Steward Global Healthcare was running parallel talks with Konrad Mizzi and Joseph Muscat’s office while also negotiating with the Health Ministry, Chris Fearne revealed on Monday.
Testifying under oath, Fearne recalled his frustration at learning of the backchannel talks which were happening without his knowledge.
“Things were happening which I did not know about,” he said, telling a court that he had planned on raising the matter in cabinet in November 2019. That did not happen, as Mizzi resigned earlier that day, Fearne said.
Mizzi was Tourism Minister at the time but also controlled Projects Malta, the state entity which the court has heard took the lead role in the hospitals deal.
“I was going to table a memo that day to say ‘listen, either everything is under health, or nothing at all. But then you know what happened that day,” Fearne recalled.
Fearne was testifying in a civil case filed by former Opposition leader Adrian Delia which is seeking to rescind the 30-year contract the government signed in 2015 to privatise three state hospitals.
Steward took over that deal from the original concessionaires, Vital Global Healthcare, in 2018.
In previous sittings, the court has heard that the deal was piloted by Projects Malta, which was part of Konrad Mizzi’s ministerial portfolio. It has also heard former Finance Minister Edward Scicluna testify that he knew nothing of a €100m side letter which Mizzi signed with Steward, former Prime Minister Joseph Muscat insist the deal was discussed thoroughly by cabinet and Mizzi himself answer very little at all.
Konrad Mizzi and Chris Fearne in 2018. Fearne told a court that Steward and Mizzi were in talks without him knowing. Photo: DOI/Pierre SammutWhat Fearne said
In just over 90 minutes of testimony on Monday, Fearne also said that:
• He had been told of a “non-binding” agreement which Mizzi had signed with the concessionaires and which he knew nothing about.
• Milestones in the contract were missed as permits required to complete them were not issued. The concession contract did not link the milestones to permits, Adrian Delia rebutted.
• Government is scrutinising a €15m bill for infrastructural works which Vitals presented, and which has been partly paid for.
• He had no idea about an MOU which the government signed with Vitals before the concession was opened to bids and only learnt of it from the media. He was later told the MOU had been rescinded.
• He never signed any contracts with Vitals Global Healthcare.
• The government’s plan to privatise hospitals “made sense, on paper” and Gozo’s healthcare service has improved significantly in ensuing years.
• Cabinet was told that the government would be guaranteeing a loan Vitals received from BOV. But there was no discussion of individual clauses in the deal or their specific meaning and it was normal for a cabinet memo to not include the full document it referred to, Fearne said.
St Luke's Hospital: one of three hospitals handed to the private sector for 30 years. Photo: Chris Sant FournierBoxes of documents
Before Fearne testified, judge Francesco Depasquale informed parties that Ronald Mizzi, who serves as permanent secretary at the Tourism Ministry and who testified in the case last month, has presented two boxes of documents to the court.
The documents will be held by the judge and only accessible to parties in the case, he said.
The court also agreed to a request by Delia’s lawyers to summon the secretary of cabinet as a witness, to testify about cabinet meetings in which the Vitals deal was discussed.
“It is clear that different ministers have given conflicting evidence,” lawyer Edward Debono told the court.
Chris Fearne was represented by Alex Sciberras. Adrian Delia was represented by Edward Debono, Nick Debono and himself.
As it happened
Live blog ends
1.56pm That's all from us in this live blog. We'll have a summary of Fearne's key points of testimony available at the top of this article shortly. Thank you for having joined us.
'Cabinet secretary should testify'
1.34pm There’s one final request from lawyer Edward Debono: he wants the cabinet secretary to testify about minutes of cabinet meetings in which the Vitals deal was discussed.
It is clear that different ministers have given conflicting evidence, he says, explaining his request.
The judge upholds that request: the secretary will be summoned to testify.
Judge to keep documents
1.31pm State Advocate Chris Soler asks about the boxes of documents given to the court by Ronald Mizzi. The judge says these will be kept at his chambers until the next sitting, with only parties to the case having access to them.
