The people entrusted with the running of three public hospitals in 2015 splurged cash on luxury cars, five-star hotels, private schools and even Netflix subscriptions, according to financial documents. 

Over 22,000 financial records from between October 2015 and January 2020 were obtained by the Organized Crime and Corruption Reporting Project (OCCRP) and shared with Times of Malta and The Shift News. 

The transactions, revealed for the first time as part of the investigation, fuel suspicions that the people involved in Vitals Global Healthcare (VGH) mismanaged public money.

Footage filmed during the investigation shows the abandoned interior of St Luke's Hospital - one of three that were meant to be on the receiving end of a €200 million upgrade. 

Watch: Inside St Luke's Hospital, in a state of ruin as a result of neglect.

In 2021, the Auditor General called on the authorities to investigate concerns by the health ministry that funds meant for the running of the St Luke’s, Karin Grech and Gozo hospitals were being funneled out of the government concession by VGH.

VGH shifted at least €21 million to its Maltese parent company Bluestone Investments between 2016 and 2018. Some of those transactions were made on the same day that VGH received payments from the Maltese government to run the hospitals. 

The St Luke's, Karin Grech and Gozo hospitals were meant to be on the receiving end of a €200 million upgrade by Vitals.The St Luke's, Karin Grech and Gozo hospitals were meant to be on the receiving end of a €200 million upgrade by Vitals.

Last year, VGH director Ram Tumuluri said in a legal letter to Times of Malta that VGH and Bluestone were both operating under the same management structure and were together spending funds in relation to the concession. 

"Bluestone had contracts relating to the same concession for which it had to fulfil its contractual obligations, hence the funds were moved as intra-company transfers," Tumuluri had said via his lawyer. 

In comments to OCCRP this week, Tumuluri said via a lawyer that Bluestone was financed by investors and shareholders, not the hospitals contract.

“The funds used for that spending were not VGH funds,” the lawyer said. 

Hotels, restaurants and private schools

Transactions reviewed by the investigation show that Bluestone's accounts were regularly used to pay for private spending.

The amounts involved range from over €5 million being wired to accounts and companies linked to VGH 'consultant' Shaukat Ali and his family members, to over 150 ATM cash withdrawals amounting to €54,000.

Fairyland was once a ward used to treat sick children. Today, it is falling apart.Fairyland was once a ward used to treat sick children. Today, it is falling apart.

Records even show how payments for private schools in Malta and Zurich, vet fees, stays at a Montenegro Hilton and €1,000 restaurant bills were all expensed to Bluestone.

Both Vitals and Bluestone were run by Tumuluri, with his backer Mark Pawley also acting as a director. 

When contacted, Pawley said he did not control the bank accounts in question. 

"Mr Tumuluri moved his wife and daughter to Malta to run the project full time so there is nothing untoward in paying his school fees and other reasonable living expenses as this would have been part of his expat package.

"I cannot comment on the other payments other than to say that payments which did not have a business rationale would be of concern," Pawley said. 

Tumuluri told OCCRP that he had a contract with Bluestone that included “the provision for personal expenses and school fees for my children”.

He reiterated that these payments came from “investor sources” and not public money. 

While the people running Vitals were spending big, one of the main hospitals, St Luke's, was largely left in a dilapidated state. 

A court in February blasted both Vitals and Steward for failing to deliver on their promised upgrades to the hospitals.A court in February blasted both Vitals and Steward for failing to deliver on their promised upgrades to the hospitals.

Patient records left on hospital desk

Photographs and footage from St Luke’s hospital show large parts of the building in disrepair, with mould growing on the walls and the children’s ward once known as Fairyland left abandoned.

The state of abandonment has persisted under Steward, the current concessionaries. 

In one section of the hospital, records of medicines administered to patients can be found strewn over a desk.

Vitals were handed the keys to the three hospitals on the back of a promise to invest upwards of €200 million to turn them into what then-Prime Minister Joseph Muscat had described as “state-of-the-art medical facilities”.

