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Government gave consent for VGH sale after agreement was signed

Situation puts validity of share transfer agreement in doubt

St Luke’s Hospital: The doctors’ union says VGH has nothing to show for the millions it has received from the government. Photo: Matthew Mirabelli

St Luke’s Hospital: The doctors’ union says VGH has nothing to show for the millions it has received from the government. Photo: Matthew Mirabelli

The government gave its legal consent to the sale of the VGH hospitals concession more than a week after the agreement was signed, The Sunday Times of Malta can reveal.

Under the terms of the concession, Vitals Global Healthcare should have obtained written consent before signing the deal, a situation which could cast doubt on the legal validity of the share transfer agreement between VGH and Steward Healthcare of the US. 

Read: Vitals hospitals memorandum signed before tender won

On December 21, the government announced that “an agreement was signed between VGH and Steward” for the sale of the 30-year concession to operate Karen Grech, St Luke’s and the Gozo hospitals.

Yet, the Times of Malta has now learned that the obligatory government consent was only issued on December 29, just two days before the end of the year and more than a week after the deal was done.

Read: €1: The price Vitals paid for three hospitals' contents

The consent was issued through Projects Malta, a government entity under the direct responsibility of Tourism Minster Konrad Mizzi, and not through Chris Fearne’s Health Ministry, under which the hospitals fall.

Both the Office of the Prime Minster and the Health Ministry were repeatedly asked for a copy of the written consent but neither of them would provide it.

Watch: Vitals sale of hospital concession to US operator approved by government

The OPM also declined to say whether the Cabinet had discussed the deal prior to the issuing of the written consent and refused to give the date of the Cabinet meeting held to review the agreement.

According to clause 15 of the concession agreement, negotiated by Dr Mizzi when he was still responsible for health, the transfer of shares is not valid “without the express prior written consent of the government of Malta”.

Read: Vitals deal investigation still pending

The Sunday Times of Malta has already reported that important aspects of the concession agreement, particularly the milestones set by the government for VGH to make the necessary investment in infrastructure, have all been missed.

By last year, VGH was meant to have set in motion a new medical college in Gozo, as well as additional beds in St Luke’s and the Gozo General Hospital. All these milestones have been missed, although VGH have blamed it on a failure to be issued with the promised permits on time.

Once the agreement was reached, VGH asked for consent

The Medical Association of Malta, which represents doctors, last week questioned the €34 million paid by taxpayers to VGH in 2017, saying there was nothing to show for these millions.

“The only things VGH have done so far is a hole (excavation) in Gozo and some scraping on the façade of St Luke’s Hospital. Surely these didn’t cost €34 million,” MAM secretary general Martin Balzan said.

Read: VGH avoids questions about handing hospital procurement to private firm

Less than two years into the 30-year concession, worth €2.1 billion to VGH, the government announced that a deal had been signed between VGH and Steward for the transfer of the hospitals’ concession. The announcement was made on December 21.

On the same day, Health Minister Chris Fearne gave an interview to the Times of Malta in which he said the agreement had been signed at 9.30 pm of the previous day and that the government had given its consent. However, when pressed by this newspaper to give the exact date of the written consent, to provide a copy and to declare who signed it on behalf of the government, the Health Ministry at first refused to reply.

Read: VGH Gozo air ambulance costs taxpayers €1m a year

Pressed again, the Health Ministry admitted the consent had been issued by Konrad Mizzi’s ministry through Projects Malta (a government entity) on December 29 – more than a week after the government officially announced the deal.

“As already stated through a press release dated December 21, 2017, Steward Healthcare signed a share purchase agreement with Vitals Global Healthcare,” the ministry said in its latest reply.

“Once the share purchase agreement was reached, VGH asked for the government’s consent as stipulated in the original concession agreement. This was granted on December 29 through Projects Malta.”

Read: Attempts by Malta Enterprise to keep secret Vitals MoU under wraps

Yet, the concession agreement stipulates that written consent must be acquired by VGH prior to such a deal being signed.

Asked to state why, despite having been stripped of the health portfolio due to his involvement in the Panama Papers, Konrad Mizzi is still calling the shots over important health services decisions, Deputy Prime Minister Chris Fearne did not reply.

Despite the fact that the deal involves a concession on three public hospitals, the government has so far refused to say how much the VGH concession was sold for.

VGH have so far also declined to reply to questions on the value of the deal.

The crucial Clause 15 – Change of Control

“For 3 (three) years from the Completion Date the Concessionaire shall not suffer or allow to suffer the transfer, transmission, allotment, assignment or other dispersion sohowever called on its shares or the shares of its subsidiaries without the express prior written consent of the Government of Malta.”

ivan.camilleri@timesofmalta.com

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