Lawyer Joe Camilleri says he is concerned about the documents “ending up in the media’s hands.”
“First prove that these documents are privileged,” Delia shoots back.
The judge cuts the arguments short and says he will keep hold of the documents.
The case will continue on April 12 at 11am.
Chris Fearne ends testimony
1.29pm Chris Fearne is done testifying and steps off the witness stand.
The judge thanks him and health authorities for their work and asks a favour of him.
“Please take care of my staff, because they’re all going down (with COVID-19),” he says with a smile.
Fearne bows good-naturedly and exits the courtroom.
No discussion of individual clauses
1.27pm There was no discussion or explanation within cabinet about individual clauses or their meaning, Fearne says.
He tells the court that he however disagrees with Delia’s interpretation of the €100m clause to mean that the government committed itself to paying that amount “come what may”.
“I don’t interpret it as that,” he says.
Cabinet discussion about loan guarantee
1.23pm Judge Depasquale asks Fearne why it was Mizzi who signed that €100m deal, when he was not health minister.
Fearne says that Mizzi had retained Projects Malta under his remit, and therefore signed for deals which it was responsible for.
Delia leafs through some papers and then hands a document to Fearne. Was that presented to cabinet, he asks. (The document relates to the government’s loan guarantee for Vitals).
Fearne says no. It’s not normal practice for documents to be attached to cabinet memos, he says. He tells the court that he recalls the matter being discussed, at times animatedly.
The witness goes through the index included with the file and tells the court that he doesn’t recall the full cabinet discussion, other than the fact that the government was to guarantee the loan.
'Things were happening which I did not know about'
1.16pm Delia takes Fearne back to the original MOU.
Fearne says he learnt of it from the media and that he had asked Konrad Mizzi about it.
“He told me he didn’t know about it,” Fearne says, adding that he later learnt the MOU had been cancelled.
“I became minister in April 2016. The RFP happened before that. Contracts were signed in March 2015, then November 2015 and January 2016. I never signed documents with Vitals Global Healthcare”.
The €100m side letter was signed by Konrad Mizzi on the government’s side, Fearne says, in August 2019.
Delia notes Mizzi was not in charge of health at that stage.
“As I said, things were happening which I did not know about,” Fearne says. “I was going to table a memo that day to say ‘listen, either everything is under health, or nothing at all. But then you know what happened that day.”
Where are the projects at?
1.11pm Fearne is asked about the progress in the various parts of the deal.
Plans were filed for Gozo Hospital “just over a year ago”. Plans were also submitted for St Luke’s Hospital, albeit “not in as much detail”. Plans for Karin Grech are incorporated into those.
The process there is currently at a halt as parties are negotiating the future of the concession.
'Non-binding' deal
1.07pm Fearne says the concessionaire had sought new talks because they were worried about the way in which some clauses were being strictly interpreted.
He tells the court that he learnt of another agreement reached (with Mizzi) which he was later told was non-binding.
The court asks Fearne to present a copy of this deal.
'Side letter may have been mentioned'
1.05pm Fearne says he does not know whether any side letters concerning the deal were tabled in cabinet.
“They might have been mentioned in other matters. Mizzi did table memos at cabinet.”
Fearne says he will not answer any more questions about that as the matter is still ongoing.
He tells the court that he does not know of any other agreements.
Meanwhile, on social media
1pm Meanwhile, Delia (who is in court asking questions of the witness) has taken a leaf out of the Joseph Muscat playbook and published a post to social media as court proceedings continue.
He says Fearne’s testimony has exposed Muscat’s lies, as cabinet had only been given one presentation about the deal and not discussed it, as the former PM had testified.
Roping in Harvard
12.58pm Delia asks what technical experience Vitals had.
Fearne: They were backed by Harvard.
Delia: But Harvard was not a party to the contract.
Fearne: No.
Delia asks whether involving Harvard was their idea, or his.
Fearne: I can’t say I didn’t request it, but they did. It was in early 2018 and I went to the US.
