Muscat planned to double payments to Steward Health Care – NAO

It was only thanks to the 2019 political upheaval and the massive protests that led to the forced resignation of disgraced former prime minister Joseph Muscat that Malta was saved from deeper troubles over the “fraudulent” public hospitals’ deal, according to the latest NAO report.

The report sheds light on secret negotiations with Steward between 2018 and 2019 that should have led the concessionaire to be allowed to scrap the medical tourism commitment, on which Muscat ‘sold’ the deal to the public in 2015.

According to the NAO, as soon as Steward took over the already failed concession, with Muscat and former minister Konrad Mizzi’s permission before the obligatory cabinet endorsement, a series of negotiations were held to modify the terms of the original concession.

Once again, the main interlocutors of these negotiations were the Muscat triumvirate (Muscat, Mizzi and chief of staff Keith Schembri) and involving Armin Ernst, the CEO of Vitals Global Healthcare who shifted back to Steward Health Care following his intervention to renegotiate the deal with the government.

According to the findings of the NAO, shackled continuously during the investigations by elements within Robert Abela’s government, including Permanent Secretary Paul Zahra, Malta Industrial Parks CEO Karl Azzopardi (resigned), and Malta Enterprise CEO Kurt Farrugia, the Labour administration was on the brink of conceding new terms to Steward.

These included that instead of the medical tourism element – promised initially as the primary motive for the deal.  Steward would then just become a service provider to the government.

In return, the government was to increase its payments by 9% yearly on the 30-year concession, allowing it to receive double the amount of state funds it was already receiving – in just seven years.

While this deal was about to be signed in November 2019, which included several other provisions, all in favour of Steward and against the interests of the public, it was disrupted by political upheaval that led to the resignation of those at the helm of government involved in the negotiations.

The NAO report shows only Health Minister Chris Fearne and Steward came forward to provide information about what was happening behind closed doors and collaborated with the NAO investigation.

Fearne wanted to be seen as having nothing to do with the tainted deal, even though he publicly defended it, calling it the “real deal.”

Steward’s Armin Ernst, meanwhile, was focused on trying to get a better business deal for the concession’s new owners while rubbishing his former Vitals’ bosses.

The report shows how the real protagonists and their ‘helpers’ did their best not to collaborate with the NAO.

When replying to questions by the NAO, Joseph Muscat was clearly economical with the truth. While claiming that the deals were all negotiated by Konrad Mizzi and all were endorsed by the cabinet, the NAO found this not to be true.

He also claimed that he became aware of the scandalous €100 million side agreement, guaranteeing payment to Steward in case of a default, only through the court case instituted by the former Opposition Leader.

Clearly contradicting himself repeatedly in his replies, Muscat insisted that everything was approved by cabinet while he did not know about crucial agreements by his administration.

While Mizzi, the disgraced former minister used as frontman for these deals by Muscat and Schembri, did not bother to reply to the NAO questions, Schembri was also limited in his answers.

The NAO also questioned the roles played behind the scenes by various top civil servants who claimed that they did not know anything.

Former Finance Minister Edward Scicluna and his permanent secretary Alfred Camilleri – now a director of the Corinthia Group – declared their non-involvement in the deal. Still, the NAO noted that it was ‘their’ finance ministry that approved a multi-million government guarantee on massive loans – some €32 million – granted by BOV to Steward.

Ronald Mizzi, then Mizzi’s permanent secretary, now occupying the same role within Economy Minister Silvio Schembri’s office, was aware of the mess and irregular negotiations and agreements. Yet he provided scant details on the murky deal, the NAO report notes.

Paul Zahra, who, like Alfred Camilleri, was one of the few permanent secretaries left in their post after Labour was returned to power in 2013, also defied NAO requests to provide information.

The NAO tried to establish whether the government guarantees on loans to Steward were considered state aid and in breach of EU rules.

Zahra, placed as the chairman of the ‘independent’ State Aid board, refused to reply to any NAO requests to provide information.

Zahra is now the Permanent Secretary of Finance Minister Clyde Caruana, appointed by Robert Abela.

Kurt Farrugia, made Malta Enterprise CEO by Joseph Muscat on a €180,000 package just a few weeks before his forced resignation, also did his best to prevent further embarrassment to his former leader and Keith Schembri, who he had publicly called his mentor.

Farrugia refused to give the required documents to the NAO when asked.

Both Farrugia and Zahra are now the subject of investigations by the Standards Commissioner following a request by independent candidate Arnold Cassola.