The Malta Independent 14 April 2021, Wednesday

You've turned this courtroom into 'Xarabank', judge says as Muscat, Delia clash

Monday, 18 January 2021, 11:58 Last update: about 4 months ago

Former Prime Minister Joseph Muscat has arrived at the law courts where he is to testify in proceedings on the VGH case.

The case was instituted by former Nationalist Party leader Adrian Delia.

Muscat had missed the last sitting in December, saying that he could not attend because he was abroad.

Former health minister Konrad Mizzi was also due to attend in the December sitting, but he had claimed he had Coronavirus symptoms and was in quarantine.

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In today's sitting, the court was informed that Mizzi is in quarantine again. Mizzi was health minister at the time the contract was signed.

In 2018, Delia had filed a court case against the government and Vitals Global Healthcare (VGH) asking for the contract to be cancelled and the three hospitals to be returned to the public.

The case was filed against the Prime Minister, Vitals Global Healthcare, the Attorney General, the CEO of Malta Industrial Parks Limited and the chairman of the Board of Governors of the Lands Authority.

Vitals Global Health Care, known as VGH, were given a concession by Muscat’s government to run the Gozo General Hospital, St Luke’s and Karin Grech Rehabilitation Hospital. 

However, VGH failed to honour its commitments and eventually pulled out of the agreement just 21 months into the deal after it sustained mounting debt.

The concession was transferred to Steward Healthcare.

A damning National Audit Office report found that the government had signed a Memorandum of Understanding with several investors who eventually formed VGH, months before an international request for proposals was even issued.

Government was paying VGH around €70 million per year to provide hospital beds to the State.

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13:49 Thank you for following. 

13:49 The sitting ends. The next hearing will be held on 8 February at noon. 

13:48 Judge: “The court will assure that this addendum isn't shared to the public and remains in the possession of the court.”

13:46 The judge says that the Auditor General will come to the next hearing and present the document.

13:45 Lawyer Edward Debono asks the court to call the Auditor General to present the €100 million contract addendum, which is believed to be in his possession.

13:43 Joseph Muscat now finishes testifying. He steps away from the podium. 

13:43 Muscat says that this termination clause was added as a security measure for the local bank. 

13:42 Delia moves on to the termination clause. “Factually, did you know that in the summer of 2019, any material change was done in terms of the default?” 

13:41 Things get rowdy again. The judge brings everything back to order and asks about timeframes. 

13:41 Delia reiterates this question: “Was this contract ever amended without the Cabinet's knowledge?” 

13:40 Delia asks whether any Cabinet members, specifically Konrad Mizzi, made any decisions on the hospitals project behind Cabinet’s back. Muscat says the minister didn't do anything that wasn't approved by the Cabinet.

13:39 Delia asks whether there had been any changes to the contracts over time. Joseph Muscat confirms this.

13:35 Muscat confirms that government hadn’t approached Steward itself and adds: “Whether they saw an opportunity locally, or whether they were approached by Vitals, I wouldn't know.”

13:34 Delia: “Did you ask how all of a sudden Steward came into the picture?” 

13:34 Delia asks whether Steward was brought in by Vitals or government. Muscat says he doesn't know, but confirms that it wasn't from his end. “I didn't even know who they were,” the former PM says.

13:33 Muscat: “When the MoU was dropped, it wasn't because the people involved weren't efficient. It was simply because the MoU didn't reflect our vision for the public health sector.”

13:32 The judge asks Muscat: “This MoU expired in February in 2015, and in June an RfP was signed. Can you explain whether these two are linked?”

13:31 Delia questions this, asking how this could be such a pure coincidence that both were signed by the exact same entities. 

13:31 Muscat continues to insist that the MoU and RfP are completely separate initiatives despite the investors in the MoU eventually ended up winning the hospitals concession.

13:29 Muscat clarifies that a proposal was presented in relation to the MoU, but when this was found not to fit with the government's vision for public health an RfP was published.

13:28 Muscat is asked about the choice of VGH. “The choice was carried out on the criteria of the request for proposals. I understood that Vitals satisfied those criteria,” he says.

13:26 Muscat objects to Delia’s description of the concessionaire having “cashed” in the money. He insists the figures are all accounted for. “They received the €265 million but they spent them too. They don’t just send invoices and the government pays. The government verifies,” Muscat says. 

13:25 Delia asks about the €265 million Vitals received in five years. “Did they take those millions? Did €6 million go to VGH CEO Ram Tumuluri as a settlement fee?”

13:22 Muscat says that was the way of making the investment viable. The former PM gets heated again. “Mater Dei took all those years to build and the concrete was not up to standard, and you come here to speak about this!” he tells Delia.

13:21 Delia presses on. “But was that the original plan. The first substantial investment, of €35 million was for the medical school,” he says. 

13:20 Muscat insists there is misinformation. He says his government did not want to introduce fees for medical services, so to make it sustainable investment was needed. “We got an English school of international repute [Barts] to train students in Gozo,” he insists.

13:19 Delia: “Was the medical school meant to directly serve the people?”

13:16 The judge advises Delia to avoid asking about numbers, as he has all the relevant numbers in front of him anyway. 

13:16 Delia continues to ask about the expenses incurred throughout the project. Muscat insists that all expenses were accounted for. 

13:15 Delia turns to the breakdown of costs in the Vitals deal mentioned earlier by Muscat, but again things get rowdy. Judge Francesco Depasquale chimes in: “You've turned this courtroom into Xarabank. I will not tolerate this anymore.”

