Updated 6.15pm with comments from Joseph Muscat

A Swiss firm that paid Joseph Muscat as a "consultant" had a secret backdoor deal to receive 30% of Steward Health Care's dividends from its “fraudulent” hospitals deal. 

It is the first time that details of the secret agreement have become known.

A magisterial inquiry into the failed hospitals deal which led prosecutors to file charges against Muscat and dozens of others only mentions it in passing.

The secret deal granted the Swiss-based Accutor participation rights in Steward’s Maltese operation – essentially a share of a company’s profits through dividends and earnings.

Muscat’s government facilitated the transfer of a €4 billion public contract for Steward to run the St Luke’s, Karin Grech and Gozo hospitals in February 2018, after the previous concessionaries Vitals Global Healthcare crashed out.

Armin Ernst, who led Steward Malta after having served as CEO of its predecessor Vitals, signed off on the secret profit-sharing deal with Swiss firm Accutor Consulting one year later, in April 2019. 

A 30% cut on dividends from Steward Malta were to be paid to Accutor Consulting.

E-mails obtained by OCCRP and shared with Times of Malta indicate the profits were intended for Pakistani businessman Shaukat Ali, who had previously held a hidden interest in Vitals Global Healthcare.

Ali faces charges of forming a criminal organisation with Muscat, Accutor Consulting owner Wasay Bhatti and others in connection with the “fraudulent” award of the hospitals contract.

Shaukat Ali was charged with corruption and money-laundering in July. Photo: Jonathan Borg.

E-mails indicate that the "substantial debts" Steward Malta faced meant no dividends were paid out prior to a court terminating the hospitals contract in 2023. 

Steward Malta did however pay over €7 million to Accutor between 2018 and 2020 for "political consultants", "jet expenses", "lobbying" and "payroll services".

Muscat made 'consultant' months later

Nine months after the secret profit-sharing agreement was signed, Muscat was put on a €15,000-per-month consultancy by Bhatti. 

Muscat received four payments totalling €60,000 in payments, two of which came from Accutor Consulting, the same company that was a party to the agreement.

Investigators suspect the consultancy contract was used as cover to pass on hospitals deal kickbacks to Muscat.

The ex-prime minister, however, insists the consultancy contract has no connection to the Malta deal. 

The profit-sharing agreement also gave Accutor Consulting 30% of the equity value if Steward Malta was sold.  

The profit-sharing agreement via Accutor Consulting is dated April 2019, nine months prior to Joseph Muscat's consultancy agreement with Accutor owner Wasay Bhatti.

In a November 2022 e-mail, Ali wrote that he would be open to receiving payments that would help “consolidate” his position via an “exit clause” of “100M,” without giving further detail. 

Muscat’s government had signed a deal with Steward, guaranteeing it a €100 million government payout if the hospitals contract was terminated.

A court order to annul the hospitals deal also struck down that side deal. Steward and the Maltese government are currently locked in international arbitration proceedings over that €100 million payment. 

Ali and Bhatti declined to comment when contacted about the secret profit-sharing agreement, citing a court-imposed gag order.

Muscat and Steward did not respond to a request for comment.

However, in later comments to Times of Malta following publication, Muscat's lawyer said the ex-prime minister is "completely extraneous" to the agreement and had no knowledge of the arrangement. 

Muscat's lawyer said reference in the criminal inquiry to the agreement "does not pertain" to his client.

"It is also worth noting that publicly available information shows that Accutor Consulting AG is not owned by the individuals in question [Shaukat Ali and his son Asad], raising doubts about their ability to enter into agreements through this company," Muscat's lawyer said. 

‘Delete these files immediately’ 

A four-year criminal inquiry into the hospitals deal makes fleeting references to a participation rights agreement, however, investigators appear to have been unable to unearth the full details of it.

In June 2019, according to the inquiry, Steward Malta boss Armin Ernst forwarded “drafts” of two agreements to a Steward employee. 

Ernst instructed the employee to “Please delete these files immediately!!!!” after printing them.

The inquiry report speculates that Ernst may have been keen to delete the files as they would have revealed the existence of the “unnamed participant” granted rights over dividends from Steward Malta.

Shaukat Ali chased Steward Malta boss Armin Ernst for payments under the participation rights agreement.

Investigators described Accutor as a central link for suspect payments and relationships made between key players in the hospitals deal, including Muscat, his chief of staff Keith Schembri and ex-minister Konrad Mizzi.

Times of Malta has previously reported how Steward paid Accutor roughly €7.6 million between 2018 and 2020, with invoices and e-mails indicating the payments were for “political consultants,” “jet expenses”,  “lobbying” and "payroll services.

According to testimony by former Accutor director Kamal Sharma, the payments to Muscat stopped abruptly after Accutor’s bankers flagged them as suspicious. 

From Switzerland to Delaware

As regulatory and media attention grew on Accutor in 2021, Ali’s son Asad asked Ernst if the profit-sharing agreement could be shifted away from the Swiss company “at the earliest”.

A new agreement appears to have been drawn up, with the cut on the Malta dividends instead assigned to a Delaware-based company called K4C LLC. 

The participation rights agreement was shifted away from Accutor Consulting in 2021.

In November 2022, Ali emailed Ernst, requesting payment under the profit-sharing deal, “in order for us to keep receiving funds as everyone else is getting paid from this operation”.

Ali noted that the request for their money was an “ongoing embarrassing subject".

Ernst responded saying he would need to discuss it with Steward US boss Ralph de La Torre, but noted that “no dividends are being taken out of Malta at this stage” due to the “substantial debts” that had been accumulated.

In February 2023, a civil court terminated the hospitals contract on fraud grounds.

An appeal by Steward was dismissed in October 2023. 

While the original court decision had pinned the blame for the "fraudulent" deal on Steward, the court of appeal said it also believed there was "collusion between Steward and senior government officials or its agencies".

Steward’s US division filed for bankruptcy in May 2024.

This article was produced with support from OCCRP and the Daphne Caruana Galizia Foundation.

In a reaction, the shadow minister for health, Adrian Delia, said the latest developments further confirmed fraud in the granting of the hospitals concession. They showed secret manoeuvres to rob the people of Malta and Gozo, undermining their health. 

Delia said the Nationalist Party would continue to seek the truth and insist on the reimbursement of the €400 million issued as part of the hospitals deal by the government.