This had been done because the FMS felt that there were several discrepancies between the estimates and the proposals indicated in the original contract with SMJV.

At the time, the two sides had agreed to appoint a team of negotiators to start intensive discussions. The government team was led by Parliamentary Secretary Tonio Fenech.

In the last two months a number of meetings had been held “without prejudice to the legal position” of the two sides.

The DOI said that although some progress had been achieved, it had not been enough to reach agreement on all the points upon which the government was insisting.

Yesterday morning, SMJV representatives informed the government team of negotiators of their latest position on the subject. When the Prime Minister was informed about SMJV’s stand, it was decided to stop all negotiations “with immediate effect”.

The DOI said that the government had a number of alternatives and in the coming days a decision would be taken in the best national interest.

Contacted by The Malta Independent yesterday, Skanska Group senior vice president corporate communications Peter Gimbe said he was optimistic about the negotiations.

“We are ready to sit at the negotiating table, confident that an agreement can be reached”, he said.

The Foundation for Medical Services yesterday said that it has always carried out its duties with diligence.

In response to the recent criticism levelled at the FMS board/s and their operations in relation to the Mater Dei Hospital project, FMS said that following lengthy negotiations which commenced in December 1998, the Foundation for Medical Services (FMS), on 23 February 2000, entered into a Cost-Plus, Design and Build contract with Skanska-Malta Joint Venture (SMJV) for the continuation of the construction of the Mater Dei Hospital.

FMS also appointed Howarth-CLS/ E.C. Harris as their cost controllers on the project. To date, FMS has been effecting payments to the contractor in accordance with certificates of payment issued by the cost controllers and authorised by the client’s representative in accordance with the relevant conditions of contract.

After initial indications that the actual project costs were set to escalate beyond the target contract sum forming part of the contract ,and the contractor opining that they were not obliged to abide with these target cost estimates, on the advice of FMS’s legal advisor, in order not to compromise FMS’s contractual position and at the same time proceed with the project, interim payments by the FMS to the contractor were subsequently only effected on a “without prejudice” basis.

FMS said that discussions on this issue between FMS and the contractor (SMJV) were initiated immediately. Both throughout these discussions as well as in official correspondence, FMS maintained that the contractor should be reimbursed costs in accordance with relevant conditions of the contract subject to these complying with the target cost estimates which form part of the same contract, together with authorised variations thereto. To date, payments to the contractor have not yet exceeded the total target contract sum, but requests for payment will shortly exceed this amount.

In an attempt to resolve the contractual impasse, following a meeting the government and high level officials of Skanska (the foreign joint venture partner of the contractor) agreed to nominate their respective negotiating teams to jointly examine the reasons for their differing positions and attempt to negotiate an amicable solution.

The government’s negotiating team is headed by Parliamentary Secretary, Tonio Fenech, Finance Ministry consultants, a Health Ministry representative and representatives from the Foundation for Medical Services. The FMS Board agreed to the appointment of Paul Camilleri, John Wilson and Jackie Camilleri on the negotiating team, FMS said.

As such, these negotiations are the culmination of FMS’s efforts and determination to justify all the expenses incurred in accordance with the contract and in particular with the contract target value.

It is pertinent to point out that in 2002, both the performance and workings of the Foundation for Medical Services and the Mater Dei Hospital project, were scrutinised by the Parliamentary Accounts Committee (PAC). Following this scrutiny, the PAC did not feel the need to further review either FMS’s activities or the hospital project.

Mr Camilleri, in private practice a partner of the architectural and engineering consultancy firm Paul Camilleri & Associates, who has substantial and direct experience of large construction projects in Belgium, Libya, Saudi Arabia and Malta, was appointed to serve on the FMS Board in October 2000, and as from April 2003, was appointed Vice-President, for which he is paid an honorarium. Together with the other board members, Mr Camilleri was instrumental in drawing the attention of government to the issues leading to the present situation.

Mr Wilson, a quantity surveyor by profession, is a full time employee of FMS and has been FMS’s clients’ representative on the project since January 2002. He has a track record of experience in various projects in the UK and the Middle East.

Ms Camilleri, a warranted accountant, was originally employed on a full-time basis as FMS financial controller from 1998 to 1999, and following her return to Malta from the UK, where she obtained an MBA (with an emphasis on health accounting and finance) from Herriot Watt, was engaged as a Financial Consultant by FMS with the specific task of carrying out a gap analysis between the target contract estimates and the projected final costs of the project as estimated by SMJV, and according to which they maintain that they should be paid.