Steward facing €5.5m garnishee, says VGH investor had already been repaid his loans
steward facing e5 5m garnishee says vgh investor had already been repaid his loans - Steward facing €5.5m garnishee, says VGH investor had already been repaid his loans

Steward Health Care has been slapped with a €5.5 million garnishee order by the Maltese courts following a lawsuit filed in a London court by one of the original investors in the hospital operator’s predecessor – Vitals Global Healthcare.

The company is currently fighting the validity of the claim in the UK court, and argues that the investor had already been repaid his loans, plus a “substantial” return on his capital by VGH, before it took over the hospitals concession.

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The Malta Independent on Sunday is informed that, as per procedure, all Maltese banks have been served with a notice from the courts, requesting them to freeze any assets they might have which belong to Steward to the tune of €5.5 million.

The UK court case was filed by US medical professional Ambrish Gupta, whose Medical Associates of Northern Virginia (MANV), had invested in Bluestone Investment Management – VGH’s parent company. The company had invested $4 million in the hospital privatisation deal.

Gupta later claimed that he had not been repaid his loans and the agreed upon consultancy fees. He had later reached a settlement agreement whereby BIM had agreed to pay MAVN $10 million in two tranches of $5 million.

MAVN was paid the first tranche but not the second, despite “repeated promises” by BIM.

The defendants were purchased by Steward Healthcare International Limited from BIM in early 2018.

According to UK court documents, Steward, which said it was conducting an investigation into its recently acquired companies, was close to reaching an “amicable solution” in 2018, but no agreement had been reached by the following year.

The company requested the UK court the right to a trial where it could make a proper defence against the claims.

 

Steward refers to corruption reports

But it also acknowleded the possibility of corruption or money laundering in the €200 million concession between the Maltese government and its predecessor – VGH.

Its lawyers referred to the Memorandum of Understanding that was signed prior to the issuing of the Request for Proposals.

That MoU has been described by the National Audit Office as “proof of collusion” between VGH and government officials.

They also referred to the magisterial inquiry into the actions of ministers involved in the deal, which was later “combined with a separate ongoing inquiry into money laundering and corruption into the same business deal.”

Referring to various news reports, Steward’s lawyers said Gupta’s claim could be invalid since the VGH concession could have been obtained “illegally.”

It also pointed out that Gupta had reportedly signed a second MoU with the other VGH investors. This document referred to the first MoU which, according to press reports, was obtained illegally. The lawyers said that, while they had no evidence to support these reports, the company needed time to investigate these matters.

Steward also said Gupta had not provided it with key documents to allow it to respond to the claim, particularly in light of the magisterial inquiry being conducted in Malta.

In June of last year, the UK court, presided by Judge Christopher Hancock, said it understood that Steward had been handicapped by the transfer of the Vitals concession in 2017 in obtaining of certain important documents pertaining to the concession.

It allowed Steward to plead its case “rapidly”, but also ordered that the company deposit in court the full claim that Gupta was demanding.

In mid-January 2021, the Maltese courts issued the €5.5 million garnishee order, but this newsroom is informed that the UK court cases is ongoing. This means that the garnishee was issued as per procedure, and not because Steward has lost the case.

 

Claims ‘predate’ Steward acquisition

This newsroom sent a number of questions to Steward Health Care, asking for an update on the court case, whether it will be settling its dues with MANV and whether this will have a negative impact on the company’s finances. The Malta Independent also asked whether Steward believes that the privatisation process between government and VGH was corrupt.

A spokesperson for the company said: “It is a known fact that Steward Health Care was not involved in the original VGH concession. Ambrish Gupta’s involvement with VGH, therefore, predates the acquisition of the original concession by Steward and Steward has no direct relationship with Gupta.”

“As has been widely reported, Gupta was part of the initial group of the VGH concessionaire investors and provided start-up capital to the consortium. As a physician and leader of a small group of doctors in the United States, he was aware of the complex implications of the original concession’s scope and requirements, and still provided funding presumably with the expectation of a substantial return from the original concessionaire (VGH).”

Steward said that, when it took over the concession, “Gupta had already been repaid his loan plus a substantial return on his capital. Considering the request for even more profit, Steward is asking in its filings with the court for a full and open review of the legality of the claim.”

The company said its focus, “has been, and remains, the provision of quality health care to the communities that it serves, including the investment in COVID-19 readiness and the upgrade of its medical facilities in Malta and Gozo. Steward’s obligations also include the stewardship and proper and transparent use of funds.”

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