A court has annulled a "fraudulent" privatisation deal for the running of three hospitals, in a dramatic judgment delivered on Friday.
Gozo General Hospital, St Luke's Hospital and Karin Grech should be returned to the government within three months, a judge ruled.
Former PN leader Adrian Delia, who led a five-year legal battle against the deal, said the decision was "a victory for Malta".
The government said it was analysing the 140-page judgment and would safeguard "the national interest, employment of all workers and all hospital services".
In 2017, the hospitals were given to Vitals Global Healthcare, which had no previous experience in managing hospitals.
When it failed to live up to its obligations, the concession was handed to US company Steward Healthcare in 2018.
Both Vitals and Steward Healthcare were found to have behaved fraudulently in the ruling delivered on Friday.
The end of a landmark day
5.49pm We are going to close this live blog now after a day that saw a court annul one of the biggest government contracts in history.
It was a day that saw:
- a court annul all government contracts awarded to Vitals and Steward;
- a damning ruling that found both had acted 'fraudulently';
- the return of three hospitals to the government;
- the former prime minister saying the cabinet had endorsed the deal;
- a victorious Adrian Delia declare a 'victory for Malta';
- critics calling for the arrest of Muscat and Konrad Mizzi;
- Steward described the decision as outrageous.
‘Outrageous and without merit’: Steward
6.30pm Steward Health Care has questioned the outcome of the judgment, calling the statements made against it as “outrageous and without merit”.
In a statement, Steward said that preliminary reviews of the judgment showed it contained “significant flaws in reasoning”.
PN urges people to protest
4.40pm PN leader Bernard Grech says Opposition will be insisting on an immediate discussion in parliament on this issue of national importance.
"You must strengthen this political cause for your rights. And that’s why you should be there, in front of parliament, to show Robert Abela’s government that their behaviour is not acceptable," he appeals to the public.
Adrian Delia on his win
4.12pm Adrian Delia, who is celebrating winning his five-year fight to annul the hospitals deal, is speaking now.
He slams the attorney general, "who said I had no right to start this case" and reiterates the court ruling that Delia not only had a right, but a duty to speak up.
Delia says various entities tried to shirk responsibility but the court found them responsible. They include INDIS, which is responsible for government-owned facilities, and the Lands Authority.
"The defence said Joseph Muscat and Robert Abela were not involved, but the court said the prime obligation in this kind of contract falls on the shoulders of the prime minister of the country. With no stuttering and with certainty", he said.
He said "the largest public contract in Maltese political history" was a fraud.
Bernard Grech slams Robert Abela, Chris Fearne
4.04pm PN leader Bernard Grech told a news conference that the party will "make sure the government obeys the court" and "gives the hospitals back to the people".
He points to prime minister Robert Abela, who "was the lawyer and legal consultant of Joseph Muscat when these contracts were signed" and "has continued to defend the people who gave our hospitals away".
He points to health minister Chris Fearne, who once described Steward as "the real deal".
Grech says: "Those who don't fight corruption are corrupt".
PN press conference
4.02pm Meanwhile, the PN is holding a news conference.
Muscat says he has 'nothing to be afraid of'
3.43pm Our journalist Jacob Borg has managed to track down Joseph Muscat this afternoon. The former prime minister says he has "nothing to be afraid of" following today's judgment, which slammed his government for "trying to escape responsibility".
No response from Steward yet
3.15pm We're waiting to hear from Steward Healthcare, who took over the contract to run the three hospitals from Vitals. Steward has been silent so far.
Today's judgment found its behaviour was fraudulent, including its move to vary the concession to include a €100 million default penalty that the government would have to pay.
Describing the company as "totally reprehensible", the court ordered it to pay all costs.
What will Steward do next?
ADPD - The Green Party calls for public inquiry
3.10pm ADPD-The Green Party has reacted too. In light of the judgment, it calls for an urgent public inquiry into all contracts awarded by the government led by prime minister Joseph Muscat.
It "also requests the Commissioner of Police to investigate Joseph Muscat, Konrad Mizzi and Chris Cardona for fraud and corruption".
Move to bin
2.53pm Matthew Caruana Galizia doesn't need any words. He posts a picture of some of the key players in the deal, and shows exactly where he wants them to go.
Daphne's reporting 'vindicated'
2.43pm The Daphne Caruana Galizia foundation has just released a statement saying that the murdered journalist's reporting was vindicated by the judgment.
In March 2015, she had reported that the government had struck a deal with Oxley Capital Group of Singapore ahead of the call for proposals for the privatisation of three of Malta’s state hospitals, and that representatives of the company, including Ram Tumuluri, had visited Malta two months earlier for meetings.
