Issue link: https://maltatoday.uberflip.com/i/1521306
2 maltatoday | SUNDAY • 26 MAY 2024 VITALS INQUIRY KURT SANSONE ksansone@mediatoday.com.mt The American who knew a IT was on 11 August 2019 that Armin Ernst, Steward Health Care's CEO in Malta, author- ised the creation of what inves- tigators believe was a political slush fund. In an email to Miroslav Boy- anov, Steward International Chief Financial Officer, Ernst called the slush fund held by Swiss company Accutor a 'con- sultancy agreement'. The email is arguably one of the most damning pieces of ev- idence to be unearthed in the Vitals inquiry that suggests in- tent to corrupt Maltese public officials, notably former prime minister Joseph Muscat. A German by birth, Ernst also holds American citizen- ship, with the inquiry suggest- ing that the email could also prompt investigations in the US on the basis of the Foreign Corrupt Practices Act. Ernst was a person of interest in the Vitals inquiry because he first appeared as CEO of VGH, the company that acquired the Malta hospitals concession, and after resigning, resurfaced as CEO of Steward Health Care that took over the concession agreement. 'Payment is 100K per month' In his August 2019 email, Er- nst wrote: "Miro - We have en- tered into a consulting agree- ment with Accutor supporting political and government ac- tivities and interactions. Pay- ment is 100K Euro per month and the first bill will arrive this month and be paid [by] months [sic] end. I will need to sign off on all bills – Ralph is aware. Please plan accordingly." The 'Ralph' mentioned in the email was a reference to Ralph de La Torre, Steward's su- preme boss. Ernst and De La Torre are both accused of partaking in criminal activity linked to the Malta hospitals concession. Accutor was a Swiss compa- ny owned by Wasay Bhatti and one of the associate companies was called VGH Europe before changing its name to Accutor Consulting AG in 2018. Just 16 days after Ernst com- municated his instructions for the creation of the political fund, the Maltese government, represented by Konrad Mizzi signed a side agreement with Steward that would make the State liable to pay the compa- ny €100 million if the contract was annulled by the courts. The Auditor General had es- tablished that this agreement like many other decision relat- ed to the contractual aspects of the concession was kept hid- den from Cabinet. The inquiry established that Steward starting making monthly payments of €125,004 to Accutor Consulting AG in September 2019. In all, nine payments were made by Stew- ard Malta, with the last one be- ing in May 2020. In total, Steward had paid Ac- cutor €1.1 million on the basis of a 'consulting agreement' in support of 'political and gov- ernment activities and inter- actions'. Investigators suspect this was used to bribe Maltese officials under the guise of consultancy agreements. The significance of these payments is that they overlap with payments Joseph Muscat started receiving from Accu- tor soon after stepping down from prime minister in January 2020. Muscat reached a consultan- cy agreement with Accutor Consulting AG and received two payments of €15,000 each in March and April that same year. He received a further two payments of similar amount in May and June from an as- sociated company of Accutor called Spring XMedia AG. Muscat has denied wrongdo- ing and insisted that all work conducted for the Swiss com- panies is accounted for. He has insisted that he will submit evidence of the work done in court. Indebted to Schembri The inquiry concluded that the political fund that was cre- ated on Ernst's instruction was intended to settle any dues with Maltese political actors, who helped facilitate the trans- fer of the lucrative concession from VGH to Steward. These consultancy payments to Accutor were funded direct- ly from money paid to Steward by the Maltese government for the operation of the three hos- pitals. The inquiry established that even Keith Schembri and Kon- rad Mizzi reached separate consultancy agreements with Accutor, making it highly un- likely that these were simply a matter of coincidence. The inquiry noted that whilst the replacement of VGH by Steward may have been in the public interest it also present- ed a large opportunity to the US company to take another step in its development of a global empire. "Without Mr Schembri's in- terventions and influence and perhaps those of Dr Mizzi, it is difficult to envisage the take- over materialising. It seems clear that Steward and Armin Ernst would therefore have been indebted to Mr Schembri for performing such a pivotal role in the takeover process. It is therefore notable that we found several what are, in our opinion, most unusual consul- tancy and participation agree- ments being put in place at the time of the takeover, the ben- eficiaries of which were care- fully concealed," the inquiry states. Ernst's senior role, first with VGH and then with Steward, put him in a position of being aware of the suspicious ar- rangements that characterised the VGH deal from inception. The inquiry found that Ernst knew that Pakistani national Shaukat Ali, who obtained a Maltese passport, was a major player in VGH even though he had no shareholding. An email unearthed during investigations shows how Er- nst referred to Ali as "the ma- jor shareholder" even though on paper nobody from the Ali family held shares in the com- panies involved in the conces- sion. Ali and members of his fam- ily were constantly kept in the loop of communication that took place between Ernst and Schembri. However, investigators were not surprised by such an ar- rangement. "[It] would be entirely consistent with the normal method of operating habitually employed by this group of investors to conceal their roles from public atten- tion," the inquiry states. The inquiry notes that Er- nst's knowledge of Ali's hid- den shareholding made him "complicit in the anonymiza- tion arrangements through his acquiescence of the concealed ownership scheme". Aware of misappropriation of public funds Ernst was also aware of the improper use of public funds paid to VGH in the purchase of MTrace and Technoline, two companies intended to reap income from the concession to the benefit of their concealed shareholders. Investigators be- lieve Schembri was one of the hidden beneficiaries of Tech- noline. Between 2016 and 2021, Er- nst was responsible for the ap- proval and signing of contracts with various suppliers to the hospital concession – IT ser- vices (OHUM), construction services (Shapoorji Pallonji), catering (Malta Healthcare Caterers Ltd), cleaning (Zenith Malta Division). Investigators believe that these contracts were used as part of a procurement fraud connected to the relevant sup- pliers and a company under the control of the Ali family – Incorp SARL. The inquiry notes that un- like the investors who formed part of VGH, Ernst had con- siderable sectoral experience in managing large healthcare facilities and projects. Howev- er, the inquiry says that during his term at VGH, despite hold- ing the title of CEO, Ernst ap- peared to have little control of the project's management and did not have access to the nec- essary financial information. The inquiry's opinion is that Steward CEO Armin Ernst's emails did say a lot, according to the Vitals inquiry: From a political fund to Keith the kindred spirit and Ali the largest 'hidden' shareholder