The minister also recalls Barts getting nervous about the medical school project, because it was not ready yet.
“So I went to St Mary’s and we agreed to focus on that medical school. And that was done.”
PA permit requirement
12.54pm Delia asks whether the PA permit needed for works to begin was part of the contract. Did it stipulate that the deal ran for 30 years from the date the permit was issued?
Fearne says that as far as he knows, the contract does not say so. But he adds “I’m not the right witness to answer that”.
Government looking into Vitals' €15m bill
12.48pm Delia asks who was to finance the various large projects envisioned as part of the deal. Fearne says it would have been Vitals.
Delia: In their published accounts, they declare that they spent €15 million on structural expenses. Did they?
Fearne: I’m not in a position to confirm this. We are verifying the sums.
Delia asks whether Vitals received some financial support. Fearne replies that he only knew of the BOV loan (which the €100m side letter was to guarantee) and does not know of any other financial support.
Fearne did not see evaluation report
12.45pm Adrian Delia takes up questioning. If Projects Malta handled the RFP, who took care of the health requirements in it?
Fearne says that was handled by the late Prof. Charles Grixti.
Delia notes Prof. Grixti formed part of the evaluation board that decided on bids submitted.
Fearne: “He was a consultant too. He provided very useful advice. But I don’t know who was involved.”
Fearne says he does not know who provided medical advice after the RFP stage and tells the court that he did not see the evaluation board’s report.
'Go see new building'
12.40pm Debono tells the witness that the original plan was not that described by Fearne.
Fearne says the Gozo hospital was “below second rate” and that St Luke’s was to be upgraded to be a state of the art facility.
“This surely couldn’t be done with the premises as they stand today. There is already a new building housing the orthotics unit. You may go see it,” he says.
'Works require many permits'
12.37pm Debono: Don’t you think that the state should have made sure that the concession would revert if milestones were not achieved?
State Advocate Chris Soler argues that the question is a presupposition. The judge waves that aside and says Fearne can reply.
The minister says he leaves legal interpretation to others, but that he was told that milestones were linked to permits being issued.
Debono: Have permits been issued?
Fearne: No, not yet.
Debono: Do you need a permit to refurbish St Luke’s?
Fearne tells the lawyer that the hospital needs significant work.
“It’s not simply plastering a ward,” he says. “Several permits are needed. This applies to St Luke’s, Karin Grech and a new hospital. Parts will be pulled down and a new hospital built. See the master plan at the Planning Authority.”
A sketch of the revamped St Luke's as proposed by the concessionaires.'I learnt Steward were also talking to Mizzi and OPM'
12.32pm Debono: Until November 28, 2019 you were not very involved in this deal, right?
Fearne reiterates that he was “not happy” with progress on it and was also displeased when he learnt of parallel discussions under way with Mizzi.
“Steward were of the view that we at health were interpreting parts of concession rigorously to withhold certain payments. I was in talks with them. But then I learnt they were (also) talking to Mizzi and OPM...”
“I drafted a memo but then came that November day [when Mizzi resigned].”
€100m side letter
12.28pm Debono turns to a side letter guaranteeing the concessionaires a €100m payment if the deal ended early.
Fearne says he knew that the government was to serve as a guarantor on the loan. “That’s all I knew,” he says.
Debono: Did you know that the government would have to pay Steward if it lost this case?
Fearne: That’s your interpretation.
Permit trouble
12.26pm Debono presses the witness: have milestones scheduled for 2017 been achieved?
Fearne says the medical school is ready and that permits for Gozo Hospital and St Luke’s have been approved. A DNO application for them was previously withdrawn, he says.
Debono: Why were shares transferred, given that milestones were not achieved?
Fearne says the lawyer is “not interpreting that correctly”.
“The transfer was to take place on the government’s authorisation. The milestones depended on [obtaining] the necessary permits and the DNO had been denied.”
Debono asks if the matter was put to cabinet.
Fearne: “I’m not aware. I do know there was a letter signed by Mizzi, which I got to know about later.
