Health Minister Chris Fearne clashed with Konrad Mizzi in 2019 after getting wind of backroom dealings to offer Steward Healthcare a more favourable deal than the one struck with Vitals to run three public hospitals. Fearne went on to take the matter to then prime minister Joseph Muscat, insisting that this “could not go on”.

The US healthcare providers had taken over the concession from Vitals Global Healthcare in February 2018, in an agreement on the same terms and conditions that Vitals had with the government. Multiple sources privy to the takeover discussions towards the end of 2017 say senior government officials had assured Steward Healthcare that they would be open to pumping more taxpayer money into the concession as part of a “re-negotiation” of the original contracts.

Source accounts vary as to whether it was Tourism Minister Konrad Mizzi or Muscat himself who gave these assurances to Steward. An unsigned memorandum of understanding dated December 2017 between the Tourism Ministry and Steward indicates the government took an active role in facilitating the American company’s takeover of Vitals Global Healthcare. Despite stripping Mizzi of his health and energy portfolios in 2016, Muscat had kept the former Tourism Minister in charge of the all-powerful Projects Malta, which handled the hospitals deal and other major contracts.

Contacted by Times of Malta, Fearne said about 18 months after Steward took over, he became aware that the American company was discussing revisions in the concession agreement with the Tourism Ministry. “I made it clear that I was not in favour and that anyway it was unacceptable for discussions to happen behind my back,” the deputy prime minister said.

“Unfortunately, this escalated and when I realised that a Steward delegation was scheduled to fly to Malta with the intention of signing a revised agreement, I took the matter to the then Prime Minister, telling him that I would not condone this and that this could not go on.” Fearne said the planned visit by the Steward delegation was cancelled and the planned signing ceremony did not take place.

These plans to hand Steward a better deal were further torpedoed by Mizzi’s resignation in November 2019 and Muscat’s announcement that he would be stepping down the following month. This led Prime Minister Robert Abela to set up a so-called working group shortly after his appointment in January 2020 to review the concession and decide on the future of the contracts with Steward.

The three options on the table included terminating the contract, maintaining the same terms, or Steward’s favoured option of a renegotia­tion of the terms. Almost two years down the line, the government has yet to publicly commit to a planned course of action.

Almost two years down the line, the government has yet to publicly commit to a planned course of action

The hospitals deal is again under the spotlight after Times of Malta revealed how Muscat received €60,000 in “consultancy fees” from a Swiss company that was paid €3.6 million by Steward Healthcare in 2018.

The largest tranche of these payments, €2.49 million, was wired by Steward’s parent company to Swiss firm Accutor AG on the same day the takeover of the St Luke’s, Karin Grech and Gozo hospitals was announced by Steward. Muscat insists the consultancy payments were for genuine work carried out for Accutor AG, and unrelated to the Steward deal.

A magisterial inquiry into the original hospitals deal with Vitals Global Healthcare was triggered by rule of law NGO Repubblika in 2019. The inquiry is also “examining” the payments to Muscat.

Former Opposition leader Adrian Delia in separate court action is attempting to cancel the contract.

Fears have been raised that severing ties with Steward could turn into costly prospect, thanks to a side deal signed by Mizzi that binds the government to pay the American company upwards of €100 million if the contract is cancelled.

An investigation published last year by the Auditor General said it was of “grave concern” how the granting of the original contract to Vitals Global Healthcare in 2015 had been “captured” by the Energy Ministry, which was at the time led by Mizzi.

In a stinging assessment, the Auditor General said Vitals Global Healthcare won the contract following “collusion” between the investors and government. He expressed concern how no ministerial authorisation appears to have been sought or provided in relation to the concession.

“This results in the absurd situation where three public hospitals were to be conceded for operation by third parties without anyone actually assuming responsibility for such a decision.”

The Auditor-General laid the blame for this “failure in governance” squarely on Mizzi’s shoulders, and to a “lesser extent” on the ministry’s permanent secretary Ronald Mizzi, who later followed Konrad Mizzi to the Tourism Ministry. These governance failures further attest to the “pre-determined nature of this concession”, the Auditor General said.