She reported how he had told medical suppliers that he already had an agreement to run the hospitals.
Caruana Galizia wrote: "I knew my information was 100% correct not only because of the cast-iron reliability of the people who were invited to those meetings at PriceWaterhouseCoopers only to be confronted with this disturbing information, but also because, when I texted the government head of communications, Kurt Farrugia, asking him to confirm or deny that the government had reached an agreement with Oxley before the tender was out, he didn’t reply at all. There was a blank wall of silence".
The foundation called for the authorities to move swiftly against all those implicated in the fraudulent deal with both criminal prosecutions and civil action to recover stolen funds, and to ensure the return of public assets to their rightful owners.
'Arrest them now'
2.25pm PN MEP David Casa doesn't mince his words.
Joseph Muscat: 'I have always acted in the interest of the people'
2.18pm Former prime minister Joseph Muscat has made his first comments after the damning ruling by the judge today on the deal his government made.
"While I want more time to process the sentence of the Civil Court that was given today, I respect it as I have always done," he wrote on Facebook.
He continues with two points. Firstly, he says all decisions were sanctioned by his Cabinet.
"I confirm that all the stages in the hospital concession, which included hospitals that had been abandoned or closed for years, were done with continuous discussions and documented decisions of the cabinet," he said.
Secondly, he encourages "any other investigation that may be about this concession.
"This is because I want all the facts to be known. I have always acted in the interest of the people and people of good will know this," he says.
2.14pm We'll continue to update this blog with reactions and other developments. But if you want to read a wrap-up of today's case, we have one here.
'Maltese taxpayers shouldn't pay a cent'
2.09pm Rule of law NGO Repubblika called on the prime minister to ensure that those responsible for the abuse are held accountable.
Maltese taxpayers should not fork out a cent - the €100 million promised by Joseph Muscat's government (in case the deal falls through) should be paid by the ones who got involved in corruption.
The NGO slammed the 'corrupt people' who planned to get rich off the back of sick people.
2.03pm European Parliament President, Roberta Metsola, says the decision shows the hospital contracts were "neither in the interest of the health workers nor the patients".
"From the very beginning, the message to the government was clear: don't sell the hospitals."
PN leader Bernard Grech calls for justice
1.57pm In a Facebook post, PN leader Bernard Grech thanked Delia, adding that had it not been for the Opposition's pressure, millions of euros would have continued being stolen from Maltese taxpayers.
"The Opposition expects the government to return the hospitals back to the Maltese and ensure that those who abused, stole, and pocketed money, face justice.
"Robert Abela and his friends not only continued defending those who handed over the hospitals fraudulently, but also kept calling the deal 'the real deal'.
"Instead of defending the people, Robert Ablea defended the corrupt and fraudsters. Whoever doesn't fight corruption, is corrupt."
'Delia, Delia, Delia'
1.49pm Adrian Delia, flanked by some PN MPs, is greeted with cheers and chants as he makes a short statement.
Government 'analysing the ruling'
1.47pm Reacting, the government said in a statement it was analysing the ruling.
In any eventuality, the government assures to safeguard the national interest, the employment of all workers and all hospital services."
Delia outside court
1.46pm In a short address after the case, Delia said triumphantly that a five-year battle had finally resulted in justice. He thanked those who had continued to support him.
"Justice prevailed. The truth came out. You can never give up in the face of corruption."
Calls for arrests
1.41pm The court decision was not even out officially but former AD chairman Arnold Cassola was already calling for action. He called for the immediate arraignment of Joseph Muscat and Konrad Mizzi and for arrest warrants against Ram Tumuluri and Armin Ernst.
Contract of recession to be published in three months
1.34pm According to the judgment, the government must order its notary to publish the contract of rescission within three months from today. All costs are to be borne by Steward Malta Ltd.
'Victory for Malta'
1.32pm Today is a big win for former PN leader Adrian Delia following a five-year legal battle. He was hugged and kissed as he left the courtroom.
He updated his Facebook page with a simple two-word post: Rebħet Malta (victory for Malta).
Hospitals to be returned to the people
1.26pm The court has cancelled all agreements and ordered all property to be returned to the government.
BREAKING: Court annuls hospital concession
1.21pm All pleas of the defendants are rejected. Both the concession and all three agreements are to be cancelled, the judge rules. The concessionaires did not fulfil their obligations.
Steward also committed fraud
1.18pm After denouncing Vitals' fraudulent behaviour, the judge turns to Steward. It led government to vary service concession, to include a €100 million default penalty and to make the government assume all debts.
