Chris Cardona did not read a Memorandum of Understanding with Vitals Global Healthcare before signing it back in 2014, the former minister testified on Wednesday.
Cardona, who served as minister between 2013 and 2020, said he signed the MOU and others like it because he was “told to do so”.
“I signed it and that’s it,” he said of the MOU, which he said he only saw on the day of it being signed and again when he was questioned about it by the National Audit Office, years later.
He said there was nothing unusual about that, as MOUs were not legally binding and preceded advanced due diligence work. He signed several such MOUs as minister and often did not know much about them, he testified.
The MOU with Vitals focused on a proposal to develop a hospital and medical school in Gozo and it was allowed to lapse because the government decided it wanted a “total revamp” of the national healthcare system, Cardona said.
That MOU preceded a public procurement process to revamp and run three state hospitals – a process awarded to the MOU signatory, Bluestone Investments through its subsidiary Vitals Global Healthcare.
But Cardona said he had nothing to do with the broader concession and only knew what the media has reported about it.
The National Audit Office had concluded in 2020 that Vitals should have been barred from bidding for the hospitals deal, given its MOU with the government.
That deal was annulled by a court last year, which concluded it was tainted by fraud. A magistrate’s probe into the deal led prosecutors to charge former prime minister Joseph Muscat with corruption, bribery and money laundering in the deal.
Former minister Konrad Mizzi and Muscat’s former chief of staff Keith Schembri are among others facing criminal charges.
Summoned to testify in the case on Wednesday, Cardona recalled top Malta Enterprise official Mario Galea telling him to “just sign the MOU”.
“They told me we have to sign this MOU. It was to set up a sustainable health system and its main drive was to attract medical tourism. It referred to a Gozo Medical Complex. I signed it because I was responsible for Malta Enterprise.”
Cardona said he believed the MOU was signed at the Office of the Prime Minister but categorically excluded having ever discussed it with Muscat, the prime minister at the time.
“If he were, I would recall,” Cardona said.
Apart from Cardona, the court heard testimony from a number of top officials at PWC, which was engaged by Bluestone, Vitals and Steward Health Care, which took over the concession, on various occasions between 2014 and 2022.
PwC representatives testify
PwC was initially engaged by Bluestone to work on its business plan for the MOU signed with the government, then again to help draft the company’s bid for the hospitals concession.
In their testimony, company officials emphasised that their work was purely advisory, to “help” clients.
“We were just the modellers”, director Angelique Spina said. “At the end of the day, the model belongs to the client.”
That characterisation drew a note of exasperation from defence lawyers, who said it was not clear what the firm was paid to do.
“Our job is not to verify [documents],” the witness replied. “We updated numbers in an Excel sheet concerning the financial package. And we handled project management.
When pressed on the firm’s work – “even I could input numbers into Excel,” defence lawyer Stefano Filletti remarked – the witness said the sheet was a complex one with several figures that required expertise.
The client was happy with the work done and ultimately submitted that document, she added.
Ganado representative testifies
A representative of legal firm Ganado Advocates also testified. The firm was engaged by Projects Malta to advise on how to award an eventual hospitals concession, and advised the government that it should do so through a public request for proposals, lawyer Antoine Cremona testified.
Privatising the hospitals could not be done through a simple MOU, Cremona said, and the firm considered the MOU that the government had signed with Bluestone to be a “non-entity”.
“The only issue was that it could have given some undue advantage to third parties,” he testified. Ganado raised that issue, he said, but stopped short of advising the government to exclude the company from the project.
The government went ahead and prepared a public procurement process for the privatisation deal, Cremona said, and asked Ganado for input on the concession’s wording.
Cremona said that the firm had various concerns about the way in which an initial draft of the concession was amended by the government, and circulated a second draft in July 2015.
It never got a reply to that email and had nothing else to do with the project, Cremona said.
