Safeguarding the country’s interests

Government is committed to recovering any public funds paid to Vitals Global Healthcare (VGH) or their successors, Steward, that were not adequately justified by the services or investments provided.

The Maltese Parliament held an urgent, heated debate on Monday evening to discuss the Court of Appeal’s decision, given earlier in the day, upholding the annulment of the Steward hospital privatisation deal.

Prime Minister Robert Abela explained how his government is committed to acting in the best interests of the country at this junture, emphasising that the government had already initiated the process of taking back the hospitals from Steward long before the Monday court ruling.

The Prime Minister emphasised that the government is committed to recovering any public funds paid to Vitals Global Healthcare (VGH) or their successors, Steward, that were not adequately justified by the services or investments provided. He claimed that this latest ruling strengthens the government’s case in the ongoing arbitration proceedings filed by Steward.

Here is a chronological overview of the key developments related to this issue.

10th October 2014

A Memorandum of Understanding was signed between the Government and the developers and operators of the proposed project, the majority of whom would later constitute the VGH. The MoU, which was not made public, outlined the investors’ interest in the setting up of a Gozo Medical Complex.

27th March 2015

Projects Malta Ltd issued a call for the submission of proposals leading to the award by the Government of a services concession for the management and operation of healthcare and ancillary services from the sites at St Luke’s Hospital, Karin Grech Rehabilitation Hospital, and Gozo General Hospital through the grant, for a specified term, of the right to exploit such services.

27th June 2015

Projects Malta Ltd informed VGH that it was designated the highest-ranking bidder.

9th September 2015

Following negotiations, Projects Malta Ltd notified the VGH of Government’s intention to award it the services concession for the redevelopment, maintenance, management, and operation of the sites at the three hospitals.

30th November 2015

The Government and VGH Ltd, VGH Assets Ltd, and VGH Management Ltd, entered into the Service Concession Agreement (SCA). The SCA provided a framework for the concession granted by Government to the VGH for the redevelopment and improvement of the three hospitals. The Government and VGH Management Ltd also entered into the Health Services Delivery Agreement (HSDA). The Agreement regulated the terms and conditions of the purchase by the Government and the supply by VGH Management Ltd of healthcare/clinical and ancillary non-clinical services.

29th March 2016

Concession milestone – the handover plan was to be submitted to Government. The VGH failed to provide the handover plan by the specified date.

1st June 2016

The concession officially began, following the submission of the handover plan by VGH.

30th August 2016

Concession milestone – the design plans were to be submitted to Government. The VGH failed to achieve this milestone by the indicated date and until the concession was transferred to Steward Health Care.

1st January 2017

Concession milestone – 50 additional beds were to be provided at the Karin Grech Rehabilitation Hospital. The VGH failed to achieve this milestone by the indicated date and until the concession was transferred to Steward Health Care.

30th June 2017

The Government and VGH Ltd, VGH Assets Ltd, and VGH Management Ltd, entered into the Addendum to the SCA. Through this Addendum several terms of the SCA were revised, foremost among which was a proviso relating to the deadline for the completion of works, which was revised from a fixed deadline to one that rendered the deadline relative to the attainment of relevant construction permits.

The Government and VGH Management Ltd also entered into a third Addendum to the HSDA. Through this Addendum, changes were made to amend the first Addendum to the HSDA, whereby it was agreed to extend the date of provision of the additional beds from 1st January 2018 to not later than 1st January 2020.

The Government and VGH Management Ltd signed an Addendum to the LSA, which was made effective with retrospective effect from 1st June 2016. Several LSA-related amendments were introduced through this Addendum, foremost among which was the formalisation of the list of resources as corresponding to 1,536 staff.

1st July 2017

Concession milestone – the Barts College in the Gozo Campus was to be completed. The VGH failed to achieve this milestone by the specified date and until the concession was transferred to Steward Health Care.

30th September 2017

Concession milestone – the provision of 80 rehabilitation beds at the St Luke’s Hospital. The VGH failed to achieve this milestone by the indicated date and until the concession was transferred to Steward Health Care.