"Such conditions were also part of Steward’s fraud, making an unjustified enrichment to the detriment of the Maltese government and people," the court rules.
"Did the people in authority accept out of ingenuity or pressure?" the court asks.
"No person having the country’s good at heart would ever enter such a deal if not taken in by fraud. Steward’s stance was totally reprehensible."
Steward 'well aware of the shortcomings'
1.16pm The judge turns to Steward, who took over the concession from Vitals, and holds it still.
"As for Steward, the court had no doubt that it was well aware of the shortcomings of Vitals," the judge says.
Vitals CEO, Armin Ernst, was now an official at Steward.
A 'fraudulent plot'
1.14pm The court says the fraudulent behaviour "persisted not only prior but also throughout the concession".
All projects were never completed and some were not even started. Medical tourism was frivolous and never put into effect.
It was "all part of the fraudulent plot".
Vitals 'ought to have been disqualified'
1.12pm The agreement was part of the whole process of concession. Vitals had an apparent conflict of interest which "ought to have led to the disqualification of Vitals", the court rules.
Vitals kept that memorandum of understanding hidden and "that was evidence of its fraudulent intent".
1.09pm The court says it has "no doubt" that Vitals first bound the government to give it all information.
"It abused of its position. Their investors, aware of the political situation at the time, used fraudulent tactics to get the concession," the judge says.
The evaluation committee made absolutely no due diligence but relied on “letters of comfort.”
These gave no comfort at all. Vitals got funding from a local bank. There was no due diligence of who was making proposals.
'Proof you are corrupt'
1.07pm The court decision is not out officially but there is already reaction.
Former Nationalist MP Jason Azzopardi posts: "Chris Cardona, Konrad Mizzi, Joseph Muscat: there is now proof you are corrupt".
Detailed bid in two weeks
1.02pm The judge is referring to some documents and questions how Vitals could have prepared such a detailed bid in just two weeks.
Fraud before the contract
12.59pm The court refers to the Auditor General's timeline of the process. That timeline gave the court a clear picture which enabled the court to reach a decision.
Far before it published its intention to privatise the hospitals, the shareholders of Vitals had already concluded a memorandum of understanding with the government
After the government was informed of a number of investors interested in developing Gozo hospital, the government bound itself not to deal with anyone while that agreement was in effect. At that stage, there was still no public announcement.
The information was subsequently used by Vitals when putting its proposal for the hospitals.
Fraud in three stages
12.55pm The judge rules that there was fraud in three stages of the process.
Changes to contract 'to benefit Vitals, not the people'
12.52pm When all was considered milestones were not reached. There’s "doubt about the good faith of the concessionaire".
The court says such doubts "should have been flagged by all those responsible in government, Including Dr Mizzi".
When he introduced changes "only to the benefit of Vitals and certainly not the people".
List of failures
12.47 pm The court is perplexed at the dearth of evidence put forward which "probably reflects the poverty of the project"
The judge lists the failures: No beds as promised, no 80 rehab beds at St Luke’s, no new building at Gozo hospital, new works in Gozo not completed to date.
There were renovation works in Gozo including in the toilets of telephone operator, but not the promised works.
Regarding the promised tourism beds at St Luke’s: nothing was ever done about this project, it was totally shelved and Steward brought no evidence to show if the project was even being considered. So the court understands that it will never be done.
Milestones not fulfilled
12.44pm Delia argues that the concession should be annulled because milestones were not fulfilled. He summoned various witnesses to that effect. Martin Balzan, head of the Medical Association of Malta, testified that “almost nothing was done” by Vitals from all things promised. The Gozo school was opened shortly before Fearne testified in the case. Even Joseph Muscat himself conceded that not all had been fulfilled.
The court would expect the defendants to produce witnesses to prove that obligations were fulfilled.
But surprisingly all that Steward produced was a one-page affidavit and 76 pages of photos, including images of a new helicopter, the renovation of toilets and the telephone operator.
No 'logical sense' to Konrad Mizzi move
12.42pm Konrad Mizzi although not a health minister yet, conceded to Vitals up to 2022 to do what they were to do by 2018. Mizzi chose not to continue to testify before this court after resigning and therefore he shed no light on this matter His actions made "no logical sense” says the court.
Government 'incredibly' re-negotiated deal
12.40pm The court has harsh words for the government. When it was evident that when it was clear that Vitals were not fulfilling obligations, the government “incredibly” went on to re-negotiate the deal. Vitals were given an additional 4.5 years to do what they had to do. But still Vitals did not do what they were to do in spite of that extension.
No milestones fulfilled
12.37pm The judge continues. There is "no doubt" that if one of the agreements was breached there was also breach of the concession.
