Updated 7.49pm with PL reaction to PN statement
The primary victims of the government’s hospitals privatisation deal were the citizens of Malta, an international tribunal said in a 200-page ruling.
“Sadly, the concession for these hospitals turned out to be a failure and gave rise to different proceedings, including before the courts of Malta.
“The primary victims of this failure are the citizens of Malta who were anxious to receive through a private public partnership improved health care services in an improved hospital environment in their beautiful country,” the tribunal said.
The government on Friday released the tribunal’s full findings,
In its award, the tribunal rejected Steward’s claim that the government had unlawfully terminated the concession and owed it contractual damages.
The tribunal, however, also dismissed the Maltese government’s bid to be compensated by the US healthcare company.
It found that the government received €889,434,091 worth of services from Steward, while the government paid the healthcare company €884,644,629, leaving a shortfall of €4.78 million.
Read the full 200-page document using the PDF link above. Times of Malta will be providing analysis of the document in the coming days.
What was the government seeking?
The government initially sought €760 million in damages from Steward.
It alleged that Steward fraudulently misrepresented its financial position when taking over the concession, thereby acting in bad faith.
It also claimed losses resulting from Steward’s failure to invest in St Luke’s, Karin Grech and Gozo General hospitals, losses due to Steward’s failure to develop medical tourism and other contractual claims relating to the agreements between the parties.
Once a Maltese appeals court confirmed a February 2023 ruling to annul Steward’s contract on grounds of “collusion,” the government adopted the court’s decision to strike down the concession contract as its primary defence.
It therefore argued that the contracts had effectively been voided, and both parties should be “restored” to the position they were in prior to signing the contracts.
What did it get?
The tribunal agreed with the government’s argument that the contract was null, and therefore both parties should refund the amounts paid to each other.
It confirmed that during the course of the contract, Steward received a total of €884,644,629 from the government, while it gave a total of €889,434,091 in medical services.
This left a shortfall of €4.78 million, which the government owes Steward.
Where did this figure come from?
The majority of the €884,644,629 in payments by the government to Steward were for the healthcare services it provided while running the Karin Grech, Gozo and St Luke’s hospitals.
Apart from these payments, Steward was also meant to invest around €200 million of its own money into renovating the St Luke’s, Karin Grech and Gozo hospitals.
The government sought compensation in the form of a “discount” on the €884,644,629 due to Steward for its services, because of its lack of investment in the hospitals.
This argument was shot down by the tribunal, on the basis that it would be difficult to translate these issues into a discount rate that would warrant reducing the value of the services given by Steward.
“Any such calculation would, at best, be speculative, based on a rough guess,and amount to little more than conjecture,” the tribunal said.
What evidence did the government present?
The government submitted witness statements, expert reports and documentary evidence.
It also obtained confidential documents from Steward during the tribunal disclosure process.
The government also submitted three National Audit Office reports into the hospitals deal, as well as copies of the two Maltese court rulings annulling the hosptials contract.
It also submitted documentation on reports by Times of Malta about Steward engaging in spying and smear campaigns linked to the contract.
What about Steward’s own compensation claim?
When Steward took the government to arbitration, it argued it was owed upward of €100 million, as part of an early termination clause found in the contract.
This claim was rejected by the tribunal, on the basis that the contracts had been declared null by the appeals court, therefore, the €100 million claim was unenforceable.
Who didn’t testify?
The tribunal said that neither the government nor Steward offered evidence from key players in the deal, be it at initial stages or in between.
On Steward’s side, Armin Ernst, who the government described as the “mastermind” behind Steward’s involvement in the concession, did not testify.
Neither did Ralph de la Torre, the CEO of Steward’s global operations or Marc Rich, its CFO.
On the government side, Konrad Mizzi and Chris Fearne, both ex-health ministers, were not brought as witnesses.
The absence of testimony by other senior officials was also noted.
This included Ronald Mizzi, who acted as permanent secretary for different ministries involved in the deal, Joseph Rapa, who was permanent secretary to the health ministry, Joseph Chetcuti, another permanent secretary and Edgar Borg, a former financial officer within the health ministry.
“Given the substantial sums at stake in this arbitration, it might have been expected that testimony would be provided by those with the most direct knowledge of the facts.
“However, the tribunal believes that any additional witness testimony would have been unlikely to alter the outcome of this arbitration,” the tribunal said.
‘Contracts crafted against public interest’ – PN
In a statement, the Nationalist Party said the report confirmed the two Maltese court rulings and three National Audit Office reports namely that “there was collusion and a total failure against the Maltese people”.
“The Partit Nazzjonalista is carefully analysing the full details of the decision,” the PN added.
They also pointed out that the government’s claim that it was the one to initiate the arbitration is “false”.
“As clearly stated in the official conclusions, it was Steward who took the Maltese Government to arbitration, not the other way round.”
“This decision further confirms that these contracts were crafted against the public interest and should never have been signed. Once again, we are seeing that not only was nothing built or improved, but millions of euro belonging to citizens were wasted in vain.”
‘The truth has surfaced’ – PL
The PN’s statement was swiftly followed by a reaction from the Labour Party, which claimed that the report “clearly shows” the government had “defended the national interest in the best possible way.”
In its statement, the PL accused the Opposition, and in particular Adrian Delia, of “deceiving the public,” saying they not only “lied but the final decision reveals that, because of the way he filed the case in the Maltese courts, he deprived the Maltese State of the opportunity to seek damages.”
“They lied point blank, and today they are trying to make people forget the €400 million lie but the Nationalist Party certainly cannot forget that the truth has now surfaced,” the PL said.
The Labour Party said the PN had “deceived the public,” noting that the tribunal showed not only that Steward received no €400 million, but also that the government received fair value for the services provided.
“The Nationalist Party also deceived the public when it claimed that the government paid for infrastructure improvements that Steward was meant to carry out, when in fact the evidence shows that the government only paid for the benefits it received – benefits from which many Maltese and Gozitan patients profited.”