A judge is on Friday (today) set to decide the fate of three hospitals handed over to foreign investors as part of a much-criticised 2015 deal.

All eyes will be on Mr Justice Francesco Depasquale’s courtroom as judgment is handed down in a case led by former opposition leader Adrian Delia.

The court has been asked to rule whether the Vitals Global Healthcare contract, later taken over by Steward Health Care, should be nullified because of the investors’ failure to improve the state of St Luke’s, Karin Grech and Gozo hospitals.

Delia has attacked the failure of Vitals and Steward to deliver on their promised €200 million investment, which should have included the building of a new hospital in Gozo.

The government has already put contingencies in place to retake the running of the hospitals should the judge strike down the contract. The deal, a legacy of Joseph Muscat’s government, has been criticised in reports by the national audit office.

Auditor General Charles Deguara has slammed the government’s “impotent” failure to ensure Vitals abided by the original tender requirements.

VGH won the tender despite having no prior experience in healthcare, aided by what the auditor general said was “collusive behaviour” with the government.

Muscat and former health Minister Konrad Mizzi have both stood by the deal, insisting they acted in the public’s best interest.

By contrast, Mizzi’s successor, Chris Fearne, has been keen to distance himself from the whole affair, saying he had very little to do with the original deal.

Since Muscat’s departure, Steward’s relations with the government have notably soured.

Prime Minister Robert Abela had ordered a review of the deal, with Steward hoping they could get more favourable terms to continue running the hospitals.

The judgment expected Friday could very well set the stage for further litigation, should either Steward or the government appeal the decision.

What is the Vitals case?

Former opposition leader Adrian Delia took the fight against the Vitals Global Healthcare hospital contract to the courts in February 2018, in a bid to nullify the “scandalous” deal signed by the government.

At the stroke of a pen in 2015, the government signed over the running of St Luke’s, Karin Grech and Gozo hospitals to an unknown outfit with no experience in healthcare.

Two years later, the inexperience was showing as not only were there very few signs of the promised €200 million investment in the three hospitals but Vitals itself was on the brink of financial ruin.

Delia spotted his opening when the government announced the contract would be transferred to the American company Steward Health Care, which Health Minister Chris Fearne famously described as the “real deal”.

Taking to the courts, Delia argued that, rather than transferring the contract, the three hospitals should be returned to the public.

Former opposition leader Adrian Delia speaking outside court after the Vitals hospitals case. Photo: Chris Sant Fournier

Who is the case against?

The case was filed against then prime minister Joseph Muscat, Vitals Global Healthcare (later Steward), the attorney general, Malta Industrial Parks Limited and the Lands Authority.

Delia argued that, rather than taking back the hospitals when it became clear that the Vitals contract would not be honoured, the government had instead given the people behind Vitals the opportunity to sell it to third parties.

He alleges in the case that a number of clear contractual milestones, ranging from building a new medical college in Gozo to additional hospital beds, never materialised.

The government, at the time led by Muscat, accused Delia of wanting to disrupt Steward’s investment in the hospitals, thus denying patients “world-class” care.

“The opposition is again proposing no alternative, leading to the inevitable conclusion that the opposition leader’s action is an attack on foreign investment.”

What happened since 2018?

A five-year battle ensued, with high-profile witnesses like Muscat, then health minister Konrad Mizzi and executives from Steward grilled on the witness stand.

Muscat defended the deal, insisting that privatising the hospitals made sense “in the Maltese context”. While taking responsibility for the concession, he said the final decision was endorsed by the entire cabinet.

Mizzi sang from a similar hymn sheet during his testimony in February 2021, giving a prepared statement during which he assured he had acted “in the best interest of the people”.

“I want to declare that cabinet had approved the project and it used to be regularly

updated in detail about developments, the progress of negotiations and the progress of the works in the months and years that followed, both at the time of VGH and later when Steward were involved,” Mizzi said.

However, in a separate probe into the hospitals deal he refused to answer questions for fear of incriminating himself.

Joseph Muscat and former health Minister Konrad Mizzi have both stood by the deal, insisting they acted in the public’s best interest. Photos: Matthew Mirabelli/Jonathan Borg

What evidence was presented?

Delia has ripped into Steward’s claims that it kept to its end of the deal, as evidenced by a series of “before and after” photos it presented in court. The photos were presented as evidence on how Steward’s €60 million investment in the hospitals had paid off. The document, which was uploaded on the MP’s Facebook page, made reference to toilets, a chapel door, a security room and other minor investments.

Delia cast doubt on the true value of the works. “I doubt they spent one-tenth of the declared €60 million and the biggest issue remains that not a single receipt was presented in court.”

Steward has said the hospitals concession was in a “dire state of emergency” when it took over in 2018.

The American company has accused the government of abandoning negotiations to make the concession more “bankable”.

What is this €100m clause?

Delia has accused the government of secretly approving a €100 million payout clause to Steward, should the hospitals contract be terminated. “This means Steward will be given €100 million if they fail,” Delia says.

Varying interpretations have been given to the clause, with some arguing that the €100 million should not be payable if the contract is terminated by the courts, rather than by the government.

If both the government and Steward dig in, the €100 million payout clause could very well be the subject of another prolonged court battle, depending on which direction the court decision goes on Friday.

St Luke’s, one of the three public hospitals part of the 2015 deal. Photo: Chris Sant Fournier

So, who is going to jail?

No one, at least not as a result of the Delia court case, which was fought in the civil court. A separate criminal inquiry, triggered by rule of law NGO Repubblika, is still ongoing. Both Muscat and Mizzi are considered suspects in the inquiry.

Muscat’s home was searched by the police last year in connection with suspected kickbacks he received from the deal.

Mizzi too has been the subject of a police search.