The case against Chris Fearne, Edward Scicluna and a host of others continued on Wednesday, as the court heard witness testimony about the work of a steering committee appointed to administer the implementation of the hospitals concession.
Fearne, Scicluna and a host of others – including current Permanent Secretary Ronald Mizzi and two former Permanent Secretaries Alfred Camilleri and Joseph Rapa – stand charged in connection with the now annulled hospitals deal.
The court continued to hear witnesses as it approaches a decision on whether there is enough evidence at prima facie level for the charges against the accused to stick. The two main witnesses of the day were David Galea and then-Projects Malta CEO William Wait, who is now the chairman of Malta Enterprise.
Galea was part of the concession steering committee with a particular involvement in negotiated with Vitals after they had been chosen as concessionaires. Asked who chaired the steering committee, Galea couldn’t provide much of an answer saying that there were many people involved.
He confirmed that his company – BEAT Ltd – had been engaged by Projects Malta. He could not, however, say whether he was even formally considered a member of the steering committee, but said that he would attend all of the meetings.
As it turned out, Galea said that he didn’t even have a formal letter of engagement to be appointed to this committee, even though he was paid for his involvement by Projects Malta.
Lawyer David Farrugia Sacco, who was leading the line of questioning, expressed frustration at this seeming disorganisation, commenting to the witness that even a band club has an established statute and president.
Galea testified that it was his understanding that the entity which had to check whether the concessionaire was ‘fit and proper’ was the evaluation committee – and not the committee he was a part of. He specified that the bidder had already been chosen before the negotiations committee came into the matter.
Lawyer Franco Debono argued that the evaluation committee – the members of which are among the accused – was tied to a lot of conditions that were imposed upon.
“They were the outcomes, but how to go about them is different,” Galea said. However, he agreed that there were these parameters imposed on them, and that the committee members were bound to follow those criteria.
Lawyer Ezekiel Psaila asked whether evaluation committee members had any discretion to vary certain weightings that were part of the brief that they were given. For example, the fit and proper test was weighted at just 5%. Galea replied in the negative – that the members could not change the weightings.
William Wait testified after Galea. He served as part of Projects Malta between April 2015 and June 2017, and said that Project Malta were the “administrators” of the concession. He clarified that he joined Projects Malta after the RfP had been issued.
He said that a team from Projects Malta was entrusted with the “land aspect” of the hospitals concession – there were squatters who had to be evicted, for example, and the blood bank which had to be relocated.
Debono referred to the magisterial inquiry, mentioning a passage where the inquiring magistrate said that Projects Malta had a peripheral role in the project. He asked whether the witness agrees with this statement.
“Project Malta’s role was to facilitate – but it was not expected to take decisions,” Wait said. Decisions on the project were taken by Cabinet after various recommendations made by various committees, he added.
Wait said that Projects Malta – prior to his involvement at the entity – had issued the RfP, but he disagreed with a suggestion that the entity was the ‘contracting authority.’ Lawyer Stefano Filletti asked therefore what role he thought Projects Malta had in the project. “We were the administrators of the project,” Wait said.
Wait said that this was Projects Malta’s first – and only – concession project. Prodded by Filletti again ask to what an authority is in terms of the public procurement process, if it issues and RfP and receives bids, Wait simply replied: “I can’t answer you,” but that he was just an administrator.
Moving onto the steering committee, Wait said that Projects Malta’s representatives on it did not update him on what was done – something the lawyers, and Magistrate Leonard Caruana, could scarcely believe.
Those representatives were appointed by Ronald Mizzi, Wait said. He was asked whether, as the CEO of Projects Malta, he had asked for updates from the Projects Malta representative from the meetings on the concession they attend. “No,” Wait replied, but he later clarified that he would seek “one-pagers” from his COO on certain matters such as this.
Two representatives from Price Waterhouse Coopers (PwC) also testified, as they both faced questions on their role in aiding Ram Tumuluri and the company Bluestone Ltd – which later became VGH Ltd – to prepare a presentation for the hospitals concession, and to submit their bid in the RfP.
Michel Ganado, a partner at PwC, was the first from the company to take the witness stand.
He explained to the court that Bluestone, through Tumuluri, was a client which had requested assistance through a foreign branch of PwC with preparation of a business plan for the operation of the Gozo General Hospital hospital, and then later to assist them with submitting the bid as part of the RfP process.
Debono asked the witness to focus on the onboarding process that PwC handled, and Ganado said that Tumuluri and Bluestone went through the company’s “risk management function” – which is a procedure to understand who the potential client is – and that gave a green light, allowing them to move forward.
He explained that Tumuluri had told them that the starting point was the MoU which was signed between Bluestone and the government, and that they had three months to present a proposal to the government of their plans for Gozo General Hospital.
