The news came as no surprise that Malta Enterprise has persisted in its refusal to a request made over a year ago by the Times of Malta to be furnished with a copy of a memorandum of understanding that was secretly signed on October 10, 2014 between Economy Minister Christian Cardona and the investors in Vitals Global Healthcare on the privatisation of the Gozo, St Luke’s and Karen Grech hospitals.
The deal between the government and VGH was negotiated by Konrad Mizzi who signed a preliminary agreement as minister of health on March 18, 2015. Although VGH had no previous record in the provision of health services anywhere, it was awarded a concession to operate the three hospitals through a call for expression of interest.
On the basis of specific details that were made available to the VGH investors, they were able to make a pre-concessional MoU among themselves with a view to the multi-million euro income guaranteed by the deal for up to 99 years. At the same time, a complex web of company structures was created so they could conceal their true identities and, presumably, deter scrutinity.
The government remained silent on various aspects of the deal and steadfastly refused to identify the real owners of VGH. The agreement was kept under wraps and a heavily redacted copy was only tabled in Parliament following intense pressure by the Opposition and the removal of Mizzi from health minister following the Panama Papers revelations.
In November 2017, VGH found it had no option but to sell out after having practically failed to complete its obligations under the contract. It was reported that Mizzi was aware that the company was falling far behind its construction deadlines since almost a year earlier. Yet, the Health Ministry had still obtained parliamentary approval to pay the company an extra €18 million for 2017, over and above the €16.5 million already paid that year.
VGH had supposedly made a €9 million performance guarantee, which Mizzi said he forgot through which bank it was made. Concealment and manipulation of the truth have been the hallmark of the Muscat-style New Labour government ever since it swept to power five years ago.
The Maltese taxpayer has been kept in the dark about the spending of billions of euros from State coffers on highly-suspicious deals reached by the government. Numerous multi-million euro contracts entered into by the State have been either published with many parts missing or not published at all under the pretext that they include a clause that prohibits their publication.
There is an evident absence of accountability and transparency on the part of the government. Here one may recall that, back in 2012, the Labour Opposition had accused the Nationalist government of lack of transparency, arrogance and misuse of taxpayers’ money when it was negotiating a deal for the lease and purchase of St Philip’s Hospital at an estimated value of €12.4 million, which it eventually had pulled out from.
Then Opposition leader Joseph Muscat had insisted that unless contracts are tabled before Parliament prior to being signed, it would just be like Parliament holding an autopsy.
Muscat, however, soon changed his tune. As Prime Minister, he did not bother to table in Parliament highly-suspicious deals struck by the Government Property Department, like the Café Premier’s €4.2 million bailout settlement and the payment of €3,276,390 in cash and property to Marco Gaffarena for the acquisition of two, one-fourth undivided shares of a property that he bought for just €163,056.
The government, with its comfortable seat majority, has steamrolled multi-million euro shady deals through Parliament in the energy and health sectors.
Concealment and manipulation of the truth have been the hallmark of the Muscat-style New Labour government
A €420-million deal was signed by Mizzi behind closed doors in May 2014 with Electrogas Malta Ltd, which was selected from among 19 bidders to construct a new gas-fired power plant in Delimara and also provide electricity and gas to Enemalta for a period of 18 years.
Mizzi appointed Nexia BT Advisory Services, a subsidiary of Nexia BT financial consulting company, as adviser to the government on the project procurement while Nexia BT itself was appointed by Enemalta to assist it in the processing of the permits required for the project.
Nexia BT happened to be the auditing company of GEM Holdings Ltd that participated in the bidding process as part of the Electrogas consortium that won the tender. Besides, one of the companies making up GEM Holdings Ltd, namely CP Holdings Ltd, was owned by Paul Apap Bologna, who was appointed a planning authority board member immediately Labour rose to power.
In August 2015, Mizzi signed another agreement binding the State to guarantee €360 million of a €450-million bank loan for Electrogas to carry out the project. The loan was to fund the construction of the project and pay for the supply of liquefied natural gas to the gas-fired power station.
An FIAU report that was subsequently leaked alleged that, on July 23, 2015, Orion Engineering Group Ltd, a local company linked to Armada Floating Gas Services Malta, the owners of the tanker, had transferred money to a Dubai-based company called 17 Black. In June 2015, the Opposition presented a parliamentary motion calling on the government to publish its contracts with Electrogas.
The contracts were eventually tabled in February 2017 together with long technical reports and were made available just two days before the scheduled date of the debate with most pages blacked out. The price for the purchase of energy and consequences of termination in the implementation agreement were kept hidden.
Secret dealings in the field of energy were carried out by Mizzi separately with China and Azerbaijan.
On December 12, 2014, Mizzi signed a €320-million deal with a Chinese State-owned firm, Shanghai Power Co. Ltd, which enabled it to expand into the European energy market. According to the agreement, which was partially published, the company acquired a 33 per cent stake in Enemalta and effectively took control of the power station.
At the heart of the deal was Cheng Chen, a control and instrumentation engineer for the Chinese company, who owned a British Virgin Islands company that was transferred to him in 2014 by Brian Tonna, the Prime Minister’s financial advisor and managing partner of Nexia BT.
On December 15, 2014, Mizzi signed an MoU with State-run Azerbaijani oil and gas company Socar Trading SA, following secret dealings in Baku also attended by Muscat, Keith Schembri and Muscat’s spokesman, Kurt Farrugia. No details were made public.
Socar was given 20 per cent of the multi-million euro tender awarded to Electrogas for the construction work of the power plant, an equal shareholding in Electrogas with two other partners and the exclusive right to supply electricity and natural gas to Enemalta for 18 years.
Mizzi also intervened in oil procurement from Azerbaijan and a fuel-hedging agreement with Socar was signed in 2014 on his direction that ended up in an overall loss of €8.6 million. The Auditor General questioned the lack of documentation in this agreement.
Denis Tanti is a former assistant director (industrial and employment relations) in the Ministry for Health.
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