Parallel talks with Mizzi
12.21pm Then focus turned to St Luke's. But Fearne ran into a problem.
"I realised that while I was in talks, there were parallel talks with [Konrad] Mizzi too. I wasn’t happy about that and wrote a memo about it. That memo was to be tabled on the same day that Mizzi resigned."
Have milestones been achieved?
12.19pm Fearne says that it was Projects Malta which selected the concessionaire. Once a preferred bidder [Vitals] was selected, then the health ministry “checked the service to be offered to Maltese people”.
Debono asks about project milestones. Were they achieved?
Fearne says that healthcare standards in Gozo have “greatly improved” and singles out professor Joe Zarb Adami for praise.
He then says that following the 2017 general election, he was not happy with progress on the project and demanded more scrutiny, with a focus on the medical school to be run by Barts.
'RFP made sense on paper'
12.16pm Fearne is asked whether cabinet was informed of an emphyteutical concession signed before notary Thomas Vella, which came after the MOU.
Fearne: “When there was an RFP [Request for Proposals] there was a presentation at cabinet. The RFP made sense on paper. Gozo’s healthcare system was in a pitiable state. It was bad. So heavy investment in that and St Luke’s [hospital], together with medical tourism… that idea made sense on paper.”
Was the health ministry involved?
"I personally was not," Fearne replies.
Lawyer backs witness' testimony
12.13pm Fearne recalls Mario Vella telling him that it was “not unusual” for Malta Enterprise to sign an MOU and then decide on how to proceed.
“Vella just told me that there no longer was an MOU [in place],” the minister says.
Debono tells the court that the witness’ testimony is correct. “I’m not contesting what he’s saying,” the lawyer says.
'I did not know about MOU'
12.10pm Lawyer Edward Debono starts the questioning.
From March 2014, following the resignation of Godfrey Farrugia, he [Fearne] was parliamentary secretary for health. Was he involved in the Memorandum of Understanding signed with the eventual concessionaires, Vitals Global Healthcare? Did he know about it?
Fearne: “No. I was not involved and did not even know it existed. It emerged in the media and I believe there was a parliamentary question about it.
“I had asked [Konrad] Mizzi about it. Then at a meeting with Malta Enterprise and Mario Vella, I was told that the MOU had been rescinded.
“As far as I know it was not put forward at cabinet. At least not while I was there.”
[The NAO has pointed to the MOU as a sign that there was "collusion" between the government and Vitals, and said Vitals should have been disqualified from bidding for the contract because of it].
Two boxes of documents
12.04pm Judge Francesco Depasquale notes that he received two boxes of documents concerning the case last Thursday. The documents were presented by Tourism Ministry permanent secretary Ronald Mizzi – Mizzi testified in the case last month.
The judge says that he has yet to comb through them, but at first glance it appears that nothing has been redacted from the documents.
The documents cover pages 1529 to 2076 of a file concerning the deal. They will be preserved in court for all parties to consult.
And with that done, Fearne can take the oath and begin his testimony.
Fearne takes his place
12.01pm The day's star witness is in court, at the witness stand.
Delia's lawyers, Edward and Nick Debono, are in the hall. So too is judge Francesco Depasquale.
And as we type, State Advocate Chris Soler enters the courtroom. It's all set to begin.
What happened last time round?
11.55am The last hearing in this case took place three weeks ago, on February 8.
Konrad Mizzi was that day's star witness. His testimony amounted to very little, however - the former Labour minister-turned-independent-MP refused to answer questions while under oath.
His lawyer [and former magistrate] Carol Peralta told a court that Mizzi's lips would remain sealed until he received full disclosure of magisterial inquiries he is facing.
Mizzi's former permanent secretary, Ronald Mizzi, also testified on that occasion.
Welcome
11.50am Hello and welcome to this live blog, which will be bringing you a minute-by-minute account of Chris Fearne's testimony in a key court case.
We're at the Valletta law courts, in hall 15, where the case is scheduled to begin at 12pm.