Steward Healthcare is asking the government to purchase the three state hospitals – Karin Grech, St Luke’s and the Gozo General Hospital – which it currently runs, or to get paid more for its concession deal, sources have told The Malta Independent on Sunday.
On 27 January 2020, just a few weeks after taking on the role of Prime Minister, Roberta Abela confirmed meeting representatives of Steward Healthcare and said he did not exclude the possibility of renegotiating the multi-million concessions deal.
In September 2016, Steward made a deal with Medical Properties Trust, a real estate investment trust, to buy all their hospital properties for $1.2 billion, lease the properties back to Steward, and pay $50 million for a five percent equity stake in the company. The deal became final in September 2017.
This allowed Steward to finance a national expansion, pay off debt, and return money to the private equity firm that bought it in 2010, it was reported internationally.
Former Prime Minister Joseph Muscat had attended the meeting between PM Abela and Steward, represented by President Armin Ernst, with sources saying that Muscat lobbied in favour of the company.
Muscat was said to have communicated his wish to see that the privatisation project goes on as initially promised. Deputy Prime Minister and Health Minister, Chris Fearne and Principal Permanent Secretary, Mario Cutajar were also present for the meeting.
This newsroom had reported that, during that meeting, Steward had asked for additional funding and wanted to make changes to its contract.
When asked by this newsroom if the Prime Minister had any other meetings, or any other form of communication with Muscat regarding the Steward agreement, since the January meeting, the government confirmed he had not. Questions were also sent to Steward, asking about changes to their contract and if they were denied, would they consider leaving Malta, however, no replies were forthcoming.
Government does not deny Steward made request
This newsroom also asked government if the Prime Minister was considering selling the three hospitals to Steward Healthcare or any of its affiliate companies, and if yes, the amount Steward was offering.
Government replied: “as already publicly announced, Government is currently evaluating the hospitals’ agreements and will be taking all necessary decisions in the best interests of our country.” Abela had previously stated that he is “taking stock of the situation” before taking any decisions.
Following the possibility of renegotiation, shadow health minister Stephen Spiteri called on the government to stop the Steward public-private partnership, suggesting the contract was devised under suspicious circumstances. Opposition Leader Adrian Delia also said, on Saturday, that he was holding out his hand for Abela to join forces in stopping the Steward Health Care hospitals concession deal.
Armin Ernst director in four companies related to Steward in Malta
Steward Healthcare currently has five companies registered in Malta, four of which list Armin Ernst, former Vitals CEO, as their director. His is also listed as secretary in the fifth company.
Steward Healthcare took over the 30-year concession from VGH, a completely unknown healthcare company then registered in the British Virgin Islands, which was embroiled in a controversy involving some of its shareholders, and its complete lack of experience in the field of healthcare.
It was recently reported that VGH had amassed a total debt of €36 million over two years, with nothing to show for it.
The registered addresses for these four companies have changed several times. Initially, when the companies were listed under VGH, addresses were located in Valletta, Floriana, Ta Xbiex, and then on becoming Steward, in Birkirkara.
Steward Health Care International Ltd and Steward Malta Personnel Ltd are the only two that were established after the takeover from VGH, in 2017.
As of 17 September 2019, all five companies are now registered at Steward Malta, St Luke’s Hospital Campus, Guardamangia Hill, Pieta.
Both the original deal with VGH, signed in 2015, and subsequently, the contract with Steward was signed by Konrad Mizzi, as confirmed by the former minister himself, during a court sitting in December, which was coincidentally held on the same day he resigned. The sitting was in relation to a civil case filed by Delia, requesting the rescission of the controversial deal.
The concession deal includes the management of the three hospitals, as well as the task of building the Barts Medical School in Gozo, additional beds in Karen Grech and St Luke’s Hospital, the building and renovation of Gozo General Hospital (GGH) and the addition of medical tourism beds at St Luke’s hospital.
All original milestones should have been concluded
The Malta Independent had reported last year that Steward had fallen behind on its milestones and that it was in discussions with the Health Ministry to set new timeframes.
The concession milestones for the completion of major parts of the infrastructure to be put in place by VGH formed part of the original contract. The milestones, however, were blacked out when it was published in Parliament in 2016, citing commercial sensitivity. The timelines for VGH to submit the designs for the sites, and the nursing college at St Luke’s Hospital, as well as the timelines for the written approval of the designs, were also redacted.
This newsroom had questioned the reason for the redaction of the timelines, noting they are not commercially sensitive information, however, the Ministry did not reply. The concession milestones were eventually revealed and show that all projects tasked to VGH should have now all been completed.
It had also been reported that, when Steward took over the concession, just 21 months after the original deal with VGH, in 2017, several conditions in the original contracts were changed. This ran contrary to the government’s original pledge that the projects started by VGH would be delivered according to the original contracts.
Just a few days ago, Steward said it had submitted its application to redevelop the St Luke’s Hospital Campus to the Planning Authority. It also said it had continued to make progress at Gozo General Hospital.
On July 2019 a magistrate’s court ordered a magisterial inquiry into the concession deal with Vitals, following a request made by NGO Repubblika in May. In October of the same year, the Criminal Court revoked an order to hold the magisterial inquiry that would have placed Ministers Konrad Mizzi, Edward Scicluna and Chris Cardona under magisterial scrutiny.
Four years since NAO was asked to investigate concession deal
In 2017, the Public Accounts Committee asked for an investigation into the controversial deal. The National Audit Office is said to be investigating but to date, no information has been presented. It has been reported that the NAO will not publish the results before the end of 2020. This means that four years would have passed since the probe was requested.