Former PM Joseph Muscat defends VGH deal during courtroom grilling

Former Prime Minister Joseph Muscat defended the Vitals Global Healthcare deal as he took the witness stand and was questioned in court yesterday by PN MP Adrian Delia and lawyer Edward Debono.

The case, filed in 2018, was instituted by former Nationalist Party leader Adrian Delia against the government and Vitals Global Healthcare (VGH) and asks for the contract to be cancelled and the three hospitals to be returned to the public. VGH had been awarded a concession by Muscat’s government to run the Gozo General Hospital, Karin Grech Rehabilitation Hospital and St Luke’s Hospital. However, VGH pulled out of the agreement just 21 months into the deal after it sustained mounting debt. The concession was transferred to Steward Health Care. A National Audit Office report found that the government had signed a Memorandum of Understanding with a subset of investors who eventually formed part of VGH, months before an international request for proposals was even issued.

During the sitting, Joseph Muscat insisted that an agreement penned with a group of investors for the transfer of public hospitals was “different” from the eventual deal that saw three public hospitals being transferred to VGH.

The former prime minister defended his government’s decision to rope in VGH to run the Gozo General Hospital, St Luke’s and Karin Grech Rehabilitation Centre.

Muscat said a Memorandum of Understanding (MoU) signed between Malta Enterprise and a group of private investors towards the end of 2014 on a hospitals concession did not fall within the scope of the public health service’s needs. The MoU was terminated at the start of 2015 and government issued an international Request for Proposals (RfP). However, the same investors were eventually awarded the tender.

Muscat said in court that the MoU and the RfP were two different things despite the investors being the same.

While being grilled, the former Prime Minister defended the agreement and refused to subscribe to the notion that the investors failed to carry out any work.

While testifying, Muscat pointed out that through the concession, new physiotherapy services were provided, 48 new beds were added at St Luke’s, a new orthopaedic ward was set up, and there was an increased capacity within the ICU. Debono clarified and asked for an answer on structural milestones within the hospitals concession agreement. Muscat here began to lose his temper, angrily pointing out the new prosthetics unit.

Questions moved on to the €100 million termination clause, which was part of an agreement signed in August 2019 with Steward Health Care.

Muscat said that the €100 million clause was a backdoor guarantee for a local bank that was exposed by the deal. He said the bank had sought a state guarantee but that could not be granted and so while avoiding the issue of state aid, in case the contract was annulled in court, government would take the medical school and make good for all of it. “That’s the only thing I can recall about this €100 million issue,” he says.

During the sitting, Muscat said that one of the things he read stated that taxpayers are paying €250,000 daily for this contract. “This is completely incorrect. It is not true,” he says. After providing a breakdown of costs, he said that at most the deal is costing €160,000 daily in taxpayer money. “Government was costneutral in this. That €160,000 would have had to be paid anyway,” he said.

Muscat and Delia clashed during the sitting.

Delia asked: “Did Vitals have to make this investment?”, referring to the 450 beds that had to be added to the Gozo General Hospital. Muscat appeared to be avoiding questions relating to the investments that had to be undertaken directly by Vitals as part of the concession agreement. Delia pulled out the concession contract and there was uproar in the courtroom with the magistrate warning the parties not to turn this into a political exercise.

Delia turned to the breakdown of costs in the Vitals deal, but again things got rowdy. Mr Justice Francesco Depasquale chimed in: “You’ve turned this courtroom into Xarabank. I will not tolerate this anymore.”

Delia continued to ask about the expenses incurred throughout the project. Muscat insisted that all expenses were accounted for.

Delia asked about the €265 million Vitals received in five years. “Did they take those millions? Did €6 million go to VGH CEO Ram Tumuluri as a settlement fee?”

Muscat objected to Delia’s description of the concessionaire having “cashed” in the money. He insists the figures are all accounted for. “They received the €265 million but they spent that too. They didn’t just send invoices and the government paid. The government verified,” Muscat said.

Former health minister Konrad Mizzi, who was also expected to testify, notified the court that he was unavailable. Mizzi is in mandatory quarantine after having returned from abroad.

On his way out of court, Muscat said he had full trust in Prime Minister Robert Abela when asked about the government’s attempts to renegotiate the agreement. “They will do whatever they feel is best in the circumstances,” Muscat said.

Delia addresses the press

Delia addressed the press after the sitting.

Delia said that former Prime Minister Joseph Muscat had confirmed in court that the Vitals group did not meet the obligations listed in the contract it signed with the Maltese government.

Muscat tried to justify the fact that they will be taking thousands of euros from us every day, Delia said. “I definitely do not think that our people should be robbed from so much money each day, whether he thinks it is or not,” he said.

In the beginning, Delia said, Muscat did not want to give any information on the alleged €100 million termination clause that was signed with Vitals. “This is all coming from people’s money,” Delia said. “However, after beating around the bush, it resulted that after summer of 2019, meaning much later than when I opened this case against him, this contract was in fact signed, with the Cabinet’s consensus. However, former Finance Minister and now Central Bank Governor Edward Scicluna said the opposite, so one of them is lying. We have to find out who the person is. Maybe Konrad Mizzi can enlighten us.”