertake such a commitment, and address the myriad contractual anomalies and deficiencies that resulted in the disproportionate allocation of risk being borne by the gov- ernment and the setting of cer- tain obligations on the Conces- sionaire that were not realisable or feasible." (Page 26, 2.2) 2. Konrad Mizzi's failure to cooperate "It is with the gravest concern that the NAO views the failure of the Minister for Tourism [Kon- rad Mizzi] to cooperate in this au- dit as inexcusable, compounded no less by the centrality of his role in the concession. The shirking of accountability on the part of the Minister for Tourism hampered this Office in its understanding of the initial developments that led to the concession being taken over by the SHC [Steward] and impacted other aspects for which he assumed responsibility in re- lation thereto, most notably in authorising the change of control and in representing government as guarantor for funds secured by the SHC." (Page 29, 3.9) 3. Failure to understand how Steward assumed control of obscure concession "The NAO fails to reconcile how a reputable firm such as the SHC would be willing to assume control over a concession that was fraught with controversy, acquire a company whose track record was abysmal, whose fi- nances were undisclosed and unknown and that was led by an individual who elicited mistrust, and how despite all these facts being known to the SHC at the time of its interest in taking over the concession, proceeded re- gardless." (Pages 30-31, 3.15) 4. Steward's mistrust of Vitals director "Ample evidence of the SHC's mistrust of the Director VGH, its awareness of the shambolic state that the VGH was in, its cogni- sance that more time would or- dinarily be required to conclude such a transaction and that the transaction was to be seen in the context of a seller who could not warrant his business, emerged. The SHC attempted to mitigate these risks through assurances and waivers sought from the gov- ernment, such as the temporary and conditional release of the performance bond, the intro- duction of a standstill period, the deferral of payment of taxes and the capping of liabilities." (Page 34, 3.32) 5. Keith Schembri seeks Stew- ard's go-ahead to inform Chris Fearne "Despite all these red flags, the SHC ploughed on regardless, driven recklessly forward by a government that – for some rea- son unknown to the NAO – was bent on the hasty resolution of this transaction. The disjoint- edness of government emerges most clearly in the correspond- ence submitted by the CEO SHC International to the Chief of Staff OPM, wherein the for- mer sought the clearance of the latter on whether to disclose any information regarding progress on discussions to the Minister for Health. Aside from the absurd- ity of this correspondence, the guarded approach to the disclo- sure of information to the Minis- ter for Health confirms that stat- ed to the NAO by the Minister in terms of his non-involvement in the transfer of the concession and contradicts that stated by the Prime Minister." (Page 34, 3.32) 6. Key government officials im- peded NAO from understanding full picture "The failure of key officials of government, namely the then Chief of Staff OPM [Keith Schem- bri] and the Minister for Tourism [Konrad Mizzi] to provide any information impeded this Office from forming a comprehensive understanding of developments and heightens concern that gov- ernment's interests were not served. In the NAO's opinion, the irrationality driving the govern- ment and the SHC in concluding this transaction lacked coherence and resultantly cast doubt on the conduct of the government offi- cials involved." (Page 35, 3.34) 7. Government bank guarantee for Steward overdraft hidden from Cabinet "While the Minister for Tour- ism sought Cabinet's approval in relation to the exemption re- quested by the SHC in relation to the performance guarantee, the same cannot be said with respect to the Direct Agreement, through which the Government effective- ly guaranteed an overdraft facility that the Concessionaire sought to secure." (Page 39, 4.6) 8. Chris Fearne sidelined by Muscat and Mizzi "The Minister for Health [Chris Fearne] informed this Office that... he was informed that the Minister of Tourism was negoti- ating with Steward, which negoti- ations were to result in additional payments by the government to the concessionaire without any increase in services. This was deemed unacceptable to the Minister for Health, who raised objections with the Prime Min- ister [Joseph Muscat]. According to the Minister for Health, the Prime Minister assigned respon- sibility for negotiations to him; however, the Minister for Health STEWARD HOSPITALS DEAL In the Auditor General's words An ill-defined concession, Konrad Mizzi's failure to cooperate and Steward's mistrust of Vitals directorship… the third investigation of the maligned deal in the Auditor General's words St Luke's Hospital was one of three facilities granted on concession to VGH, and later, Steward Healthcare