A memorandum of understanding signed with Vitals Global Healthcare in 2014 gave them no undue advantage when bidding on a concession to run state hospitals, the former Malta Enterprise chief who drafted “a good part” of that document testified on Thursday.
Mario Galea insisted Vitals “could not have drawn an advantage from the information I gave in that MOU, because there was no information linked to the concession.”
“And if any other bidder had approached me, I would have given the same information,” he said when testifying at the second Vitals case on Thursday.
Galea was head of the Foreign Direct Investment unit at Malta Enterprise at the time. He would go on to be promoted to CEO of the entity.
His testimony focused on the MOU signed in October 2014. The National Audit Office had concluded that Vitals should have been precluded from bidding on the hospitals concession, as there was “significant overlap” between it and the MOU Vitals signed months before.
That concession was annulled by a court last year on the basis of fraud. Prosecutors have since pressed charges against many people involved in the deal.
A medical school vision
Testifying in the case against former health minister Chris Fearne, former finance minister Edward Scicluna and others, Galea said that the government had wanted to attract foreign medical schools to Malta long before Vitals entered the scene.
A number of schools were shortlisted.
Barts was one of two that made it through the final shortlisting and a “Maltese professor” who worked with Barts “opened a window,” he said, leading the way to discussions which ultimately led to a signed agreement with government.
That agreement focused on Gozo and included several obligations, namely the building of a medical school, an anatomy centre and training facilities for various medical specializations.
Anyone interested in running public hospitals would have to submit to those obligations concerning Gozo.
“My interest was always to ensure that all we promised Barts would be fulfilled,” said Galea.
“So how did you get to know about Vitals?” asked AG lawyer Rebekah Spiteri.
“I went to a meeting coordinated by the chief of staff at OPM [Keith Schembri],” replied Galea, adding that this was a “normal” procedure whereby Malta Enterprise would meet entrepreneurs to get an idea of what their investment consisted of.
A business plan
Galea subsequently sought a “technical opinion” from audit firm RSM to make sure that the hospitals project was of an industrial nature in terms of law. He said he only met the Vitals representatives in person once. The MOU was signed by then-economy minister Chris Cardona.
On Wednesday, Cardona testified that Galea had told him to “just sign the MOU”. In testimony on Thursday, Cardona insisted that his testimony had been misquoted in various news outlets.
Galea told the court that he “explained to [minister] Cardona the investor’s obligations.”
Vitals were given three to four months to submit a business plan and they did so, presenting it at a first floor meeting hall at Castille while led by Ram Tumuluri, Galea said.
Then-Energy and Health Minister Konrad Mizzi and then-parliamentary secretary Chris Fearne were also present. But the two had no involvement in the preceding months, he said.
Following that presentation, Galea received communication from Minister Mizzi who told him “this is not what we have in mind.”
“I told Cardona. We wrote to Vitals explaining that their business plan was not in line with what the government wanted.” The MOU was withdrawn.
MOU was 'never something secretive'
Galea also said that he had drafted “quite a good part” of that document which he later described as “a piece of paper” bearing no validity.
“It was never something secretive….it was a normal MOU,” Galea testified.
Despite that claim, the MOU remained under wraps for years and was only exposed by Times of Malta in May 2017, more than two years later.
Malta Enterprise battled against a Times of Malta Freedom of Information request for a copy of it, and won that battle. The National Audit Office also struggled to obtain a copy, with the Office of the Prime Minister, Fearne, Cardona and Mizzi’s ministries all telling it they had no information about it.
Under cross-examination by lawyer Stefano Filletti, Galea said that that MOU had “nothing but the conditions related to Barts.”
“From the information I gave in the MOU [Vitals] could certainly have not gained an advantage because there was no information linked to the concession. And if any other bidder had approached me, I would have given the same information.”
Asked whether he had given Vitals any information during the first meeting or subsequent communication to place them in an advantaged position, Galea replied in the negative, stressing “u lanqas kelli” [and I didn’t even have any].
Lands letters
Former Lands Commissioner Peter Mamo presented a number of letters issued in 2015 and 2016, signed and countersigned by former minister Cardona, Minister Michael Falzon and former parliamentary secretary Deborah Schembri.
Those letters were to authorize the transfer of sites from the Lands department to Malta Industrial Parks. The owner would still be government and the lands would still be registered as “government property.”
He confirmed the relevance and importance of those letters, noting that they carried a minister’s signature.
Once Lands had verified that all property in question belonged to government and any necessary expropriations completed, the department issued two legal notices to effect the transfer to MIP.
Nowadays, such transfer does not take place by legal notice but by public deed.
NAO believed concession was 'extension of MOU'
Auditor General Charles Deguara told the court that in the National Audit Office’s view, the request for proposals to privatise three state hospitals was “essentially an extension of the MOU, with the sole difference that the MOU concentrated on Gozo while the RFP included St Luke’s and Karin Grech hospitals”.
The two documents came just five months apart.
Analyzing the evidence from a good governance point of view, the NAO flagged various shortcomings.
There should have been a more equitable sharing of risk, rather than government taking on too many risks while the concessionaire got the guarantees.
Since health authorities were not sufficiently involved in this health-related project, needs were not properly identified.
Since for the first four years, Vitals did not publish audited accounts, there was no clear picture of the financial state of the concessionaire.
That situation emerged when Steward took over and published audited accounts.
Lack of documentation made it difficult to find out “who contacted who” since the NAO received conflicting versions as to whether government approached Steward or vice versa.
There was also “unnecessary haste,” went on Deguara.
Under cross-examination, he confirmed that former permanent secretary Joseph Rapa never made any payments he ought not to.
The negotiations committee kept no records or data and that was “very bad from a good governance” aspect.
“Do you know that the Attorney General - who was then State Advocate- and who is now charging all these people here, gave [legal] advice for this contract not to be terminated?”asked Fearne’s and Scicluna’s lawyer Stephen Tonna Lowell.
“Personally I don’t know but if you give me time I’ll check,” said Deguara.
However, he confirmed that under Fearne’s watch, there was some issue as to whether certain payments were due on the concession.
“The [then] State Advocate gave legal advice saying that those amounts were to be paid.”
The case presided over by Magistrate Leonard Caruana continues in October.