As it happened
Case adjourned
1.58pm That’s all for today’s court session. The next sitting is scheduled for September 23 and is likely to be a long one – eight witnesses are due to testify.
We’ll have a summary of the day’s key points of testimony available at the top of this article very soon. Thank you for having joined us for this live blog.
Excel sheet inputting
1.54pm The witness is on the backfoot here – defence lawyers are pushing her to explain, in tangible terms, what exactly PWC did for Bluestone. What does “modellers” mean, they want to know.
The witness says that financial models were highly complex and that their job was to ensure numbers provided tallied.
“We were updating the financial package numbers in the Excel sheet. We made sure that the numbers reflected the work. Another task was project management, which although sounding simple, is not simply a checklist,” the witness says.
That prompts some derision from defence lawyer Stefano Filletti, who says “even I could add numbers to an Excel sheet.”
It was a very complex sheet, the witness replies, and one that required expertise.
When it came to Steward, their work was more focused on accounting issues. Steward had in-house accountants but required more technical expertise, she says.
'We were just the modellers'
1.28pm PWC director Angelique Spina testifies. Spina helped with a number of the company’s assignments with Bluestone. She repeats what her colleagues said – that initial onboard raised no red flags, that the company prepared various documents at the company’s request, and that their contact person was Ram Tumuluri.
Spina says that the brief concerning the RFP was much bigger in scope and involved significant capital expenditure.
But PWC were “just the modellers”, she says. “At the end of the day, the model belongs to the client.”
PWC partner lists Bluestone work
12.56pm The next witness is PWC partner Lucienne Pace Ross She recalls the firm looking up Mark Pawney and Ram Tumuluri as part of initial KYC (Know Your Client) procedures when engaged by Bluestone, but found no red flags.
The first engagement letter was to help Bluestone draft a business plan. The second was to help the company with its RFP submission. Then in July 2015 they were asked to help the company update its financial model, and in May 2016 they were asked to review a model prepared by the company’s financial advisors.
In July 2016 they were asked to carry out a high-level assessment of the concession and in November 2022 they were engaged by Steward Health Care [which effectively bought out Vitals] to help update financial projections.
Those weren’t the only jobs PWC did for Bluestone and later Steward: it also provided technical accounting advice and tax advisory services to them, the witness says. Its two last assignments were not executed as PWC terminated its services to the client after a court annulled the hospitals concession.
MOU was 'a non entity' to them
12.45pm Defence lawyer Stefano Filletti wants to hear more about Ganado’s view of the MOU. Cremona says the firm “gave no weight” to the MOU, as they believed the concession should be granted through a public procurement process. The MOU was a “non entity”, Cremona says.
“The only issue was that MOU could have given some undue advantage to third parties.”
Answering a question by defence lawyer Jason Grima, Cremona says he is not aware that Projects Malta “wanted to cancel that MOU”.
That's all from this witness.
Concerns about MOU
12.38pm Ganado worked on the project for five-and-a-half months and saw nothing illegal about it. The firm or its representatives was not asked to testify in the magisterial inquiry into the case.
The witness highlights issues which “did not make legal sense” to them. One was the fact that the concession could be extended. Another concerned the MOU – other firms could contest it, he said.
The witness is asked if they you advised that the company signing the MOU [Bluestone/Vitals] should be excluded from the RFP. “No, but we said that it could give rise to contestation,” Cremona replies.
Ganado never met Muscat
12.26pm Answering questions from defence lawyer Giannella de Marco, the witness says Ganado was not involved any more in the case after that July 24 email.
Pressed by De Marco, he says Ganado was also engaged by the government to work on arbitration proceedings involving the [now annulled] concession.
He says, when questioned, that Ganado never met Joseph Muscat to discuss the concession.
Ganado's advice on concession: 'No MOUs'
12.15pm Cremona says their letter of engagement with Projects Malta was signed in 2015. There was just one letter of engagement.
