Vitals Global Healthcare (VGH) used public funds on luxury cars and apartments, sources told The Malta Independent on Sunday.
Sources told this newsroom that VGH had spent funds given by the government on Mercedes cars as well as high-end apartments in locations like Sliema front and Ta’ Xbiex, and that these were for use by foreign VGH owners and related officials. The amount spent on these is not known.
VGH had been awarded a concession to run three of Malta’s hospitals – the Gozo General Hospital, St Luke’s Hospital and Karin Grech Hospital through a deal in 2016. The deal was highly controversial given that the company did not have a history in the medical field. In addition, VGH was heavily criticised for not keeping to the terms of the concession and for not investing enough in the hospitals. Indeed, news reports read that VGH had amassed a debt worth millions. PN MP Adrian Delia had eventually filed a court case to “give the hospitals back to the public”. The case is still ongoing.
This newsroom asked the National Audit Office (NAO) for the amount of money given by the government to VGH while it had the hospitals' concession. “The amount due to VGH by the government in 2016, 2017 and early 2018 (when the concession was still under the control of VGH) amounted to €16,022,406, €33,555,813 and €5,262,869, respectively. In aggregate, amounts due to VGH for the indicated period exceed €54.8 million,” the NAO said. (The €5,262,869 is in respect of VGH only, excluding what was later given to Steward).
The concession agreement with VGH was recently scrutinised by the NAO. The NAO, in its report last December, recommended further investigation by the competent authorities in terms of any possible financial mismanagement and misuse of public funds in connection with this concession awarded by government.
VGH exited the concession in 2018, when Steward Health Care took over the concession.
This newsroom sent questions to Steward Health Care Malta (SHCM) asking, among other things, whether it had found any evidence of misuse of public funds by its predecessor VGH when it took over the concession, and whether this was reported to the authorities.
“When we took over the concession, Steward reconstructed years of general ledger accounts and audits that had not been done. We discovered a large number of assets and funds that had been used for purposes outside of the concession’s scope. These included investments in medical services, devices that were outside the terms of the concession through multiple companies, and other assets that were not related to medical services at all, such as automobiles and apartments. SHCM (Steward Health Care Malta) divested itself of these assets as a priority, wound down all companies outside the concession’s healthcare mission, and immediately worked to repatriate any funds identified as pertaining to the concession, in accordance with our strict governance and transparency values,” a SHCM spokesperson said.
“To further support our commitment to transparency, we changed the corporate structure. The Steward companies operating in Malta are owned by an EU-based company in Spain, Steward Health Care International (SHCI), in direct contrast to the opaque and convoluted offshore structure we inherited,” the spokesperson added.
Steward Health Care was also asked about recent news articles, which read that it is refusing to pay €36.5m in tax, penalties and interest for the period starting May 2016 to June 2021. A report by MaltaToday read that in its court application, Steward said its audit of the Vitals management accounts found “serious anomalies”, with Vitals’ original owners – the Bluestone network of offshore companies – having declared less output tax to claim more VAT credits in its favour, when it actually owned money to the VAT department.
A SHCM spokesperson said that SHCM supports any investigation into alleged wrongdoings or irregularities relating to the previous hospitals’ concession agreement with VGH.
“As part of its audit of the management accounts of the concession and commitment to transparency and accountability, SHCM uncovered this tax discrepancy that was relevant to the period of VGH’s control of the concession and proactively informed the relevant government tax departments of the missing funds. We have been willing to work with the Inland Revenue Department to reach a solution and reached a fully negotiated agreement (with full visibility from the Ministry of Finance) on this issue in July 2021 that remains unsigned,” the spokesperson added.
“Steward does not consider the policing of the prior concession to be in its remit and has not worked to identify negligence or complicity of any party with the failure to record, report or book this VAT as a liability. The responsibility for the liability of these taxes and the resolution of the issue is still under discussion and subject to legal proceedings, so SHCM will not comment any further. SHCM remains dedicated to improving patient access to quality healthcare across the communities we serve.”
SHCM president Nadine Delicata had penned an opinion article in the Times of Malta early in February, where she had said that when discrepancies were found, Steward was not rewarded but punished. She had written: “We uncovered a staggering amount of VAT that, not only had not been paid by VGH, but which the authorities had failed to detect, a likely mistake if no audit had ever been carried out. It was Steward which, transparently and openly, reported this issue to the tax authorities, only to be told that it was liable to pay for the negligence of VGH’s owners."
Steward was also asked whether, given that Delicata was the CEO of the Gozo Hospital while under VGH, she was aware of this issue and others she penned in that opinion article back then. A SHCM spokesperson said that the management teams working at VGH “were not allowed any visibility of the financial situation by the owners”.
“While she was at VGH, Dr Delicata was responsible solely for the operations of the Gozo General Hospital, with no visibility or responsibility of any VGH corporate or financial matters. Dr Delicata was asked to step up as vice president and then president of SHCM only after Steward took control of the concession.”