The once missing memorandum of understanding between the government and Vitals Global Healthcare “strongly supports” the National Audit Office’s conclusion that the tender process was “staged and deceitful”, the same NAO said in a statement on Tuesday.
The MoU was signed by then-Economy Minister Chris Cardona on behalf of the government.
In an addendum to the first part of their audit into matter relating to the concession awarded to Vitals by the government, the NAO said that the MoU “affirms that all findings and conclusions reached in its initial report remain unchanged, with concerns highlighted therein substantiated by the facts brought to the fore.”
The NAO had concluded that the hospitals privatisation deal was predetermined and that the documents provide "proof of collusion with government or its representatives."
The NAO had said that its immediate concern was the agreement that parties representing Government reportedly entered into prior to the request for proposals (RfP) with a subset of the investors of the VGH.
"The overlap between this Agreement and the concession was clear and created major doubt and concern regarding the integrity of the eventual concession."
The government’s reluctance to provide the NAO with this agreement only added further suspicion, the NAO said before noting that this agreement provided grounds for Vitals to be disqualified from the RfP process.
“The overlap in terms of the nature of the project and the identity of the Investors is evident and strongly supports this Office’s understanding of a process that was staged and deceitful”
The agreement being referred to – an MoU signed between the government and Vitals – was not found until some weeks ago, when the government then handed it over to the NAO for them to continue their investigations.
The government had resisted publishing the MoU themselves when asked by the media, including The Malta Independent, however the NAO shed light on its contents in their statement.
The NAO said that the government was represented by then-Economy Minister Chris Cardona, and that the other party to the MoU were the developers and operators of the proposed project, represented by Mr Mark Edward Pawley in his capacity as Director of Bluestone Special Situation 4 Ltd, Dr Ashok Rattehalli in his capacity as Director of AGMC Incorporated, and Mr Mohammad Shoaib Walajahi and Mr Chaudhry Shaukat Ali in their capacity as Directors of Pivot Holdings Ltd (collectively referred to as the Investors).
“Acknowledged in the MoU was that the Investors were interested in investing in the setting up of a Gozo Medical Complex, which comprised the extension and operation of the Gozo General Hospital, the construction and operation of an assisted living centre, as well as the construction of a medical school to be operated by Barts School of Medicine and Dentistry”, the NAO said.
The MoU was dated 10 October 2014.
Read more: ‘I shouldered responsibility long ago’, Joseph Muscat says of Vitals deal
“Having reviewed this MoU, the NAO affirms that all findings and conclusions reached in its initial report remain unchanged, with concerns highlighted therein substantiated by the facts brought to the fore.”
“The NAO is of the opinion that the MoU entered into by the government and the Investors and the subsequently issued Request for Proposals relating to the concession of three public hospitals can be considered as one process”, the NAO said.
The NAO noted that there is a “significant overlap” between the Investors that entered into the MoU with the government and the owners of Vitals Global Healthcare Ltd that the government subsequently awarded the concession to.
“Second, the nature of the project remained unchanged as the refurbish and operate model was retained, revenue by the government always guaranteed in the envisaged long-term agreements, medical tourism underpinned feasibility, and the construction of Barts Medical School a central requirement throughout”, they added.
The only major difference, the NAO said, was the reduction in the intended number of beds at the Gozo General Hospital, which reduction was more than compensated for through the inclusion of St Luke’s Hospital and Karin Grech Rehabilitation Hospital.
“The overlap in terms of the nature of the project and the identity of the Investors is evident and strongly supports this Office’s understanding of a process that was staged and deceitful”, the NAO said in a scathing conclusion.
"Despite the NAO’s efforts at deciphering the active role played by the OPM, this remains obscure"
The NAO said that even though the MoU provides an insight into certain development that took place prior to the RfP, multiple gaps still persist.
“Most notable of which related to the identification of the Investors, the negotiations held leading to the MoU and the negative outcome of the due diligence undertaken by Malta Enterprise with respect to the Investors”, the NAO said.
“Despite the lack of visibility afforded to this Office regarding the nature of the negative outcome of the due diligence, the NAO’s concerns emerge when one considers that, irrespective of the critical risks flagged, the government persisted in negotiations with investors that, for the most part, remained unchanged when granting a concession to operate three public hospitals a few months later”, they concluded.
'Active role of Office of the Prime Minister remains obscure', NAO say as Keith Schembri refuses to answer questions
In the addendum, the NAO noted that a meeting with the investors was convened at the Office of the Prime Minister, before the MoU was signed, by the Chief of Staff of the then-Prime Minister, Keith Schembri.
This was stated to the NAO by Malta Enterprise's Principal Chief Officer, who said that Malta Enterprise was not involved in the identification of the investors for the project.
Speaking to Cardona, the NAO said that very limited information was obtained, "as the Minister for the Economy maintained that he was not involved in the formulation of the project or in any negotiations leading to the MoU or negotiations held after entry thereto."
"The Minister for the Economy recalled that he was requested to sign the MoU on behalf of Government; however, reiterated that he was not involved in any other way. Of interest to the NAO was the emphasis made by the Minister for the Economy that the MoU was not signed at the MEIB, and indicated that in all probability it was signed at the OPM. He noted that other MoUs were signed at the OPM", the report reads.
The NAO said that attempts to get Schembri's views on the subject were to no avail - a point which is referred to another three times in the report.
"The role played by the OPM in the formulation of the project assumed a more definite form based on the information provided to the NAO by the Minister for the Economy and the Principal Chief Officer Malta Enterprise", the NAO found.
"Notwithstanding this, many gaps persist in this Office’s understanding of the process leading to the MoU. These gaps result from the fact that no records were retained by the OPM in relation to the MoU and attempts at sourcing information from the former Chief of Staff OPM proved to no avail. Despite the NAO’s efforts at deciphering the active role played by the OPM, this remains obscure", they added.