Filletti then confronted the witness with what the NAO had concluded: that the tendering process had been “vitiated” because the MoU – signed before the RfP was issued – essentially catered for the tender.
“It’s subjective. I can’t give a factual answer – all I can say is that the MoU referred specifically to Gozo General Hospital,” Ganado replied.
Angelique Spina, a senior partner at PwC, meanwhile said that her job was to review and update things related to the business plan – ergo, to see that the inputs are aligned to what was requested and handling documents such as income statements, balance sheets, and cashflows.
“You had no red flags on Ram Tumuluri so you proceeded to work with him,” Debono suggested. “For me to have worked with him, then there were no red flags,” she said.
Lawyer Roberto Montalto asked why Deborah Chappell – one of the accused – had submitted the bid for Bluestone, and not PwC, but Spina is not aware as to why and that one of her colleagues would be better placed to answer as she was heavily pregnant at the time.
She said she remembers Tumuluri signing the documents at the PwC offices, but not the seals.
Spina also testified that she knew about the existence of the company VGH and that it was related to Bluestone: “To me it was an incorporation set up by Bluestone to respond to the RfP,” she said.
Both she and Ganado said that they did not testify before inquiring magistrate Gabriella Vella in her inquiry, and neither do they believe that anybody from PwC had been summoned to testify – although the inquiry itself shows that a Deborah Gatt from PwC was summoned to testify in the inquiry.
A third person from PwC – Lucienne Pace Ross – will be summoned to testify in the next sitting on Thursday about the company’s due diligence process to onboard Tumuluri as a client.
The case continues on Thursday.
Minute-by-minute coverage of the sitting can be viewed below.
14:01: Today’s sitting has come to an end – thank you for following this live commentary! The next sitting will take place tomorrow morning.
13:59: The magistrate is currently going through the list of witnesses and seeing if any can be struck off the list because questions that the defence had for them have already been answered. It appears that there are no more witnesses to be heard today.
13:51: Claudine Attard, also from PwC, has come onto the stand but the defence has no questions for her as they’ve been asked to the previous witness.
However, the Magistrate asks her to advise Lucienne Pace Ross that she is to testify in tomorrow’s sitting about the onboarding of Tumuluri as a client and to bring any letters of engagement between him and PwC with her.
13:46: Filletti asks what companies Bluestone Ltd had under its cap and in whose name the bid was done. Spina says she doesn’t know what companies were owned by Bluestone, but the bid was submitted for Bluestone.
Bluestone turned into VGH at the RfP stage, but this wasn’t incorporated by PwC, Spina sort of recalls. Filetti asks whether she know the relationship between Bluestone and VGH, to which Spina replies “for me it was an incorporation set up for the RfP.”
Spina's testimony ends there. The defence says they would like to summon Lucienne Pace Ross as she was responsible for onboarding Tumuluri as a client.
13:41: Angelique Spina, who is also from PwC – she’s a Senior Partner, is the next witness to testify. Her role was in the preparation for the document for Bluestone to apply for the RfP.
Debono asks about the onboarding process that PwC used to accept Tumuluri and Bluestone as a client, and she replies that this was in the hands of the company’s risk management department, led by Lucienne Pace Ross.
Her job, she says, was to review and update things related to the business plan – ergo, to see that the inputs are aligned to what was requested and handling documents such as income statements, balance sheets, and cashflows.
Debono asks whether anybody from PwC testified to the inquiring magistrate, but Spina says she doesn’t know.
“You had no red flags on Ram Tumuluri so you proceeded to work with him,” Debono suggests. “For me to have worked with him, then there were no red flags,” she says.
Roberto Montalto asks why Deborah Chappell had submitted the bid for Bluestone, and not PwC, but Spina is not aware as to why. She says she remembers Tumuluri signing the documents at the PwC offices.
13:32: Filletti tries to ask on the NAO’s conclusion that the tender was vitiated because of the signing of the MoU prior to the tender being issued, but the Magistrate feels that the witness isn’t the person to answer this.
Filletti convinces him to allow the question. Ganado answers that it’s “subjective.”
“I can’t give a factual answer – all I can say is that the MoU referred specifically to Gozo General Hospital,” he says.
That brings Ganado’s testimony to an end.
13:22: Debono asks whether a representative of PwC had testified in magistrate Gabriella Vella’s inquiry had testified, and Ganado says that nobody had testified.
He now asks about the 2014 MoU between the government and the people behind Vitals. Ganado says that they knew about this, because Tumuluri himself had told them about its existence, saying that it bound them to present a presentation on a Public-Private concession for the hospitals within three months.
Magistrate Caruana is the one asking the questions now, and he asks whether in his mind the agreement was finalised. “Our understanding was that it was finalised,” Ganado says.
