Former Finance Minister Edward Scicluna had pulled the brakes in 2019 on the payment of an additional €10 million to Steward Healthcare at the request of then Tourism Minister Konrad Mizzi, and had sought Cabinet approval, the Cabinet Secretary, Ryan Spagnol, told a court on Thursday.

That, he said, sparked a “hospitals concession clarification discussion” as evidenced by an email and an extract of the relative cabinet minutes dating back to October 2019.

Spagnol was giving evidence in the compilation of evidence against Scicluna, now governor of the Central Bank, and Chris Fearne, who succeeded Mizzi as health minister. Both are facing fraud and misappropriation charges in connection with the now-annulled Vitals hospitals concession deal.

Steward Healthcare had taken over the deal from Vitals and had sought additional government funding.

The court was told that a memo issued by Mizzi, as the minister responsible for the project, laid out projections which would have needed a €10 million payment to the concessionaire, above the original contract. But Scicluna sought clarification at cabinet level, insisting that the government could not fork out those funds unless the principles outlined in the memorandum were endorsed by means of a signed agreement.

The Director-General, Budget Affairs, Mark Borg, faced questions by lawyer Franco Debono about an email exchange he had with Alfred Camilleri, the then permanent secretary at the Finance Ministry, now also facing prosecution.

Borg confirmed that Camilleri had instructed him not to exceed the amount stipulated in the Vitals agreement.

While confirming that a request for additional funding had originated from the Ministry of Health, the witness could not tell whether that was because of a memorandum signed by then Minister Konrad Mizzi. He did not delve into the contents of that memorandum, Borg explained.

Department of Contracts was excluded from concession deal

A former Director General at the Department of Contracts, Anthony Cachia, testified that the law on public procurement at the time of the Vitals concession in 2015 excluded public service concessions. For that reason, the department was not involved in the deal, any due diligence process or in the relative Request for Proposals or evaluation of bids.

In an email sent to then ministers Scicluna and Mizzi and their permanent secretaries, Cachia said he had highlighted that the hospitals concession did not fall within the remit of his department. Such processes were to be handled by the contracting authority concerned.

A ministry itself was classified as a contracting authority, he explained.

Lawyer Joseph Camilleri from Mamo TCV who assisted Steward in various past and pending judicial proceedings, informed the court that he was bound by professional secrecy which had not been waived.

He confirmed that the lawyer-client relationship with Steward started around May 2018 when he stepped in to offer professional services in some pending proceedings. That information was in the public domain.

Asked by lawyer Franco Debono whether Camilleri and the firm he represented had stepped into Kevin Deguara and Jean Carl Farrugia’s shoes as previous legal counsel to Steward, the witness said that he could not quite answer that question. He pointed out that documents in the public domain showed that DF Advocates- Deguara and Farrugia- had provided legal services to Steward.

Asked about any input to the magistrate heading the Vitals inquiry, Camilleri replied, “I assure you no and I don’t know about anyone else.”

A partner at PriceWaterhouseCoopers auditors testified that the firm had terminated its services to Steward in February 2023 following the court judgment annulling the concession and adverse media coverage about the deal.

There were several factors prompting that decision but that judgment was “a trigger,” said Lucienne Pace Ross who was called twice to the witness stand on Thursday after her testimony was suspended so that she could produce some documents requested by the defence. She presented various documents, including a document to renew the financial model. But that task was never finalized.

Asked by lawyer Franco Debono about two companies, Crossrange and Pivot Holdings Ltd, the witness said that she had searched her company’s database but those companies were not on its clients list. Under further questioning, Pace Ross stressed that she was not involved in services but only with compliance.

The case, presided over by magistrate Leonard Caruana, continues next week. 

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