UPDATE (4) –
This morning, the Court of Appeal reached its conclusions on two appeals filed by Steward Healthcare – one appeal was filed through Steward Spain, and the other was filed by Steward Malta Assets Ltd, Steward Malta Ltd, and Steward Malta Management Ltd.
The court rejected the appeal filed through Steward’s Malta-based companies, with an exception for just one of a total of 12 grievances listed by Steward Healthcare in its appeal: it imposed the sharing of court costs on the government and the individuals which were party to the case, namely disgraced former prime minister Joseph Muscat, the office of the Attorney General, and the heads of INDIS and the Lands Authority.
To begin with, the court immediately rejected the appellant’s argument that Steward Healthcare was somehow different to Vitals Global Healthcare (VGH) when in reality, Steward effectively “became” VGH when it acquired VGH’s shareholding in its entirety. I translate the relevant quote:
(in reference to Steward Healthcare’s argument): “this is an erroneous representation of the facts and can deceive: the concessionaires were always the same; the appellants, whether they use the name of Vitals or whether they use the name of Steward, remained the same and the baggage that they carried remained and remains the same. The arguments and observations in the appeal as to what led today’s concessionaires to take over shares from previous appellants could have relevance in other instances but not for this case.”
The Court of Appeal went even further than the previous court, arguing that “the way this story developed does not show deceit from one end and ingenuity from the other, as was believed by the first court, but collusion between the appellants and high-ranking government representatives or the government’s agencies which led to the drafting of simulated contracts which were planned not to provide quality medical services but to reach other objectives“.
The Court of Appeal substantiates this argument by pointing towards the major issues it observed with the concession agreement, including:
- the Memorandum of Understanding which was signed between the government and VGH in 2014 months before the request for proposals was issued,
- that there was clear evidence of the non-viability of the concession agreement,
- both the government’s key representatives as well as Steward Healthcare as a company failed to carry out adequate due dilligence when issues with VGH’s lack of credibility were manifestly evident, and
- the government’s failure to rescind the concession when it was evident that none of the milestones of the concession were reached by the time Steward Healthcare scooped up the deal.
The Court of Appeal did not mince its words when referring to how the government handled the constant stream of failed milestones:
“The reaction of those who had to safeguard the country’s interests when they saw milestone after milestone go by without any results was not to look for contractual remedies but to instead further extend the concession’s time frame in favour of the appellants without them giving anything back, and, on the contrary, millions of euros were paid out to these appellants.”
The court further argued that this scenario strengthens its suspicions that the primary reason why the concession was awarded to VGH and then Steward Healthcare was not the improvement of medical services but “as an instrument so money can go out of the country’s pockets and into the pockets of the appellant societies”. It also lampoons health minister Chris Fearne for his infamous declaration that Steward Healthcare was going to be “the real deal”, arguing that this certainly was not the case.
The appeal filed by Steward Spain was mainly based on the company’s claim that the allegation of fraud was not within the scope of the case, that the government failed to address issues relating to the concession’s viability when it was in the best-placed position to do so, and that the annulment decision meant that Steward Spain (an entity which served as a creditor to Steward’s Malta-based assets through a €13 million loan) could not repay its financing obligations towards Bank of Valletta.
This appeal was rejected in its entirety.
UPDATE (3) –
I managed to get my hands on a copy of the Court of Appeal’s judgement. Given that it’s 99 pages long, I’ll do my best to summarise it as soon as possible, but it’s going to take a while. In the meantime, you can download it from here if you wish to have a look at it yourself.
UPDATE (2) –
The Times of Malta was reporting directly from court this morning – you can read their initial summary here.
UPDATE (1) –
Dr Adrian Delia has confirmed that the Court of Appeal confirmed the annulment of the hospitals concession. Story will be updated as soon as possible.
While you can get the whole story from beginning to end by flicking through the data library, I provided a very brief timeline below to help you refresh your memory and understand how we got to this point.
The court case throughout 2023:
25 February, 2023 –
Mr Justice Francesco Depasquale hands down an unequivocal judgement condemning the hospitals concession as “fraudulent”. I quote the Times of Malta’s report on that same day:
A court on Friday condemned Steward Health Care, which took over the hospitals’ concession from Vitals, as having intended to “unjustly enrich itself at the expense of citizens” and engaging in “possibly criminal behaviour”.
Depasquale’s judgement effectively ended the concession and ordered that the hospitals which were previously conceded to Vitals Global Healthcare (VGH) and later, Steward Healthcare – Karin Grech Rehabilitation Hospital, St Luke’s Hospital, and Gozo General Hospital – were to be rescinded to the government within the span of three months.
While Depasquale’s extensive 136-page verdict is far too detailed to reproduce in an article like this, the most salient reasons why the judge quashed the deal were as follows:
- VGH’s evident prior knowledge of what the tender would look like,
- the government’s abject unwillingness to commit to adequate due diligence and multiple failures of basic good governance along the way, and
- Steward Healthcare’s decision to swoop in on a deal they knew was mired in litigation and controversy in order to line its own pockets and shortchange the Maltese taxpayer while failing to provide credible evidence of its own promised investments.
Steward Healthcare immediately came out guns blazing after Depasquale’s verdict, doing its utmost to discredit the judicial process through a PR blitz and a formal appeal against the judgement. This same appeal is the one we are expecting to be concluded today.
Even though the appeal essentially “froze” Depasquale’s judgement and entitled Steward Healthcare to maintain the concession while the appeal is concluded, the company had completely cut ties with the Maltese government and ended its local operation a couple of weeks after Depasquale’s judgement.
31 July, 2023 –
The Court of Appeal, presided by chief justice Mark Chetcuti and Mr Justices Giannino Caruana Demajo and Anthony Ellul, announces its intent to finalise its judgement today, on 23 October, 2023.
Throughout that hearing, Steward Healthcare’s legal team had argued that the government had failed to uphold its own obligations and attempted to pin the blame solely on the government for defrauding Steward Healthcare by roping the company in for a concession that was already known to be fraudulent.
The company’s lawyer attempted to discredit Depasquale’s conclusions, arguing that the judgement was unfairly favourable towards the government and that its conclusions weren’t clear in terms of whether it was annulled due to fraud or breach of contract.
Both the state advocate and Opposition MP Adrian Delia’s lawyer had strongly rebutted Steward Healthcare’s argument, pointing out that Steward Healthcare could not have possibly not known about the extent of the fraud surrounding the deal while citing arguments Steward Healthcare itself had made in cases that were being heard both in Malta and in overseas jurisdictions.