Ganado was informed of the MOU in the first phase of their legal advice, he says. But in their view, the concession had to be opened to public bids as part of a competitive RFP process. “No MOUs,” he says.
The Irish expert engaged to assess EU law also believed that was the best practice. And that advice was taken up.
'Great sense of haste'
12.10pm Ganado was engaged by Projects Malta but dealt with their instructing counsel, Mifsud Bonnici. The company was paid for its work, Cremona says.
The magistrate wants to know more about the “great sense of urgency” surrounding the project.
Cremona recalls David Galea pressing, but says that more generally “there was always a sense of haste in the project.”
Ganado ghosted after second email
12.05pm Ganado sent a first draft of the concession text to Mifsud Bonnici, Galea and other team members on July 11.
“They came back with substantial amendments,” Cremona recalls. Those amendments were “not viable” in Ganado’s view, he says.
Ganado sent a second draft on July 24. They never received a reply and never heard anything more about the project, Cremona says. There was one other email on July 25 regarding a labour supply agreement, but it had nothing to do with the procurement team.
“We were never involved in evaluation, negotiations with bidders or adjudication,” he emphasises.
Advice seemingly accepted
12pm Cremona says the firm was never explicitly told that the government had accepted its advice to issue a public call for the concession, but that they surmised that after Mifsud Bonnici contacted them in March to give them points to include in the RFP.
Other firms were also working on the project, he says, recalling that RSM [an audit firm hired as consultants on the project and headed at the time by George Gregory] had sent a draft ahead of the March 27 RFP issue.
Towards the end of May, Ganado was again approached by Mifsud Bonnici and David Galea of BEAT [another consultancy firm engaged]. They were asked to draft the legal side of the concession agreement, to provide government with a legal backbone when negotiating throughout the summer.
Ganado lawyer testifies about RFP advice
11.52am Lawyer Antoine Cremona is the next witness. He works for Ganado Advocates, who provided services to Projects Malta and Health Ministry ahead of the RFP.
The firm provided services between February and July 2015, he recalls. Ganado partner Stephen Attard led that effort and the work came after Attard was approached by lawyer Aron Mifsud Bonnici to help with a foreign investor in the health sector.
Their job was to work on a public service concession.
“Our role was to give advice on what legal framework was needed for the investment,” Cremona recalls. “It was not a real estate deal, but it needed public procurement.”
He notes that the EU had at the time issued a directive regulating public service concessions. That directive had not been transposed into Maltese law yet, but Ganado advised that it should still be taken into consideration. An Irish expert was tasked with providing advice on that.
Mifsud Bonnici gave them a presentation about the project on February 12, Cremona testifies.
“We got information in bits and pieces. We were still trying to understand what the project was about. It concerned the state hospitals.”
How many hospitals, asks AG lawyer Rebekah Spiteri.
“I cannot answer on the spot, because I don’t recall exactly,” the witness replies.
He recalls Mifsud Bonnici and other consultants involved in the project acting with “a great sense of urgency”. But he also notes that it’s not unusual for clients to have pressing deadlines.
PWC 'had nothing to do with audits'
11.39am Questioned by defence lawyer Jason Grima, Ganado says that he did not testify in the magisterial inquiry into the Vitals deal and says nobody spoke to him about the case.
He also denies that PWC had anything to do with Bluestone/Vitals auditing.
“We were never involved in audit accounts,” he says. Nor did PWC see company accounts before they were signed by the company’s auditor.
That’s all from this witness.
Project was feasible 'at the time'
11.36am Lawyer Vincent Galea again asks the witness whether the business plan presented was realistic.
The magistrate steps in. Was the project feasible? Was it doable?
“At that point in time, yes,” the witness says.
He denies [following a question by Galea] that police searched his offices.
Four volumes of business plan documents
11.28am The magistrate takes over questioning. How did PWC help Bluestone with its business plan and RFP submission, she asks the witness. Ganado recalls having to look into Barts for their work on the MOU business plan, as well as into the potential of attracting medical tourism.
