A landmark Maltese court judgment recently annulled agreements between the government, Vitals Global Healthcare, and Steward Healthcare regarding the management of three hospitals. Judge Francesco Depasquale declared that the entire deal was tainted by fraud, condemning both Vitals and Steward for deceitful behavior and slamming government officials for gross incompetence.
The scandal dates back to October 2014, when a secret Memorandum of Understanding (MoU) was signed between a group of investors (who later founded Vitals) and the government. This MoU allowed the investors exclusive access to critical information about Malta’s healthcare system long before the government issued a public tender. By March 2015, the government opened a call for expressions of interest for the hospitals’ privatization, unaware that Vitals had already used insider information to craft a proposal that would secure them the contract.
Judge Depasquale strongly criticized the government for failing to carry out financial due diligence on Vitals and for continuing to support the company despite multiple warning signs. Vitals did not meet its obligations, including building new hospital facilities, increasing hospital bed capacity, or launching medical tourism projects, all while receiving taxpayer funds. The failure to halt the agreement and retake control of the hospitals drew sharp criticism from the court.
When Steward Healthcare took over in 2018, they too failed to meet the project obligations, while continuing to drain public money. A shocking revelation was Steward’s 2019 agreement, which guaranteed a €100 million payout from the government if the contract fell through. Steward also secured loans using the government’s credit, all while knowing that a court case filed by opposition politician Adrian Delia was underway to nullify the contracts.
Judge Depasquale’s ruling highlights the web of corruption and fraud that characterized this deal from its inception. The judgment allows the government to reclaim the hospitals without the €100 million fee and spares it from taking on Steward’s debts. However, efforts to recover taxpayers’ funds from Vitals and Steward through separate lawsuits remain ongoing. Additionally, a criminal inquiry involving former Prime Minister Joseph Muscat and Konrad Mizzi continues, as they are both considered suspects in relation to the deal.
This judgment serves as a stark reminder of the importance of transparency, due diligence, and accountability in public-private partnerships, particularly when essential national resources like hospitals are involved. It is yet to be seen if appeals will overturn the decision, but for now, it represents a significant win for public interest in Malta.