Tax returns filed by the original concessionaire in a controversial hospitals deal are being investigated by the taxman.
Times of Malta is informed that, prior to leaving the island, Vitals Global Healthcare filed tax returns that were flagged as irregular by the Inland Revenue Department.
The matter is being reviewed by the Tax Compliance Unit (TCU), which is looking into whether the company inflated figures and if it irregularly qualified for tax credits or other benefits as a result.
Sources close to the fiscal review said a company official had only filed the company’s tax returns covering 2015 to 2017 after it was threatened with court action.
An initial review of the documents by the TCU flagged irregularities in the filings, prompting a deeper investigation.
The sources said that although company officials had been called in to discuss the filings, they never responded to requests from the tax authorities.
The controversial €4 billion hospitals contract to run the Gozo General, St Luke’s and Karin Grech hospitals had been made on the promise that the private investors would spend €220 million to completely revamp the tottering health facilities.
Steward Health Care cooperating with authorities over VGH’s tax review
VGH, however, crashed out of the government contract just two years into the 2015 deal, with US healthcare provider Steward Health Care coming in to pick up the pieces.
Steward's tax issues
It is understood that Steward Health Care has been cooperating with the tax authorities over the review of VGH’s taxes for several months. Steward has been locked in talks with the government about improving the terms of the deal ever since taking over the contract from VGH.
The new concessionaire, however, is not without its own tax problems. On Tuesday, Times of Malta reported Steward is being chased to pay some €37 million in outstanding VAT dues, fines and other penalties.
The company last month instituted a civil court case against Inland Revenue Department Commissioner Marvin Gaerty over the matter. The case, instituted through its local company, Steward Malta Management Limited, is to be heard before Mr Justice Christian Falzon Scerri next month.
Steward is understood to be disputing the dues and is set to call in witnesses from the government and senior tax officials to prove its case.
The court case has temporarily paused separate legal action which the tax department planned on taking against Steward Health Care later this year after the company failed to pay taxes for four years.
It is the latest twist in the hospitals deal which has been the source of controversy for years.
The privatisation of Karin Grech, St Luke’s and Gozo General hospitals has been the subject of a damning investigation by the National Audit Office.
The NAO said VGH should have been barred from winning the hospitals contract due to “collusive behaviour” with the government.
In a follow-up report, the NAO found around 60 instances of VGH breaching its service obligations in the hospitals’ contract, yet no action was ever taken.
Times of Malta reported in November that former prime minister Joseph Muscat received €60,000 from Accutor AG, a company which, in turn, received millions from Steward Health Care when it took over the contract to run three state hospitals from VGH.
The police searched Muscat’s family home earlier this month as part of a magisterial inquiry into the matter.