Issue link: https://maltatoday.uberflip.com/i/1521306
KARL AZZOPARDI & NICOLE MEILAK kazzopardi@mediatoday.com.mt • nmeilak@mediatoday.com.mt 12 maltatoday | SUNDAY • 26 MAY 2024 VITALS INQUIRY Vitals cash funded Technoline, with Schembri-Mizzi A company that was granted an exclusive procurement con- tract by Vitals Global Health- care (VGH) was destined to be owned by former chief of staff Keith Schembri and ex-minister Konrad Mizzi, among others, investigators in the Vitals PPP scandal believe. The owners of Vitals Global Healthcare, previous media re- ports had revealed, had fund- ed the takeover of Technoline through the use of a company, Gateway Solution. The acqui- sition was facilitated by Tech- noline's marketing director, who used a loan from the VGH shareholders to his personal business Gateway Solutions to acquire the company. But it appears that from July 2015 onwards, Joseph Mus- cat's former chief of staff Keith Schembri and former minister Konrad Mizzi, together with associates, were intended to be the owners of Gateway Solu- tions, while subsidiary Tech- noline got to enjoy exclusivity to supply VGH with medical equipment. "We found evidence that a mechanism involving offshore companies and nominees was constructed to enable Ivan Vas- sallo to appear to be the owner of the Technoline Group," the magisterial inquiry found. Just weeks after the award of the hospitals concession to VGH in July 2015, Nexia BT partner Brian Tonna scheduled a meeting with Pierre Sladden – an associate of Keith Schem- bri – to discuss the Technoline acquisition. At the same time, Ivan Vas- sallo was setting out detailed plans for the proposed share- holding for Gateway "whereby we consider Keith Schembri, Konrad Mizzi, Pierre Slad- den and Adrian Hillman were each allocated individual share holdings of 25%/22.5%." Both Hillman and Sladden were already associates of Keith Schembri in the carve- up of profits from the Kasco Group's printing machinery supply to Progress Press, where Hillman was a director. So how did they get away with the Technoline acquisition? Investigators say companies used a Jersey offshore – Vitals Procurement Ltd (VPL) – to issue a convertible loan note agreement for €5 million to Gateway. "Using VPL created the pre- tense that it was private in- vestor funds that were being used to finance the loan to Gateway. However, […] the funds originated from Vitals Global Healthcare Manage- ment, which effectively meant that the Maltese taxpayer had loaned out funds for the pur- chase of Technoline," the in- quiry finds. Investigators say the plan was that VGH only "virtually" ac- quire Gateway, as can be seen from the acknowledgement by Vassallo for Gateway's and Technoline's public ownership to be incorrectly recorded at Malta Business Registry, which was further confirmation that Vassallo's publicly recorded ownership of Gateway was "a sham". VGH Malta paid Gateway just over €5 million in February and April 2017, a cost funded entirely from the government concession. That same year, Technoline's annual turnover increased by 20%, or around €2 million, thanks to the VGH exclusive supply agreement. Vassallo's remuneration dou- bled from €50,000 to €100,000 upon Gateway's acquisition of Technoline. "We consider the new salary packages for Vassal- lo and Mario Gatt which were agreed with Ram Tumuluri pri- or to the acquisition of Tech- noline, were part of the com- pensation package for their continuing assistance and Vas- sallo's ongoing acquiescence in the various and highly unusual ownership arrangements that had been planned for Gateway since July 2015." Investigators noted that VGH's exclusivity contract for Technoline could have been awarded at any stage prior to the Gateway share purchase. "VGH did not award the con- tract for legitimate commercial reasons. There was obviously a plan intended to ensure that Technoline would not ben- efit from such an exclusive contract until such time as its ownership could be handed over to Ivan Vassallo and, more importantly, his associates… It appears obvious that there would have been little rationale for VGH to choose to reward a completely unrelated individu- al, Ivan Vassallo, with 100% of the profit on the entire supply chain operated by the hospitals concession." Inquiry: Hillman was Schembri's 'proxy' The inquiry says the method of concealed ownership used with Gateway and Techno- line "placed sufficient distance between Schembri and Mizzi while they were still able to directly influence government policy and decision making." Investigators believe the €5 million VGH paid to Gateway "represented embezzlement" from the concession for the benefit of Schembri and Miz- zi "and to a lesser degree, Ivan Vassallo, Adrian Hillman and Pierre Sladden." Hillman, former director of Allied Newspapers and Pro- gress Press, served as Schem- bri's proxy on the Technoline deal, provided Schembri with sensitive details on the pro- gress towards the purchase of Technoline. Under this plan, 90% of the shares in Gateway would be held by Adrian Hillman, Pierre Sladden, Keith Schembri and Konrad Mizzi. Schembri had previously se- cretly partnered with Sladden and Hillman using offshore companies in secrecy jurisdic- tions. Redmap had been subcon- tracted by construction com- pany Blokrete to carry out works on the Progress Press premises in Mrieħel, acquired in 2009 by the Allied Group, publishers of The Times and The Sunday Times. Through their Cypriot off- Vitals investigators say tax money from hospitals PPP used in Technoline acquisition of 'exclusive' medical equipment supplier