13:05 Delia pulls out the concession contract. There is uproar in the courtroom with the magistrate warning the parties not to turn this into a political exercise. 

13:04 Muscat appears to be avoiding questions relating to the investments that had to be undertaken directly by Vitals as part of the concession agreement. 

13:03 Delia stands his ground. “Did Vitals have to do this investment?” he asks, referring to the 450 beds that had to be added to the Gozo General Hospital. 

13:03 Muscat questions the relevance of this to the case. He turns to the magistrate: “I will not play charades.” 

13:02 Former Opposition leader Adrian Delia begins his own grilling. He asks about the investment done by Vitals. “From the investment that took place by Vitals, they did not manage to fix these problems, correct? What did Vitals do?”

12:58 The lawyer asks Muscat whether he has a copy of the agreement. He says that is an issue for Cabinet.

12:56 Muscat says the €100 million clause was a backdoor guarantee for a local bank that was exposed by the deal. He says the bank had sought a state guarantee but that could not be granted and so while avoiding the issue of state aid, in case the contract was annulled in court, government would take the medical school and make good for all of it. “That’s the only thing I can recall about this €100 million issue,” he says.

12:55 Questions now move on to the €100 million termination clause, which was part of an agreement signed in August 2019 with Steward Healthcare.

12:52 The former PM’s reply brings a few giggles and Debono says it’s best not to use sexual arguments. 

12:50 Debono continues to ask about the milestones tied to the concession and Muscat again loses his temper. “Dan argument żobiku,” Muscat shoots back.

12:42 He admits that there were disagreements between Vitals and government, but holds that it was the best decision strategically.  

12:42 Muscat: “The whole point is that when faced with a situation where a primary American company is seeing how to expand its operations in other countries, and wants to enter Malta, it would be irresponsible for that government not to let them in. I believe in the private sector. The only way some sort of sustainable and accelerated development could take place in the health sector was to bring in this company. For as long as I was PM, the concession made most sense.” 

12:40 As he testifies in court, Muscat’s Facebook page is live reporting his testimony. Muscat had done something similar when he testified in the Daphne Caruana Galizia public inquiry.

12:37 Debono clarifies and asks for an answer on structural milestones within the hospitals concession agreement. Muscat begins to lose his temper, angrily pointing out the new prosthetics unit.

12:34 Muscat points out that through the concession new physiotherapy services were provided, 48 new beds were added at St Luke's, a new orthopaedic ward was set up, and there was an increased capacity within the ICU. “It cannot be said as fact that no work was done,” he insists.

12:33 Debono and Muscat are in a brief squabble over whether the hospitals are owned by government or not. Muscat insists that they are still under the ownership of government and available to the public, but Debono begs to differ.

12:28 Muscat insists that there has been a lack of understanding on the way the hospitals concession was structured.

12:27 After providing a breakdown of costs, he says that at most the deal is costing €160,000 daily in taxpayer money. “Government was cost-neutral in this. That €160,000 would have had to be paid anyway,” he says.

12:26 Muscat says that one of the things he read stated that taxpayers are paying €250,000 daily for this contract. “This is completely incorrect. It is not true,” he says.

12:24 Muscat: “Cabinet.” 

12:24 Debono: “Was the decision taken as a Cabinet or between you and the minister?” 

12:24 QUICK REMINDER: A Memorandum of Understanding had been signed between Malta Enterprise and a number of investors, who eventually formed VGH for a project that involved the Gozo hospital. Prior to government issuing a request for proposals, VGH investors were already making detailed presentations about their project. The National Audit Office found there was collusion between VGH and the government. The NAO also found that VGH had secured a financing guarantee from a bank in India before the request for proposal was even issued.

12:21 Muscat confirms that an MoU had been signed prior to the publication of a request for proposals but says that this was dropped. “That MoU has nothing to do with the Vitals project,” he argues. Muscat adds that the MoU was signed with the same persons but not for the same project.

12:20 Debono: “There was already an agreement with Vitals from before a request for proposals was published by the government.”

12:18 Debono points out that when Projects Malta officials testified, they said that they were only employed for an evaluation and due diligence report. Their job was to put things into motion.

12:16 Muscat pauses and says the ministry acted according to protocol. 

12:15 Lawyer Edward Debono asks how the project was sent to Projects Malta, a government entity under Konrad Mizzi’s wing, after Muscat appointed Mizzi health and energy minister. 

12:14 Muscat: “My decision at the time - approved by the whole Cabinet - but I will take responsibility for it, was to opt for a model that was successful in previous administrations and rope in the private sector.” 

12:13 Muscat says that when he became prime minister the health service was falling to bits. “There wasn't enough money to buy pills and medicine, let alone to create investments in the health sector,” he says. 

12:12 Joseph Muscat’s testimony starts now. 

12:06 Adrian Delia’s lawyer, Edward Debono verbalises a request for Mizzi’s testimony to be heard via teleconferencing. “This is the 5th time he was asked to appear in this case before the court,” Debono argues. The court accepts this request for the next hearing if Mizzi is unable to show up.

12:03 The court is informed that Konrad Mizzi will not be attending since he is under obligatory quarantine as he travelled recently. The court received the notification today. 

12:02 We're starting and Joseph Muscat takes the witness stand.

12:00 Good afternoon. 

 

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