Concession milestones were "deliberately hidden" when the deal was presented in parliament.
These milestones included design plans, plans for the Barts campus, additional beds for Karin Grech, the renovation of Gozo hospital, beds for hospital tourism, etc.
"None of those completion milestones were fulfilled by Vitals and Steward," the judge rules. They were rendered "virtually ineffective" if not a “laugh in the face”.
The crux of the case
12.35pm Now for the crux of the case. Did Vitals breach the obligations of the concession?
"This was the crux," the judge says. There could be no doubt that the ground rent concession could only take place with the other agreements. All three hospitals were transferred in such a manner that Vitals could dispose of them as opportune. Not to make a profit but solely to implement what they undertook to do under the three agreements signed before the emphyteutical concession, the judge reads.
'Trying to escape responsibility'
12.30pm Another plea raised by all defendants except Vitals was that they were non-suited. The prime minister and attorney general said that the contract was signed by the health minister so they were not part of it.
The court couldn’t help but voice surprise at this plea by the defendants, "As though they all were trying to escape responsibility".
Indis and Lands were to be part of the suit. As for the prime minister, the health minister Konrad Mizzi was appearing on the deed on behalf of the Government of Malta as he testified before this court.
So no one else but the prime minister was to represent the republic. As for the attorney general, he was the one who had obligation to seek rescission of the contract.
Another defence plea rejected
12.28pm Another plea was that Delia was not a party to the contract. However the court says that the law allows an MP to step into contracts to ensure that obligations in favour of government are respected and the contract is thus rescinded. In the case at hand, the property belonged to the government and provided essential service to the people, namely health. Therefore this plea - that Delia was not a party to the contract - is also shot down.
Delia had right to take case
12.22pm Another plea was that Delia had based his case on breach of contractual obligations after the concession. The transfer was completed and therefore as MP he could not put the case the way he did. But Delia rebutted that the contract was vitiated by fraud. The judge rules that as a representative of the people he had the right to challenge the contract.
PM's plea rejected
12.18pm: The second defence was one raised by the prime minister. That is that the concession was separate to other 'related instruments'. The court notes that there were three related instruments. It decides that the concession could not be considered separately from other related instruments. Altogether, they served to implement the project which the government wanted Vitals to do. The plea raised by the prime minister could not be upheld.
Court rejects first plea from defence
12.15pm The court shoots down the first plea from the defence. The court says that formality is an integral part of court proceedings. But such formalism should not be used in an “asphyxiating” manner. Although not expressly clear in the application, Delia’s intention was clear.
Summary of defence arguments
12.13pm The judge summarises the defence's arguments:
- Delia had no juridical interest in the case;
- He wasn't a party to the contract;
- The contracts of service were distinct to the concession contract so there was no breach of agreement;
- There was no breach of conditions.
Basis of the case
12.07pm The judge reminds the court of the basis of this case. Adrian Delia had argued that Vitals failed to fulfill their obligations and as an MP sought to annul it. The respondents countered that he lacked juridical interest, meaning that they did not believe he had the right to institute the court action in the first place.
12.06pm The judge says the judgment is 140 pages. He'll read out parts of it.
Judge enters courtroom
12.04pm Mr Justice Depasquale enters the courtroom with a 'good afternoon', as he prepares to give his verdict on whether the Steward hospital deal is invalid.
Tension in the courtroom
12.02pm Inside, the courtroom is filling up, mainly with lawyers and members of the media. We're waiting for Mr Justice Depasquale. There’s a silence that’s tinged with tension as church bells outside strike midday.
Adrian Delia arrives to applause
11.57am Former PN leader Adrian Delia has arrived to a smattering of applause outside court. He is accompanied by fellow Nationalist MP Alex Borg.
Team ready to take over
11.53am What happens to the hospitals if the judge decides to nullify the concession deal? As we reported earlier this week, according to government sources, in the event that a clear decision is handed down, and no appeals are filed, the government will immediately move in to “seamlessly” take over the running of the St Luke’s, Karin Grech and Gozo hospitals. A shadow team has been in place since the summer.
What is the Vitals case?
11.41am Even the judge deciding this case has described it as complex. So our colleague Jacob Borg has written a Q&A to get you up to speed. Have a read while we wait for the courtroom doors to open and Mr Justice Francesco Depasquale to deliver his judgment.
'If I lose, I lose alone, if I win, it is the people's victory'
11.37am Adrian Delia, the man who has led this case for five years, admitted he had a sleepless night last night. In a Facebook post ahead of the ruling, he said that whatever happens today, he has no regrets. "If I lose today, I will hurt alone, but if God wants me to win, it will be the people's victory".