13:15: Ganado says that the company Bluestone was a client who had requested assistance with preparation of a business plan for the operation of a hospital, and then later to assist them with submitting the bid for the concession.
He says that the first approach was from a foreign branch of PwC in October 2014, who had said they had a client who wanted help with putting together a presentation for the operation of Gozo General Hospital. The contact person for Bluestone was Ram Tumuluri, he says.
Debono wants the witness to focus on the onboarding process that PwC handled.
Ganado says that the process went through the company’s “risk management function” – which is a procedure to understand who the potential client is – and that gave a green light, allowing them to move forward.
13:10: Michel Ganado, a partner with Price Waterhouse Coopers (PwC), is the next to testify. He seeks the court’s permission to break client privilege. Lawyer Roberto Montalto is not particularly impressed with the request... “privilege is for priests and lawyers,” he says.
The Magistrate takes a couple of minutes to consider the matter and exempts him from professional secrecy.
13:05: John Valenzia, also from Projects Malta, is the next witness – but he doesn’t even need to take the oath. The defence says that they’ve gotten the answers on the questions they want with regards to Projects Malta, so they don’t need him to testify.
The same can be said about another witness, Eman Schembri who was the Chief Operating Officer of Projects Malta.
Both of them depart the courtroom without having to testify.
13:02: Filletti asks whether Wait had ever attended any such meetings and he says he isn’t sure. The lawyer therefore asks how he could know such information, to which the witness says that he used to request a “one-pager” from his Chief Operating Officer.
Wait’s testimony comes to an end.
12:57: Wait says that Projects Malta – prior to his involvement at the entity – had issued the RfP, but he disagrees that the entity was the ‘contracting authority.’ Filletti asks therefore what role he thought Projects Malta had in the project. “We were administering the project,” Wait says.
Wait says that this was Projects Malta’s first concession project. Filletti again asks in terms of the public procurement process, if an authority issues and RfP and receives bids, what does that make it?
“I can’t answer you,” Wait replies. He adds that he was simply administering the project. He replies to another question and says that Projects Malta’s representatives on the steering committee did not update him on what was done.
Those representatives were appointed by Ronald Mizzi, Wait says. He is asked whether, as the CEO of Projects Malta, he had asked for updates from the Projects Malta representative from the meetings on the concession they attend. “No,” Wait replies.
The Magistrate chimes in with a question now, and asks whether these representatives had an obligation to follow-up or report to someone on the contents of these meetings. “Yes and no,” Wait says.
What was expected were “work schemes”, and some of these were allocated to the entity – some such as evicting squatters on the land, relocating the blood bank, and so on, he says.
12:50: Debono cites from the magisterial inquiry, referring to a passage where the inquiring magistrate says that Projects Malta had a peripheral role in the project. He asks whether the witness agrees with this statement.
“Project Malta’s role was to facilitate – but it was not expected to take decisions,” Wait says. Decisions on the project were taken by Cabinet, he adds.
12:45: Wait is asked whether he knows who had prepared the legal elements of the RfP, but he replies that he doesn’t.
He says that David Galea was the person coordinating the steering committee on the project. Wait says that he however did not attend any of these meetings himself. Farrugia Sacco asked Wait how he knew that David Galea had coordinated this committee – and this prompts Wait to correct himself: it was Konrad Mizzi’s ministry’s Permanent Secretary Ronald Mizzi who chaired the steering committee.
David Galea chaired the contracts drafting and negotiating committee, Wait clarifies. He says that his involvement in this project was limited, and that there were a bulk of committees which did the work on it.
Debono asks who Projects Malta’s lawyers were, and Wait replies that it was Mifsud Bonnici & Associates.
12:38: William Wait is the next witness to take the stand. He is the chairman of Malta Enterprise.
Lawyer Jonathan Thompson is the first to ask questions. He is asking on behalf of Kevin and Kenneth Deguara.
Wait explains that he was part of Projects Malta between April 2015 and June 2017, and that Project Malta were the administrators of the concession. He joined Projects Malta after the RfP was issued.
12:34: Magistrate Caruana returns to the courtroom at 12:30 on the dot. He is greeted by an empty courtroom save for four journalists. The lawyers and their clients filter back into the courtroom and we can get back underway.
11:53: Galea’s testimony comes to an end – we’ve got six witnesses left, but Magistrate Caruana suggests a bit of a break for lunch before proceeding.
The sitting therefore is suspended until 12:30pm.
11:48: Lawyer Stefano Filletti quotes from the Auditor General’s testimony and his report, where his office had heavily criticised the sidelining of the Health Ministry in the hospitals concession. Filletti notes that the NAO had alluded to a schism between the Energy and Health Ministries.
Galea however says that at the time the ministries were joined, and says that health officials were involved as he did not have the necessary medical expertise.
