Updated 4pm with Adrian Delia's remarks below - A total of €86 million was pumped into Vitals Global Healthcare (VGH) by the government during the first two years of the company taking over the running of the St Luke’s, Karin Grech and Gozo hospitals.
Accounts drawn up by the current concessionaire Steward Healthcare show that despite the millions in public funds received by VGH, its accumulated losses amounted to €27 million by the end of 2017.
Finance Minister Edward Scicluna has argued every single penny paid to VGH was approved by parliament in the budget vote and went to pay nurses and doctors.
Contributing to VGH's losses was €7 million in directors’ fees paid to company frontman Ram Tumuluri and VGH’s supposed owner Mark Pawley over that period.
The fees include a €5.6 million bonus to Mr Tumuluri, a source familiar with the matter said.
Mr Tumuluri has told MaltaToday, who have reported on VGH’s losses, that he never took the bonus.
VGH ‘won’ the government concession to run three public hospitals despite having no prior healthcare experience.
The concession gave the company a guaranteed revenue stream worth over a billion over the 30-year concession period.
Within two years, those behind the project bailed out, having apparently made millions off it whilst leaving the company deeply in the red.
VGH, owned through a complex chain of shell entities, claimed €35 million in what was termed “other expenses” during the two-year period it was running the hospitals.
Auditor Christopher Spiteri warned in the 2017 accounts that the company’s liabilities exceeded assets by €27 million, casting “significant doubt” about its ability to continue functioning.
Since taking over, Steward Healthcare has sought to negotiate certain aspects of the concession agreement, which is already seen as being very generous towards the company.
Leading those negotiations is Steward’s president Armin Ernst, who worked side-by-side with Mr Tumuluri and Mr Pawley as VGH’s CEO.
The government has demanded that the company pay millions owed in tax dues, which were apparently waived by former prime minister Joseph Muscat.
The original hospitals deal, signed by former minister Konrad Mizzi, is currently the subject of an in-depth review by the Auditor General.
A partner of Dr Mizzi’s Panama Papers advisory firm sat on the adjudication board that picked VGH to run the concession.
Three bids were received for the concession, but two of them were immediately deemed non-compliant by the committee, as no bid bonds were submitted, and documents were missing.
An inquiry in the courts, sparked by NGO Repubblika, is underway despite objections by Dr Mizzi, former minister Chris Cardona and Finance Minister Edward Scicluna.
Delia: Enough evidence to stop the hospitals deal
Addressing a news conference Opposition leader Adrian Delia said the audited accounts presented enough evidence for Prime Minister Robert Abela to terminate the hospitals concession agreement.
“The evidence is compelling, and if the prime minister fails to take action he will be held responsible along with all members of Cabinet and not just his predecessor Joseph Muscat, former Health Minister Konrad Mizzi and Finance Minister Edward Scicluna,” the Nationalist leader said.
Delia also raised a series of questions regarding spending listed in the accounts. He said the government should explain the €24 million in “administrative expenses” and say whether it was true that €7 million had been paid for consultancy fees. “If this was the case who pocketed this money?”
He also called for more details on the €12 million listed as “contracts assets value”.
When it was pointed out to him that there could be penalties to the tune of €100 million in case the government terminated the contract, the Opposition leader said that this condition would only apply had Vitals adhered to its commitments.
During the press conference Delia also refuted the prime minister’s claims that the Opposition was fueling alarm on the Coronavirus. He insisted that the government should base its decisions entirely on medical grounds.
“The Superintendent for Public Health should be allowed to take decisions without undue influence from other quarters,” he said.
“Though this is not the bubonic plague, this is nonetheless serious. Government’s duty is to ensure the country is prepared in the best manner possible,” Delia added.
Independent journalism costs money. Support Times of Malta for the price of a coffee.Support Us