It has become a pattern: the government’s PR machine hypes up a big private investment as a good deal for the country only for the promises to remain largely unfulfilled or for a serious catch to emerge. Jacob Borg reports.
St Luke’s hospital.Vitals Global Healthcare
Date officially announced: June 2015
Promised investment: €220 million
Promised completion dates: Various
The commitment
After a request for proposals, former Health Minister Konrad Mizzi had said the concession for Vitals Global Healthcare (VGH) to run three public hospitals would create 650 direct and indirect jobs.
Apart from refurbishing St Luke’s, Karen Grech and the Gozo hospitals, VGH was also meant to build a new medical campus in Gozo which would start receiving students in September 2016.
Dr Mizzi said the VGH deal would allow citizens to benefit from a modern healthcare infrastructure.
The catch
A memorandum of understanding was secretly signed with Oxley Group, the Singaporean equity firm which set up VGH, before the request for proposals had even been published.
Doubts were raised about who actually owned VGH, as the ownership structure of the local companies led to the secretive jurisdiction of the British Virgin Islands.
Mark Pawley, Oxley Group’s CEO, admitted to this paper that it was the first healthcare venture for the ‘global’ healthcare company.
Refurbishment works on the hospitals proceeded at a snail’s pace, amidst reports that VGH was struggling to raise finances.
Works on the Gozo medical campus only began a few months before the June 2017 election. They ground to a halt soon after.
A promised helicopter service between Gozo and St Luke’s hospital never really took off, save for a few flights.
READ: Why were Vitals payments doubled, days before its hospitals sale?
This newspaper has revealed that VGH missed several of the milestones it had committed itself to in the concession agreement.
On December 21, Prime Minister Joseph Muscat tweeted that US firm Steward Healthcare had chosen Malta for its first international investment. Health Minister Chris Fearne said the deal to buy out the VGH concession had been sealed. Yet, a few days later The Malta Independent on Sunday quoted a VGH spokeswoman as saying discussions with Steward were still ongoing.
The AUM campus in Cospicua.American University of Malta
Date officially announced: May 2015
Promised investment: €115 million
First student intake: 2017
The commitment
Prime Minister Joseph Muscat had said the project, partly on a stretch of open coastal land at Żonqor Point, would consolidate Malta’s already excellent reputation, while also serving as an education hub in the Mediterranean.
Dr Muscat had expressed his satisfaction that the Sadeen Group had teamed up with DePaul University of Chicago, which would offer international students a cutting edge experience in Malta
The student intake was set to reach 4,000 within five years, while creating 400 new jobs.
The catch
Just days after the announcement, DePaul University distanced itself from the project. The university said it was not establishing a branch campus and will not be issuing degrees in Malta, but rather providing curricula and academic resources.
READ: AUM is firing lecturers after failing to attract students
After mass protests, the government agreed to split the campus in two, reducing the size of the university footprint at Żonqor Point. In September 2017, the AUM opened its doors, admitting that student enrolment was proving challenging. This paper later revealed that just 15 students had enrolled in September.
Mass staff layoffs followed. Just last week, the whole academic faculty was dismissed. The AUM will reportedly employ part-timers to replace them.
The Opposition is insisting that the Żonqor land is no longer required by AUM, given the dismal student intake.
Metropolis Gzira tower
Date officially announced: April 2015
Promised investment: €100 million
Promised completion date: 2018/2019
The commitment
The project was said to feature luxury apartments, offices, a supermarket, restaurants and a range of shops, health, fitness and leisure facilities and an underlying car park.
It was said the investment would result in the employment of 400 people.
READ: Whatever happened to the Metropolis tower?
Prime Minister Joseph Muscat had boasted how he personally convinced Libyan businessman Jalal Husni Bey to go through with his investment, after the PN government had made life difficult for him.
The catch
The earmarked site is still a massive hole in the ground. Even the original foundation stone put in place during the inauguration has been removed.
Hard Rock hotel
Date officially announced: February 2016
Promised investment: €300 million
The commitment
The government transferred a large tract of land in the so-called golden mile near St George’s Bay.
Prime Minister Joseph Muscat said the €60 million land transfer deal to hotelier Silvio Debono was good value for money. Minister Konrad Mizzi, who is responsible for all public-private partnerships, said the valuation of the land was based on an innovative model which would be used for future projects. The plans include a €300 million project for a 315-room hotel under the Hard Rock franchise, as well as 209 residences.
The catch
Far from being a lump sum €60m payment to the government, analysis of the contract showed the Seabank Group would be paying the government in tranches over a number of years. In an interview with The Sunday Times of Malta, former PN infrastructure minister Michael Falzon had said the price negotiated for the sale of the land “was not on”.
READ: 'Prime land - given away practically for free'
A master plan prepared for the government by Mott Macdonald had valued the land at €200 million. The contract obliges the Seabank Group to invest €150 million, half the amount touted by the government.
The Crane Currency building under construction.Crane Currency
Date officially announced: September 2016
Promised investment: $100 million
Promised completion date: 2017
The commitment
Prime Minister Joseph Muscat said Crane Currency’s investment would be a landmark achievement for Malta. He described his chief of staff Keith Schembri as being the “catalyst” behind the deal.
The catch
Mr Schembri benefitted financially from the deal, which was heavily subsidised using taxpayers’ money. His company Kasco will earn thousands for the servicing of the money-printing machines bought by Crane Currency.
READ: Crane Currency machines will be serviced by Schembri's Kasco
This paper reported how Malta Enterprise committed taxpayers to some €81 million in exposure to the deal.
But last month, Crane Currency changed hands for $800 million. The good deal negotiated with the government significantly improved Crane’s re-sale value.
Electrogas power station
Date officially announced: January 2013 (Electrogas chosen as preferred bidders in October 2013)
Promised investment: €450 million
Promised completion date: March 2015
The commitment
A then unknown Konrad Mizzi had captured people’s imaginations with a seemingly impossible promise: to build a new gas-fired power station within 23 months.
Many dismissed the timelines given by the then Labour Opposition for the project as being unfeasible.
The government reduced energy tariffs by 25 per cent before the power station had even been built.
The catch
The lead shareholder Gasoil pulled out of the consortium in 2015. The new power station was finally brought online last year, two years after the original deadline.
A government guarantee of €360 million was given to cover the loan taken out by Electrogas for the project. This guarantee was secretly extended twice in May and September 2017, before Electrogas secured long-term financing from the project.
READ: Unreliability and faults found in Electrogas plant
In correspondence with the government in August 2017, Enemalta chairman Frederik Azzopardi described the new power station as being unreliable and faulty.
The power station has also been closely linked to corruption allegations involving Dr Mizzi and the Prime Minister’s chief of staff. According to the State’s anti-money laundering agency (FIAU), money was transferred to Dubai company 17 Black, by the local agents for the LNG tanker. Leaked extracts from an FIAU report show 17 Black was listed by Dr Mizzi and Mr Schembri’s financial advisers as one of the “target clients” of their Panama firms.
200-bed private hospital at Smart City
Date officially announced: March 2015
Promised investment: €100 million
Promised completion date: 2017
The commitment
Former health minister Konrad Mizzi had said the new hospital would employ 500 staff and could include a cadaver lab for research and education, a sports medicine centre and offer “personalised medicine” technology that allows for tailored therapy.
The catch
In July, the company behind the hospital received a final warning by Smart City to pay €4.7 million or be declared in default. This was after it signed a contract for the purchase of 16,000 square metres of land in Kalkara to build its hospital after it was granted a number of extensions to the original promise of sale agreement.