A partner of accountancy firm Nexia BT has told a court that the deal signed by the government with Vitals Global Hospitals would have merited being revoked.

Emanuel Castagna was one of the members on the committee tasked with selecting the preferred bidder to run the Karin Grech, St Luke’s and Gozo hospitals. 

He was testifying on Friday afternoon in proceedings instituted by Adrian Delia, Opposition Leader against former Prime Minister Joseph Muscat, the Attorney General, Malta Industrial Parks and Vitals Global Healthcare.

Vitals crashed out of the concession two years after taking over. 

The investors failed to raise the required financing, leaving unions and the Opposition seething about the lack of progress at the three hospitals and the opaque nature of the deal. 

Under questioning by lawyer Edward Debono and Delia himself, Castagna insisted that the committee had abided by the terms laid out in the Request For Proposals, ticking the scoresheet and ensuring documentation was in place. 

There was nothing suspicious about the fact that Vitals had been registered on May 30, 2015, just one week before submitting its bid, he said.

Castagna also said that he found nothing untoward in the fact that the company had a share capital of 1200 at €1 each share, undertaking to invest €187 million. 

The viability of the project was based upon various assumptions, the major one being that of attracting medical tourists to Malta.

“Wasn’t it obvious even at that stage that your projections would go off target and by far?” asked Debono.

“At that stage no. The targets were attainable….I think they went awry,” Castagna replied. 

“Your job was to make sure that if they went awry, they [Vitals] would foot the bill!” remarked Delia. 

The report forwarded to government by the evaluation committee had concluded that VGH was “the ideal setup,” basing its conclusions on letters of comfort - an assurance about a debt, short of a legal guarantee - to attest its financial clout.

Yet those letters were non-binding, Delia promptly pointed out, as the witness went on to explain that it had not been within the committee’s remit to investigate.

When pressed further, Castagna said that they had made their recommendations, knowing that both Projects Malta and government could “strike off the deal” at any time, even after evaluation. 

Up to the bidding stage, their proposal was viable, said Castagna, drawing a parallel to the Valletta Waterfront Project.

“I have no vision as to what happened afterwards. You’re asking the wrong person,” he went on, categorically denying that the committee knew that Vitals was the ‘chosen one’ from the very start. 

No due diligence

Earlier in Friday’s sitting, James Camenzuli, Projects Malta Director up to three weeks ago, had likewise insisted that the evaluation and adjudication committee, of which he was member, had stuck to the remit laid down in the RFP.

That remit did not include a due diligence exercise which was not mentioned in the RFP. 

“How could you assess the financials of the bidders without embarking upon a due diligence exercise?” Debono asked.

Yet Camenzuli insisted that their task was to assess the bidders in line with the RFP, and in fact, the two other bidders had been written off as “non-compliant”, leaving Vitals as the only compliant bidder. 

“Did you check Tumuluri?” pressed on Debono.

“It was not our remit to evaluate the persons but the bid,” came the reply.

“Did you know about his bankruptcy in Canada back in 2012?” 

“No. It was afterwards that I read about it in the newspapers, just like you and everyone else.” 

“Our remit was to follow strictly the scoresheet put by Projects Malta. That was our remit and we fulfilled it. We undertook no investigation, we undertook evaluation.”

“Did you know beforehand that Vitals was the chosen one?”

“I swear under oath that I did not.”

As for the fact that the company had been registered one month before the evaluation report was completed, Camenzuli said that it was normal for a “consortium” to come together shortly before casting a bid.

“Yet a consortium was not the preferred bidder. Only VGH was,” pointed out Dr Debono and Dr Delia in unison. 

“They [VGH] had the backing of large companies. Perhaps consortium is not the exact term,” the witness replied. 

The case continues in September.