He mentioned Dr Stephen Zammit, who led Karin Grech Hospital, and Dr Nadine Delicata, who led the Gozo General Hospital – both of them eventually ended up working with Vitals.
Lawyer Ezekiel Psaila asks Galea about a ‘pass mark’ for the 'fit and proper' element of the project, and whether they were established within the RfP, and if so, by who. Galea says that he cannot remember. The document is checked, and Galea confirms that it was weighted at 5%.
11:29: The concessionaire was paid for the health service, which for the first two years was to keep things going after which the concessionaire was meant to start building hospitals. Then there were payments for medical services and the overall management of the government properties, Galea explains when asked about the payments to the concessionaire.
Galea says he did not testify in the magisterial inquiry about the hospitals deal. He did testify to the NAO, though.
He is asked about a Project Initiation Document that he had penned. The report focused on a work breakdown structure of the project, Galea says. The report looked at the concession across the board, and it was requested by Projects Malta.
Galea says he hadn’t seen any other bid in relation to this project, and neither was any other bid discussed in his presence.
11:10: Galea says that he understood that the entity which had to check whether the concessionaire was ‘fit and proper’ was the evaluation committee – and not the committee he was a part of.
He again specifies that the bidder had already been chosen before the negotiations committee came into the matter.
Lawyer Franco Debono argues that the evaluation committee – the members of which, lest we forget, are among the accused in this courtroom – was tied to a lot of conditions that were imposed upon.
“They were the outcomes, but how to go about them is different,” Galea says. However, he agrees that there were these parameters imposed on them, and that the committee members were bound to follow those criteria.
Galea agrees, but draws a parallel: “I can tell a doctor to do an eye surgery, but I’m not going to be the one to tell him how to do it.”
11:00: The constitution of this committee is under question: Galea says he didn’t even have a formal letter of engagement to be appointed to this committee, even though he was paid for his involvement by Projects Malta.
Farrugia Sacco is frustrated at this seeming disorganisation as he comments that even a band club has an established statute and president.
Galea is asked about meetings that the committee had with banks, and he replies that there weren’t any meetings with local banks but there were challenges tied to the financing of the project. The plan was, Galea continues, that project finances itself without needing guarantees from third parties.
That ultimately didn’t happen: Bank of Valletta had lent Steward €36 million with the government acting as the guarantor for the loan.
10:45: Both the witness testimonies so far today have been about seriously specific parts of the hospitals concession. What’s under the microscope at the moment is the exact role of that this steering – or negotiations – committee had in the concession agreement.
Galea, who is still testifying, explains the technical requirements that had be established by this committee. He is asked how this committee studied the concessionaire, and whether they evaluated the concessionaire – ergo, Vitals – themselves.
Galea clarifies that the concessionaire at that point had already been chosen – he was tasked with negotiating with them.
10:35: Farrugia Sacco asks about the RfP, and Galea replies that he had some contribution in the commercial and financial aspects of the document. Evaluation criteria and payment methods were two of the areas he contributed to.
He names George Gregory – from auditing firm RSM – as having helped him on these points.
The lawyer asks who prepared the terms of reference for the RfP. Galea says that he had an input in this document.
10:28: David Farrugia Sacco is the lawyer asking the first set of questions, and he’s focusing about Galea’s role on this steering committee. Galea explains that he, or rather his company BEAT Ltd, was engaged by Projects Malta to be on this committee.
He says that he used to attend the meetings, and it was Permanent Secretary Ronald Mizzi who used to chair the meetings. He’s not too sure about this though, as this committee apparently didn’t even have a formal terms of reference.
10:23: David Galea is the next witness. He’s known to have been a close friend of Konrad Mizzi and was part of the negotiations committee which led talks with Vitals – and which the NAO found had failed to retain any documentation about its work.
Galea explains his role in the matter to the court, saying his principle role was in talks with Vitals and that he had a small input in the drafting of the RfP.
10:17: Another email has been exhibited. Micallef – who is specialised in business operations and works in the private sector – was on a steering committee with regards to the privatisation of the hospital. David Galea – from BEAT Group – had approached him to form part of this committee.
Micallef was only on the committee for around five months and he was responsible for taking the committee’s minutes amongst other things.
10:03: Joseph Micallef is the first witness. The line of questioning for him is focusing on the Request for Proposals (RfP) which had preceded the tender for the hospitals concession being opened and eventually awarded.
09:49: NAO Auditor General Charles Deguara is the first witness today. He has brought with him a document – an email from State Advocate Chris Soler – to be exhibited in the case at the request of lawyer Stephen Tonna Lowell, who is representing Fearne and Scicluna.
09:44: Good morning and welcome to this live commentary. Court is in session, with Magistrate Leonard Caruana leading the way as always.