The magisterial inquiry into the hospitals deal has been damning in uncovering the inner workings of one of the most controversial and fraud-ridden deals in Maltese history.
Concluded last month and published on Sunday by MaltaToday, the inquiry is 1,218 pages long and has resulted in a myriad of people – including former Prime Minister Joseph Muscat, his ex-Chief of Staff Keith Schembri, former minister Konrad Mizzi, and former Deputy Prime Minister Chris Fearne – be charged.
They will face the courts for the first time this week.
But the newly published inquiry has given a window into what investigators believe was going on behind the scenes of the hospitals concession, which a court annulled last year.
From Schembri and Mizzi having secret shares in various companies associated with the concession, to the identification of “professional money launderers” who made this all possible, and to what part Steward played when they took the concession over – these are the key points to emerge so far.
The Technoline front
The company ‘Technoline’ is named 1,120 times during the magisterial inquiry, and with good reason: investigators believe that Keith Schembri and Konrad Mizzi were secretly at the heart of the company which Vitals granted an exclusive procurement contract to.
Technoline itself was run by Ivan Vassallo, and it was purchased by a company called Gateway using €5 million from the concession’s funds – ergo, Maltese taxpayers’ money.
Schembri and Mizzi were also confidentially involved as concealed shareholders in the project which eventually led to Technoline (which was a leading supplier to Maltese hospitals) being acquired by Gateway using around €5M of Concession funds.”
Shaukat Ali “as usual” was closely involved in this as well, investigators said, while Schembri and Mizzi were kept informed at all times.
Investigators said that from July 2015 onwards – once the concession had been awarded – Schembri, Mizzi and their associates were intended to be the owners of Gateway, which would then purchase Technoline.
This ownership was to be concealed, investigators said, and 90% of the shares were planned to be held of “AH, PS, and K & K” – who investigators identified as Adrian Hillman, Pierre Sladden, and Schembri and Mizzi.
“They were to acquire 100%of Technoline using [Government of Malta] funds fraudulently channelled from the VGH concession. They would thereby have acquired the valuable assets and profitable income stream of Technoline without paying anything for them,” investigators said.
Immediately after Technoline was acquired, it was awarded an exclusive multi-million Euro contract by Vitals for the supply of pharmaceutical and medical supplies, and the concealed acquisition of Gateway which in turn acquired Technoline “would entitle Schembri and Mizzi and their associates to the profits on items supplied to the Concession.”
A web of companies leading to Konrad Mizzi and Keith Schembri
The inquiry identified various companies which had concealed ownership structures that eventually led back to Keith Schembri and Konrad Mizzi – companies through which the duo, together with their associates, stood to benefit from through various government projects.
The inquiry, for instance, points towards Sirimed, Technoline, a joint venture involving Ergon and Technoline, and Greek company CERS Construction all having ties with the company Eurybates, which had been set up in September 2015.
“Eurybates received around €1.8M in kickbacks from construction projects with Sirimed, Technoline, Ergon TechnolineJV and CERS,” forensic analysts wrote in the magisterial inquiry.
“This is highly significant as Eurybates on paper belonged to Ivan Vassallo but 90% of it was probably owned and controlled by others either in, or with close links to, the OPM. We expect that the concealment of the identities of the private owners of the 90% shareholding was deliberate so as not to reveal these persons’ connections to or influence over the award of the contracts from which the funds which were paid to Eurybates originated,” it continued.
Investigators described the company as a “vehicle for kickbacks” and found evidence that the aforementioned 90% in shares were held for “K, K, AH & PS” – or rather, Keith Schembri, Konrad Mizzi, Adrian Hillman, and Pierre Sladden.
The kickbacks came through income which investigators said was “under the guise of providing consultancy and administration services and was earned seemingly without the necessary personnel to deliver what could only be described as highly technical services.”
There are other companies mentioned.
One such company was Encore Trading Ltd, which investigators said was controlled by Ivan Vassallo and Pierre Sladden “as associates of Keith Schembri” and which received almost €100,000 supposedly for “procurement and administrative services” but were in actual fact “nothing more than a kickback” for the awarding of the Paola Regional Hub tender.
Another was Impaqt Limited. This company was formed in May 2014 by Schembri’s Kasco Engineering, in whose control it remained until August 2015 – just weeks after the hospitals concession was awards to Vitals, something which struck investigators as “quite a coincidence.”
