A final decision about annulling contracts related to the privatisation of three state hospitals is expected in October. 

The date was announced by Chief Justice Mark Chetcuti during a court hearing on Monday. 

Together with Mr Justices Giannino Caruana Demajo and Anthony Ellul, the chief justice is hearing final oral submissions in appeal proceedings filed by Steward Global Healthcare against a court decision to annul their concession agreement. 

In a strongly-worded judgment delivered in February, Mr Justice Francesco Depasquale declared that the concession, originally signed by government with Vitals Global Healthcare and subsequently taken over by Steward Health Care, was tainted by fraud at every stage of the process. 

The court also condemned Steward for having intended to “unjustly enrich itself at the expense of the government and Maltese and Gozitan citizens,” when taking over the running of St Luke’s, Karin Grech and Gozo hospitals.

That court case was started by then-Opposition leader, now PN MP Adrian Delia. 

Throughout the five-year court battle, Delia argued that not only had Vitals and Steward, as its successor on the concession, failed to fulfil its contractual obligations but also that the deal was vitiated by fraud. 

Therefore the concession was to be cancelled and the hospitals to be given “back to the people,” Delia had claimed, putting forward voluminous evidence to prove that the concessionaire had failed to attain the pre-established “milestones”.

On the other hand, all that Steward had put forward in evidence was a one-page affidavit and 76 pages of photographs by way of proving the works done on the deal. 

The court did not seem much impressed, further observing that such dearth of evidence likely reflected Steward’s “poverty of investment, projects and future plans”.

When all was considered, the court concluded that the concession, including all related agreements, amendments and additions, were to be annulled and the property given back to the government. 

Steward Malta subsequently filed an appeal, and also requested a preliminary ruling from the European Court of Justice.

In its appeal, Steward argued that it was itself defrauded by the Maltese government, which made promises that it then did not fulfil.

Steward’s request for a preliminary reference to the ECJ was turned down by the Court of Appeal earlier this month. 

Steward: 'Biggest winner was government'

“Government clearly capitalised on this judgment to take back the hospitals,” argued Steward’s lawyer, Joseph Camilleri, pointing out that the government had not filed an appeal and had also requested shortening the time limit to file an appeal. 

“The judgment suited Delia but the biggest winner was the government,” the lawyer said.

Camilleri argued that the judgment was “shocking in certain respects.”

It presented a scenario of legal confusion since, although the court laid great emphasis on fraud, it was not clear whether it had decided on the basis of fraud or an alleged breach of contract.

The lawyer noted that the final operative part of the judgment did not mention fraud and asked whether the court had implied fraud in the criminal sense, or as a defect of consent.

If the concession was annulled on the basis of an alleged breach of contract, why did whole pages of the judgment speak of fraud, asked the lawyer, adding that the judgment also presented “political content” which both government and the applicant “found convenient”.

The judgment was also tinged with sarcastic comments but the court had clearly ignored evidence of certain works accomplished by the concessionaire, Steward’s lawyer argued. 

Delia: 'Steward itself admitted to fraud'

Delia’s lawyer, Edward DeBono, countered that those involved had “pocketed the money and raped the Maltese people”.

The lawyer questioned why former Finance Minister Edward Scicluna and his then-permanent secretary Alfred Camilleri had approved further payments to the concessionaire, “who did nothing.” 

Vitals and their successor, Steward, had received millions to restructure the state hospitals.

“But St Luke’s [Hospital] ended up as a nest for mice and a dovecote, nothing else,” argued DeBono, driving home the point that the whole deal was vitiated by fraud.

The Auditor General himself had also concluded that the hospitals' concession was “blatantly fraudulent” and the court of first instance had taken on board those conclusions in the Auditor General’s report, making reference to “collusion” which rendered “the entire process dubious.”

Steward Healthcare itself had described the hospitals' concession as “fraudulent” in separate proceedings it had filed before the Maltese courts against the Medical Associates of Northern Virginia Inc. Profit Sharing Plan, the lawyer argued. 

Steward had filed that case in a bid to block enforcement of a UK judgment ordering the company to pay USD$6.47 million as part of a settlement agreement concerning the acquisition of the hospitals concession. 

The company subsequently dropped that case in February 2022. 

“You yourself admitted to the fraud. So how can you now say that there was no fraud?” pressed on DeBono. 

There was no doubt that Steward entered the deal “with eyes wide open and widened pockets,” argued the lawyer, citing snippets from the first judgment to drive home his argument that the contract was vitiated by fraud.

DeBono reminded the court of a €100 million side deal signed by former Minister Konrad Mizzi, ensuring that Steward would receive that sum if the concession were struck down by court or any other authority.

He also noted how Armin Ernst, former CEO at Vitals, had taken over as CEO at Steward and subsequently, following the hospitals’ judgment, wrote to Prime Minister Robert Abela saying that they knew “this was a fraudulent deal.” 

“So why did he stay on? Why was this chain between Vitals and Steward not broken?”

State advocate: 'Steward's appeal is an optical illusion'

State Advocate Chris Soler, representing the government in the proceedings, observed that although the case looked very complex, it was actually rather straightforward. 

He described Steward’s appeal as “an optical illusion”, since although the company had filed an appeal, its own actions had extinguished that appeal. 

Steward had appealed the judgment on March 15 but within a few hours had filed notices of termination of the concession and that fact alone extinguished the appeal, said Soler, citing a judgment in Reginald Fava vs Principal Medical Officer to support his argument. 

He had attended every hearing of the Vitals case since being appointed State Advocate and could confirm that the notion of fraud had cropped up all along and that the court had allowed certain questions in that regard, Soler said. 

Although Steward had raised various pleas, they “deliberately” did not produce evidence to support those pleas, banking instead on the “€100 million clause.”

“They waited to capitalise on the fraudulent contracts which were subsequently cancelled by the court,” added Soler, triggering some additional arguments by Steward’s lawyer who objected to the State Advocate’s comment which implied that the company “deliberately wanted to lose the case.”

After hearing submissions, the court deferred the case for final judgment on October 23.