Due diligence reports were “a trade secret”, Projects Malta told the Times of Malta when asked for a copy of the appraisal regarding Vitals Global Healthcare.
The due diligence exercise was conducted before the government agency negotiated with Vitals a multi-million-euro deal on the running of three public hospitals.
Due diligence is normally conducted to establish whether a company and its shareholders are reliable and financially sound.
Prime Minister Joseph Muscat and Cabinet ministers had insisted the government had made all necessary verifications before committing to granting a 30-year concession to VGH for the running of Gozo General, St Luke’s and Karin Grech hospitals.
Amid reports that VGH, which had no experience in the medical field, was facing series financial difficulties and failed to meet obligations listed in the concession contract, the government still insisted the due diligence exercise had not flagged any such problems.
Once Vitals’ financial ills became public and it decided to sell its Malta concession to Steward Health Care, the government said it would not publish the due diligence report, deeming it “confidential”.
The government had made all necessary verifications
A request by the Times of Malta under the Freedom of Information Act weeks ago to see a copy of the due diligence report on VGH and its shareholders was rejected by Projects Malta. It insisted that such disclosure would constitute violation of “a trade secret” because the report contained “commercially-valuable information”.
The agency said that publishing the findings “is reasonably expected to unreasonably adversely affect that person/organisation in respect of its lawful business, commercial and financial affairs”.
Projects Malta would not even say which audit firm or auditor conducted the due diligence exercise and how much did the report cost.
Fronted by Pakistani-born businessman Ram Tumuluri, Vitals was expected to manage the three hospitals and, in return, get paid more than €2 billion over 30 years.
It had to invest about €200 million in the three facilities during the first years of taking over operations.
However, despite various declarations by both Tourism Minster Konrad Mizzi, who had headed the talks leading to the contract when he was still health minister, and VGH that the agreed investment would come Malta’s way, Vitals failed to abide by the concession milestones indicated in the agreement.
In the meantime, the government continued to hand over millions of euros to the company even though investment from its side was minimal.
At the end of last year, barely two years into the contract, the government announced that VGH had sold its concession to Steward, an American company presided over by Armin Ernst, who, just a few months earlier, was CEO at Vitals.
When the concession was transferred to Steward, Health Minister Chris Fearne described the new deal as “the real one”.
The Times of Malta has asked the Data Protection Commissioner to look into the government’s refusal to provide a copy of the due diligence report.