Two members of the evaluation committee that selected Vitals Global Healthcare as the preferred bidder to run three public hospitals were unware of the MoU signed by the government with the company before the concession was adjudicated, they told a court.
Robert Borg, managing director at Reanda Malta Ltd, and Manuel Castagna, partner at Nexia BT, were testifying in the lawsuit filed by opposition leader Adrian Delia to rescind the controversial privatisation deal. Delia is calling for Karin Grech, St Luke’s and Gozo hospitals to be "given back to the people" because contract conditions had not been observed.
Borg, an auditor by profession, said that the committee members were nominated before submission of the bids and had vetted three bids. Two failed to include the €500,000 bid bond and were therefore found to be non-compliant.
Asked by Mr Justice Francesco Depasquale whether it was normal to omit the bid bond in such a project, Borg said it would have been easier for him to adjudicate had there been two other bidders since it would have been better to compare three compliant bids.
Pressed further by Delia’s lawyer, Edward Debono, the witness said that he could not tell whether there were any ulterior “intentions,” but stressed that, “had I known of any collusion, I would not have been a party to it.”
Asked about the secret MoU between Malta Enterprise and VGH before the concession was adjudicated, Borg said that he had not known about that document.
He explained that the public-private partnership pivoted upon medical tourism, which “was the whole concept” without which nothing could be achieved.
There had been plans for the hospitals to specialize in a variety of fields, including prosthetics, focusing on traumatic injuries arising in war-torn North African countries.
“Without medical tourism the project would not have been feasible,” Borg said.
Asked whether he had sensed anything suspicious in the Request for Proposals (RFP) that defined the remit of the adjudication committee, Borg again said that he had not been happy with having two non-compliant bids.
“We did our best to ensure that the bid fell within the scope of the RFP,” he insisted, explaining further that the business plan of the project was deemed feasible at the time, with some €40 million forked out by the government in addition to the expected proceeds from medical tourism.
He expected that those who had engaged him did not have ulterior motives, he said.
Delia himself intervened in the questioning, asking whether VGH had kept to its side of the deal, whether it had fulfilled its obligations and whether it had injected the promised millions into the projects. What of the promised share capital injection by Vitals?
Borg said that a simple check of MFSA records could confirm what had happened.
Delia observed that the government had handed Vitals millions of euro. If Vitals did not keep its side of the bargain, could the government withdraw the concession?
Borg said the government “has a duty to withdraw amounts if obligations were not observed”
Earlier Borg started off his testimony by denying that NexiaBT was hiving-off business to his company.
Manuel Castagna, partner at Nexia BT and also member on the adjudication committee, continued testifying where he had left off at the previous sitting. Having been released from professional secrecy by the Court, Castagna presented his own copy of the RFP, saying that he had no other documents in his possession. Asked specifically about the MoU, he replied that he had not known about it.
"I got to know when it was published by the Auditor General.” As for the “fitness and probity” of the bidder, Castagna said that documents submitted by Vitals had spelt out clearly “who did what” and there was nothing in the RFP prohibiting the bidder from bringing onboard experts.
As for the bidder’s financials at the moment of adjudication, Castagna said that letters of comfort from the banks were sufficient “in terms of the RFP,” stressing that the committee had abided by the rules laid down in that document.
“If those rules were not to anyone’s liking, then one must question whoever drafted it.” At adjudication stage, the bid was credible, said the witness. “If at any subsequent stage the bidder did not stick to the bid, Projects Malta and Government could drop the performance guarantee, impose penalties or even withdraw the concession,” said Castagna, stressing, however, that he was not “stating an opinion.”
“I am here to testify, not to give an opinion. What I know for sure is that many things have changed since then.”
When the court itself pointed out the issue of due diligence, mentioned in the Auditor General’s report, Castagna said that the RFP did not include due diligence, which was reserved to a later stage. However, certain considerations, such as comfort letters, source of funds and business plans, did also serve as a degree of due diligence, he explained.
Delia asks Fearne to join him in law suit
In comments to the media after the court sitting, Adrian Delia said the evidence showed there were enough grounds for the government to rescind the agreement as Vitals had failed to meet their contractual obligations.
Following the news conference the Opposition leader walked to the Health Ministry and handed Health Minister Chris Fearne a letter inviting him to join the law suit to have the contract rescinded.