This company provided engineering consultancy services to the Health Ministry – consultancy services which it bought from Camilleri & Cuschieri and then simply added a 44% mark-up when it came to invoicing. These contracts generated over €500,000 in sales in 20 months, out of which €370,000 was billed to the hospitals before the concession had been awarded.
The ‘professional money launderers’
“Professional money launderers” is how investigators described Brian Tonna’s and his partners, as they noted that they were the “principal architects of Schembri’s network of secret companies and bank accounts until early 2016 when their activities were unveiled by the Panama Papers.”
Investigators continue that there is a “considerable volume” of emails between Tonna, government officials, and members of the proposal health care consortium dating back to as early as 2014 which showed that he had a central role.
“It is therefore our opinion that from the outset, the team developing the Healthcare PPP [Public-Private Partnership] had as one of its key architects a professional money launderer,” the investigators said.
Amongst the list of those charged in connection with the hospitals inquiry was one little-known auditor Chris Spiteri. When it had emerged that he was charged, he took to Facebook to protest his innocence, saying that when he audited Steward he had “never known that any criminal association exists” and that “no bribery or money laundering have also ever come to my knowledge during all this time.”
“I have been accused of facilitating trading in influence for Joseph Muscat, Konrad Mizzi and Keith Schembri – the truth is that I have never even met these individuals in person, let alone facilitating anything,” Spiteri said.
But investigators share an altogether different view of the auditor, describing him as a “professional money launderer” as well, the inquiry states.
They note how he has been the personal tax accountant for Shaukat Ali and his family since the early 2010, and he facilitated the establishment and maintenance of several companies directly involved in the hospitals concession.
“Mr Spiteri set aside his professional ethics when, after accepting the offer of a bonus, he undertook to deliver a clean but ultimately unethical audit of the VGH group of companies to facilitate the period of transition and smooth handover of the health concession to Steward,” the investigators said.
“However, any concerns over Mr Spiteri's conduct and ethics as the auditor of the VGH group pale beside what are various indications that Mr Spiteri was fulfilling the role as a professional money launderer for the Ali family,” the inquiry continues to read.
By extension, the investigators said, Spiteri was also fulfilling the role of a “professional money launderer” for the hospitals concession.
What about Steward?
Investigators divided the concession into four distinct time periods: the origins and development of the concession, the “year of preparations”, the “Bluestone/VGH era” and the “Steward era.”
“Nefarious activities,” investigators said, were found in all four periods.
Steward took over the running of the concession companies and their bank accounts in February 2018, and “worked to stop many of the nefarious arrangements created during the VGH era.” Significant concession funds were still involved in settling the related liabilities.
For example, Steward sought to end the exclusivity deal with Technoline – but it continued to favour the company, paying it some €5 million while it ran the hospitals. This was despite the fact that a report commissioned by Steward found that Technoline had overcharged them by around €1.2 million between June 2017 and April 2018 - €825,000 on the Gozo General Hospital, and €375,000 on Karin Grech Hospital.
However, investigators noted that Steward also “instituted other large scale nefarious arrangements which continued the diversion of concession monies to key players.”
Most noteworthy is Steward’s creation of a “political support fund” through the Swiss company Accutor AG in the summer of 2019.
Eight €125,000 payments from Steward to Accutor followed, totalling up to €1 million, and both Joseph Muscat and Konrad Mizzi signed consultancy agreements with the Swiss company soon after. Keith Schembri meanwhile became “either a client or a business associate” of Accutor’s owner and chairman Wasay Bhatti.
“Whilst the relationships between each of the three and Accutor have to date remained private or in Dr Muscat's case have been presented as independent from Accutor's connection to the Maltese Healthcare Concession, the probability of all three politicians forming independent relationships with the same foreign group of companies over the same time frame, without there being a common association, is considered so negligible that we exclude the possibility,” the investigators wrote.
Muscat would receive €60,000 over four payments debited to his Maltese bank account between March and June 2020 from two companies in the Accutor group – one of which, investigators said, had been set up and funded using €360,000 from the hospitals concession owner Bluestone Investments Malta Ltd.
In the days prior to the setting up of this fund, Steward’s Armin Ernst was in contact with Mizzi and the OPM seeking the former’s support for the transfer of ownership of Barts Medical School to Steward’s second largest institutional investor ‘MPT’ – Medical Properties Trust Inc. which is a New York Stock Exchange listed real estate investment trust.
“One possible interpretation of the evidence then is that Steward's requirement for assistance and consent in the matter warranted the creation of the political support fund for €1.0M,” the investigators wrote.