9th January 2018

Cabinet sanctions a memorandum to ratify the extension for financial close up to 5 March 2018, or possibly earlier, and endorse the consent granted by the Government for the eventual transfer of shares held by Bluestone Investments Malta Ltd in VGH Ltd to Steward Healthcare International Ltd.

16th February 2018

The shares held by Bluestone Investments Malta Ltd in VGH Ltd are transferred to Steward Healthcare International Ltd. Aside from the other concession milestones that had not been achieved, by this date the milestones relating to the completion of the new building at the Gozo General Hospirtal, the completion of renovation of the same hospital, and the completion of the St Luke’s Hospital medical tourism beds remained pending as their deadline had not yet occurred.

19th February 2018

Adrian Delia, then Opposition leader, filed a court case, asking for the hospital contract to be cancelled. Steward Healthcare was later added to the case as a defendant, replacing VGH after the latter sold it the concession and the debts it had incurred.

August 2019

An agreement was signed between the Government and Steward Healthcare that bound the government to pay the company €100 million and its debt if a court or another authority struck down the hospitals contracts.

October 2019

Barts Medical School, one of the infrastructure projects promised in the concession, is the only one that has been completed.

8th July 2020

Robert Abela, who had taken oath as the 14th Prime Minister of Malta on 13th January 2020, endorsed an National Audit Office report on the hospitals privatisation deal and pledged to take the necessary action. “In regard to what has been done wrong, we will remain consistent and will not evade the issue. As Prime Minister I am not satisfied with the conclusions drawn by the Auditor General. Had I been Prime Minister, I would have acted differently. This is a government which learns from mistakes and will not repeat the same mistakes…” he told TVM.

Despite multiple attempts, the government and Steward fail to renegotiate the concession agreement. In August 2021, the government informs Steward that it is no longer willing to negotiate the deal.

24th February 2023

A court annulled the hospital privatisation deal and ordered that the hospitals be returned to the State within three months, after finding that Steward Healthcare had not fulfilled its contractual obligations. Government did not appeal the ruling, but the company filed an appeal on 15th March 2023.

21st March 2023

Government sent a termination letter to Steward Healthcare, informing the company that it was taking over the three hospitals under its own control and under its own conditions, using a process known as a controlled step-in. In so doing, Government rejected the termination conditions which Steward sought to impose when, on the 16th March, it announced that it would be terminating the agreement.

29th March 2023

Steward Healthcare Malta filed for emergency arbitration with the International Chamber of Commerce.

4th April 2023

Government took over the running of the three hospitals and started implementing a number of initiatives therein. It also requested the court to hear the appeal filed by Steward Healthcare with urgency in the national and public interest.

14th April 2023

Government won the first stage of the arbitration case filed by Steward before the International Chamber of Commerce.

23rd October 2023

The Court of Appeal upheld the ruling that had annulled Steward Healthcare’s contract to run the three hospitals. The court, presided by Chief Justice Mark Chetcuti, also expressed its belief that there was “collusion between Steward and senior government officials or its agencies”. It ruled that government representatives named in the case, the Attorney General, and the heads of INDIS and the Lands Authority, must share the cost of court expenses with Steward.

An official statement issued by the Government of Malta on the same day pointed out that, while Government did not appeal the ruling of the 24th February 2023, handed down by Mr Justice Franco Depasquale presiding the First Hall of the Civil Court, it responded to the applications filed by Steward and, in total, submitted ten judicial acts against Steward’s requests.

Referring to the international arbitration filed by Steward Healthcare with the International Chamber of Commerce, in which the Emergency Arbitrator decided in favour of the Maltese government and ordered Steward to bear the government’s costs in the proceeding, the statement made clear that, in every proceeding, the Government will continue safeguarding the national interest in every aspect, including the financial aspect.

“In the same way that Government did not wait for the court ruling to take back control of the hospitals, it is committed to continue implementing a strong political vision for the health sector that is responsive to the needs of the Maltese and Gozitan people,” the statement read.

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