The two frontmen for Vitals Global Healthcare (VGH), who had no prior experience in healthcare, are still receiving funds off their failed hospital venture as part of a €15 million ‘settlement’ with Steward Healthcare.
A source with knowledge of the settlement told Times of Malta that Ram Tumuluri and Mark Pawley, who headed the company which was awarded a lucrative government concession to run the St Luke’s, Karin Grech and Gozo hospitals, will receive their final payment from Steward in February 2021.
Two other tranches were paid in February 2019 and February 2020.
The money was not routed to one of the various local holding companies with Maltese bank accounts set up by Tumuluri and Pawley as part of the VGH venture. Instead, the money was wired to accounts in Dubai.
VGH itself was owned by a complex web of companies in multiple jurisdictions.
These payments include directors’ fees and a substantial bonus that Tumuluri claims he was due, the source said.
Malta Today has reported that Tumuluri and Pawley signed off on contracts in June 2017 giving themselves the right to millions worth of backdated payments and a €5 million performance bonus for Tumuluri, shortly before entering into negotiations with Steward so that they could exit the government concession.
Tumuluri told Malta Today he did not draw the €5 million bonus due to him from VGH.
VGH missed its major construction and building refurbishment milestones at the three hospitals
Accounts published by Steward Healthcare show that during the first two full years that Tumuluri and Pawley were running the concession, VGH racked up liabilities of €44 million.
Pawley did not respond to a request for comment from Times of Malta about the payments.
Disputed construction works
The source noted how Shapoorji Pallonji, the company contracted to carry out construction works at the three hospitals, started invoicing VGH for works in March 2016.
These invoices were raised through Shapoorji Pallonji’s parent company in Dubai, even though the Indian company set up a branch in Malta in 2016.
VGH missed its major construction and building refurbishment milestones at the three hospitals.
Times of Malta is informed that the amount due to Shapoorji Pallonji is still the subject of dispute with Steward Healthcare, whose current director Armin Ernst is VGH’s former CEO.
Steward did not reply to multiple requests for comment.
VGH spent €94 million in 2017 alone on “direct costs” and “administrative expenses”, account filed by Steward this year show.
By the end of 2017, when Steward stepped in to take over the concession, VGH had accumulated losses of €27 million, even though it received over €86 million in government funding.
At that stage, the company had just €159,000 in the bank and had secured a loan of €896,000, a far cry from the €125 million in bank funding it was meant to raise to support the investment needed to revamp the three hospitals.
An evaluation report released by opposition leader Adrian Delia shows that Projects Malta, the government entity that awarded the concession in 2015, was satisfied that VGH was capable of raising the necessary funding for the project.
The three-man evaluation committee, which included a representative from the firm that set up a Panama company for then Health Minister Konrad Mizzi, heaped praise on the “detailed” submission by Vitals and recommended that the company be named the preferred bidder.
“The evaluation and adjudication committee also noted VGH are well-prepared to commence immediate execution of the project and have the required skill-sets and relationships with third parties who will assist in implement [sic] the project already in place,” the report states.