Vitals deal should have been scrapped, Auditor General insists

The Vitals hospitals concession tender should have been scrapped, Auditor General Charles Deguara insisted during his testimony in the Daphne Caruana Galizia inquiry today.

Deguara was re-stating the findings of an extensive audit investigation into the Vitals deal that was released in July this year.

The National Audit Office had found there was collusion between the government and the private investors that eventually were awarded the concession to run three public hospitals.

The Auditor General was also asked about the 2018 NAO investigation into the Electrogas power station contract, which this week started being debated in parliament’s Public Accounts Committee.

“In the Electrogas case, we reviewed around 50 separate agreements. We drew up a 600page report. If gaps remain after reviewing the documentation, we send for people to clarify things. Often the idea is good but there is insufficient planning. This lack of planning is a source of much trouble in large capital projects,” he said.

Deguara told the public inquiry that the NAO found cooperation from permanent secretaries when compiling the necessary documentation and in those cases were this was missing, the office adopted the policy of “name and shame”.

He said a constant problem that undermined good governance was the lack of proper minutes to record meetings.

“I’ve been in this job for 12 years and I’ve been saying it since the beginning. I’m like a voice crying in the desert. It is a sine qua non for governance, but in many cases insufficient minutes are kept of meetings… If I was an auditee and was mentioned in an auditor’s report as not having given a document, I wouldn’t sleep. It is a serious thing,” Deguara told the inquiry board.

Deguara said that there have been instances when a tender says something and the final agreement is completely different.

He gives a theoretical basis on tender processes: “Once a need is identified, a clear tender is issued and anyone can apply for it. The more bidders there are, the better for competition. Once bids are made, a fair and transparent adjudication process should take place and the winner is selected. Sometimes government is on a weaker footing in negotiations with business. Sometimes the government is weak with the contractors in big projects.”

He said the NAO was never asked to audit the Montenegro deal involving Enemalta.

Deguara added that the great majority of ministries cooperate with the office. “On the rare occasions that they don’t, they can’t find the documents or are hiding it. If there aren’t good filing practises... some departments don’t have good filing practises... audits become very difficult,” he says.

Deguara said the NAO communicates on the executive level with permanent secretaries not chiefs of staff. “For me a chief of staff represents the political side… they report directly to their political leaders,” he says.

Asked whether the government pays attention to the NAO advice, Deguara said. “It is a very valid question. Some things will improve such as evaluation processes. For example, in the Vitals contract some things had improved while others have not, such as the MOU. Essentially there are two types of audits. One type is when we choose the sector ourselves and the other is mandated by the Public Accounts Committee. In the latter cases we take the terms of reference that are given and follow them. This is important because at the beginning of the reports we explain our methodology and the terms of reference. Our work is always guided by the terms of reference.”

Deguara said the point of his office is to strengthen good governance in public affairs. “Our yardstick is that we are objective, fair and evidence-based. By and large we find cooperation. Some people provide documents within the hour, others need several reminders and occasionally we don’t receive the documents. If we don’t receive them we will note it in our reports,” he says.

The inquiry will continue on Monday at 9:30am with the testimony of former OPM chief of staff Keith Schembri.