Former minister John Dalli says the preliminary closure agreement was kept from him for six weeks. Photos: Matthew Mirabelli

John Dalli has said that a clause exonerating the company that built Mater Dei Hospital from liability had been included in the closure agreement without his knowledge.

The former health minister yesterday said the preliminary closure agreement was kept from him for six weeks after it was signed by the Foundation for Medical Services in February 2009.

Mr Dalli said that during his testimony on Friday to the inquiry on the weak concrete scandal it emerged that he had only been informed about the project closure agreement after it was signed.

This came about as a result of an e-mail sent by architect Paul Camilleri to Mr Dalli on April 5, 2009 that said: “Dear John, I realise that I have not communicated with you directly regarding the closure of negotiations with Skanska, despite the fact that Brian [St John] advised me that he had briefly informed you about it.”

Mr Camilleri was chairman of the FMS and had signed the project closure agreement with Skanska. Mr St John was the CEO.

According to Mr Dalli, the e-mail listed the salient points of the contract but made no mention of waivers.

“This shows the dishonesty and malicious intent of those who tried to point fingers at me in an attempt to extrapolate some bad practice or intent on my part,” Mr Dalli said.

Reacting Mr Camilleri yesterday stated that at no point in time prior to the signature of the Project Closure Agreement was any deficiency in the quality and grade of concrete used at Mater Dei Hospital brought to the attention of the FMS board.

“If any deficiency in the quality and grade of concrete used had been detected and communicated to the FMS board, it would have been raised in its claims against Skanska, as FMS did and addressed accordingly with regards to any other claim that resulted and was brought to its attention,” Mr Camilleri said.

The former FMS chairman said that following the inauguration of Mater Dei Hospital in 2007, Skanska raised a number of claims against FMS amounting to approximately Lm12 million (€28 million) while FMS raised a number of claims against Skanska for works not done according to the main agreement that had been entered into.

Mr Camilleri said the respective claims of each party were discussed at a Decision Group which met in December 2008 and, given that it failed to resolve the parties’ respective claims, the claims were referred to ‘without prejudice settlement negotiations’.

“On the January 15, 2009, the FMS board approved detailed terms of a proposed settlement. The next stage was for the lawyers to draft and finalise a settlement agreement. FMS was legally assisted by a reputable law firm.

“The final settlement agreement, entitled the Project Closure Agreement, was signed by FMS and Skanska on February 19, 2009. Like all agreements, the Project Closure Agreement needs to be read in its entirety and within its full context and not by taking individual clauses in isolation and out of context,” he said.

Mr Camilleri said that as a result of the negotiations undertaken by FMS and the conclusion of the Project Closure Agreement, Skanska ceded most of its claims which had amounted to approximately Lm12 million (€28 million) save for approximately Lm2 million (€4.7 million) which was accepted by FMS as representing justified additional works.

Last week the government revealed the presence of a waiver clause in the process of considering legal action against Skanska for defective workmanship after studies showed the concrete at Mater Dei was of poor quality.

The Opposition rebutted this, telling the government to seek answers from Mr Dalli, who at the time was health minister.

Mr Dalli had insisted he did not see the closure contract referred to by the government but had it come before him he would have sought Cabinet approval.

Former prime minister Lawrence Gonzi later said the closure agreement and the waiver clause never appeared before Cabinet for approval in 2009.

This prompted another reaction from Mr Dalli: “If Lawrence Gonzi is saying it never came before Cabinet then I must have never seen it myself because it was always my practice to seek Cabinet approval in such circumstances.”

Skanska received payment on memorandum of understanding

Skanska received almost €5 million upon signing a post-election memorandum of agreement for the building of Mater Dei Hospital, according to a memorandum of agreement seen by Times of Malta.

The memorandum was signed in December 1998, just two months after the Nationalist Party was returned to power.

It had to pave the way for a second agreement with Skanska after original plans for the building of a smaller specialised hospital had been altered.

The memorandum stipulated that Skanska, a Swedish construction company, in partnership with a handful of Maltese firms, would take over complete responsibility for the design and construction of the hospital.

Skanska were to be paid on a cost-plus basis plus a management fee of 7.5 per cent. But the €5 million had to be paid 15 days after the memorandum of understanding was signed and more than a year before the new contract was concluded.

The contractual agreement was eventually signed in February 2000, paving the way for the cost-plus arrangement, which was described by critics at the time as a recipe for costs to explode.

By 2003 Mater Dei Hospital, which was still in its construction phase, had cost taxpayers €324 million (Lm139 million).

After Lawrence Gonzi became prime minister in 2004, a new lump sum agreement was renegotiated with Skanska to cap costs.

A new completion date was set for 2007; however, the end result still meant that Mater Dei’s price tag reached almost €500m.