The deal has since been annulled on fraud grounds, with court testimony confirming how the committee tasked with evaluating Vital's bid did not even bother to carry out basic due diligence checks.

Sensitive medical records can be found strewn round St Luke's.Sensitive medical records can be found strewn round St Luke's.

ATM withdrawals, Netflix subscriptions and cars

Transactions analysed by Times of Malta show how the people behind Vitals splashed cash on luxury travel and high-end cars.

A total of €248,000 was spent at Kind’s Auto Sales, the local agents for Mercedes Benz, a German car manufacturer.

The transaction descriptions indicate money was spent on leasing cars, including expensive models like the Mercedes S-class.

A further €180,000 was dropped on point-of-sale purchases, including Netflix subscriptions, payments at beauty salons, clothing shops and grocery purchases.

The financial records show cash withdrawals from ATMs in Balluta, Sliema's Dingli Street, and The Point shopping mall, and other cash withdrawals in Zurich, Switzerland, amounting to €54,000 between 2015 and 2017 alone.

From hotels, to schools and Netflix.From hotels, to schools and Netflix.

According to public records, Shaukat Ali’s family resided in Switzerland and also own an apartment near The Point in Sliema. 

Another €133,184 was spent on hotels and renting an office in Montenegro, where Vitals intended to next set up shop and where it appeared ready to replicate the ‘Malta hospitals model’.

Almost half a million euros in taxpayer funds were spent on hotel and travel expenses and another €33,000 on private schooling – including at the exclusive Quality Schools International. According to the banking data, the payments to QSI were classified as “Ram expenses”.

Tumuluri: Money came from investor sources

Ram Tumuluri’s lawyer told OCCRP that Tumuluri had a contract with Bluestone that included “the provision for personal expenses and school fees for my children.” 

The lawyer said Tumuluri was not taking a salary from Bluestone or VGH at the time, and that these payments came from “investor sources” and not public money sent to VGH.

Bluestone's spending figures include a €6,300 stay at the Hilton in Podgorica paid for in October 2016, €25,000 in payments to Five Star Hotels Ltd, and a €3,500 payment to the Corinthia Marina San Gorg.

There were also €268,000 in payments to a travel agency that have not been explained despite repeated requests for those involved to do so.

Pawley breaks silence on deal 

Pawley has maintained a low profile ever since his involvement in the VGH deal. 

The deal was annulled in February on fraud grounds, with a court accusing the VGH investors of unfairly making use of the information they were privy to through a memorandum of understanding (MoU) signed with the government. 

A separate report by the Auditor General said the existence of the deal was evidence of "collusion" between the investors and government, which should have barred VGH from bidding on the eventual tender. 

Pawley and Tumuluri told OCCRP that they saw the MoU as a tool for obtaining financing for the project, rather than guarantees that they would win the tender 

The court piled the blame on the investors for failing to declare the existence of the MoU at tender stage. 

Pawley said, however, that government officials would have known of the existence of the MoU, having signed it. 

Vitals investor Mark PawleyVitals investor Mark Pawley

"From my recollection, VGH was not required/requested to disclose that it had signed an earlier MOU, and in any case, the government had subsequently advised us it needed to be cancelled.

"My vague memory is that initially the smaller project apparently didn’t need an EU tender," Pawley said. 

Pawley said VGH spent considerable money on the EU tender, including hiring reputable consultants. 

He said had VGH not complied with the conditions of the tender, and had it not been credible with its partners, it would have been difficult for them to be selected. 

"And had bigger, more credible players shown up, then maybe VGH wouldn’t have been awarded it, despite spending the money it had already spent. That’s the risk with tenders," Pawley said. 

Tumuluri too rejected claims of wrongdoing in the way the concession was obtained.

He denied colluding with government officials and rejected the court ruling that the contract was obtained fraudulently. 

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