He emphasises the “very intensive” work PWC did over a two-month period.
Bluestone presented four volumes of documents to the government and PWC helped put those together, he says.
PWC gave Vitals tax advice
11.16am Answering questions from defence lawyer Stefano Filletti, the witness says Vitals Global Healthcare was incorporated into Bluestone’s structure “later down the line”.
He is asked if PWC provided tax advice to Vitals after it won the concession. The witness says a colleague of his is better placed to answer that, as he was not involved.
“We helped the client make a presentation to the government. It took place at Castille and I don’t recall exactly who was present,” the witness says.
The presentation concerned Bluestone’s MOU pitch for Gozo, he says, and it took place in January 2015.
Filletti pushes the witness to state what other work PWC did for Bluestone and Vitals.
He says that in July 2016 it helped Bluestone Special Situations with their financial planning and continued to provide services “over time”.
Did PWC also provide services to Vitals, the lawyer asks.
“Eventually yes, but I’m not the person best placed to answer that. We assisted with project financing,” the witness says. That work concerned tax advice and reviewing tax advice by a UK company that was engaged by the client.
Distinguishing the two
11.05am Defence lawyer Giannella de Marco pushes the witness to distinguish between the MOU and RFP work.
“The MOU was limited to Gozo. The RFP was not. It was a totally different thing,” he says. He confirms that the MOU had expired by the time the RFP work was done. He also confirms that PWC needed a second engagement letter when it was asked to work on the RFP. Tumuluri was their contact throughout.
And you saw nothing untoward when working on both these engagements, the lawyer asks the witness.
“No,” he replies.
Defence lawyer Vince Galea asks the witness if PWC noted any red flags when taking on Bluestone as a client. Ganado says they did not.
The NAO concluded that the projections in the proposal was not realistic, Galea tells the witness.
“It wasn’t our business plan, it was the client’s,” Ganado replies. “Our job was to bring business projections together.” Galea asks if PWC handled the financials.
“We helped the client make financials,” Ganado replies. He says that the company discusses financials with clients and points out what it believes is not appropriate, “but at the end of the day it’s for the client to decide what plan to follow.”
Galea asks the witness: was there anything you didn’t agree with but signed anyway?
“We didn’t sign anything,” the witness says. “We only helped the client issue the business plan.”
He reveals that PWC did further work for Bluestone after it won the concession. That work concerned helping the company source financing. But the witness says he was not involved in that.
PWC helped with both MOU and RFP submission
10.56pm PWC was tasked with helping to design that business plan.
Bluestone’s ultimate beneficial owner was Mark Pawley but his designated agent was Ram Tumuluri, Ganado recalls. Tumuluri was their point of contact.
Bluestone brought over doctors and an architect to see the place, he says.
Ganado says he saw the MOU after they were engaged by Bluestone. “I recall that it was specifically for a Gozo medical complex and they had to present a feasible business plan by January 2015. It was about Gozo alone,” he says.
Then when the RFP [for the actual hospitals concession] was issued, Bluestone again approached PWC for help.
“We were asked to provide input. Again, doctors and experts came from abroad and PWC met these experts,” the witness recalls.
The Gozo business plan was submitted in January 2015, he says. Then came the RFP work, which had a broader dimension including St Luke’s Hospital etc.
Ganado is asked when the company was paid. He says it issued an invoice after every engagement. Those were paid by Bluestone.
Bluestone approaches PWC
10.50am Michel Ganado is a management consultant and partner at PWC. He is asked about his company’s role in the hospitals concession. He tells the court that they were contacted by Bluestone [Vitals’ parent firm] in 2014.
They had an MOU with the government to present a business plan for Gozo Hospital, the witness recalls.
Why was MOU signed?
10.45am Cardona is again asked why the MOU was not followed up.
Again, he reiterates that it did not match the government’s plan for the health sector.
The magistrate interjects. So why was it signed?
Cardona says the MOU was not legally binding and was needed “to know where it could lead to.”
“I think at that stage there was no due diligence, or enhanced due diligence. That’s the norm.”
Can you exclude that Dr Muscat was present at the signing, the magistrate asks Cardona.
“If he were, I would recall,” Cardona says.
He is asked what he knows about the subsequent Request for Proposals.
“Only what I know from the media,” Cardona says.
And that’s all from the former minister. The next witness, Michel Ganado, is called.
'I never spoke to Muscat about MOU'
10.43am Joseph Muscat’s lawyer Vince Galea questions the witness. The experts seem to be saying that MOU was somehow illegal or illicit, the lawyer tells the witness. Did you see anything of the sort, anything untoward?
“No, no, no. Nothing at all. Absolutely not.” “I never spoke to Dr Muscat or anyone about this MOU,” he adds.
Where was the MOU signed?
10.42am Cardona says he believes the MOU was signed at Castille and “definitely not” at his ministry. He says he’s not sure if anyone else was present for the signing.
He is asked what the practice is for such signing ceremonies.
“Some MOUs were signed abroad, or at the ministry,” he says. “People from my ministry probably spoke to me [about it]. I had two permanent secretaries, Pauline Mamo and Nancy Caruana. But I cannot with certainty say whether any other public officials were present at the signing.”
“As for MOU, what I know is that it did not remain in force. And I don’t recall if I signed anything else in relation to it. I don’t have any access to emails now.”
'They told me we have to sign this MOU'
10.39am Cardona looks closely at the MOU. It’s dated 10/10/14.
“I saw it on the day I signed it and when I testified before the NAO [National Audit Office], he says. I don’t have any copy.”
[The NAO concluded that Vitals should have been excluded from bidding for the hospitals concession as the MOU they signed months prior suggested “collusive behaviour” between them and the government].
So you just went and signed, Cardona is asked? “Yes. They told me we have to sign this MOU. It was to set up a sustainable health system and its main drive was to attract medical tourism. It referred to a Gozo Medical Complex. I signed it because I was responsible for Malta Enterprise.”
He reads from the MOU. “The investors are interested in ..construction of hospital and medical school”.
“It was tied to those deliverables and solely Gozo,” Cardona tells the court.
“Government later said that it wasn’t interested in furthering that MOU because it didn’t fit into government’s plan to reform the sector. I believe that ME later withdrew it.”
Vitals MOU 'pegged to deliverables'
10.31am Cardona speaks about the Vitals MOU.
“If I recall well, this one was pegged to deliverables. And it was not renewed because it did not lead to what the government wanted.”
Cardona expands on that. “It only related to Gozo and not St Luke’s [hospital] etc. The government wanted a total revamp of the system.”
Cardona professes ignorance
10.30am Cardona tells the court he was only involved in the MOU’s signing, as he was politically responsible for Malta Enterprise. He recalls Mario Galea [a top Malta Enterprise official who would go on to become its CEO] telling him to “just sign the MOU”.
“I would have many MOUs to sign and some were not followed up,” he says. Their aim was to entice foreign investment to Malta, he says, before professing ignorance.
“I don’t even know what all these MOUs were about,” he says.
Cardona: I only saw MOU once
10.24am Cardona is keen to emphasise that he was “explicitly” asked to testify about the Memorandum of Understanding with Vitals [which he signed as Economy Minister], and not the hospital concession subsequently awarded to the company.
Cardona tells the court he’d like to take a look at the MOU as he “only saw it once”. “I signed it and that’s it,” he says of the 2014 document.
The court obliges, and Cardona is handed a document from one of the six boxes of evidence resting in front of the magistrate's bench.
Live blog
10.20am Good morning and welcome to this live blog. Magistrate Rachel Montebello enters the courtroom and the court is in session.
We're going straight into it, with Cardona as the first witness.