Confusion reigns amid silence over Vitals' €9 million guarantee

Confusion reigns amid silence over Vitals' €9 million guarantee

Mizzi does not recall name of bank which facilitated guarantee

Video: Mark Zammit Cordina

Updated 1pm with Mizzi's comments

The government would not comment on a €9 million performance guarantee Vitals Global Healthcare bound itself to make soon after signing an agreement for the running of three public hospitals in 2015.

It was still unclear whether Vitals actually honoured their commitment given its financial situation, health industry sources said.

When asked for explanation and for proof that Vitals did in fact make the €9 million bank guarantee covering the government in the eventuality of any mishaps in the contract’s implementation, the Health Ministry failed to reply.

“The Health Ministry does not possess this type of information and these questions should be addressed to Projects Malta, falling under Tourism Ministry Konrad Mizzi,” was the only reply received by Times of Malta following various reminders.

Repeated reminders to the Tourism Ministry over the past weeks about questions on the matter yielded no response by the time of writing.

Neither would Vitals speak on the bank guarantee.

According to the agreement, Vitals was bound to put in place “an unconditional and irrevocable on demand prime bank guarantee issued by a bank duly licensed to carry out banking activities in Malta or an EU Member State and acceptable to the government of Malta”.

Read: Vitals deal investigation still pending

When it released a copy of the contract with Vitals, the government blacked out the value of the bank guarantee, which had to be made within a month from the signing of the deal.

However, Times of Malta is informed the guarantee is to the tune of €9 million.

Times of Malta also asked the government for a copy of the signed bank guarantee and to indicate which bank was involved. However, again, no information was forthcoming.

Vitals, which has no track record in the health industry, encountered difficulties finding banking institutions to finance its operations and commitments, according to sources.

According to the contract, many parts of which were redacted before being tabled in Parliament, the government had the right to call upon the performance guarantee or part of it if Vitals failed to meet its commitments.

Vitals, the sources noted, failed to honour a number of its obligations, particularly reaching salient concession milestones even in the provision of new medical facilities.

Karin Grech Hospital.Karin Grech Hospital.

By contract, Vitals had to deliver a new medical campus for Barts in Gozo, 50 additional beds at Karin Grech Hospital and 80 new rehabilitation beds at St Luke’s Hospital by last year. However, work on the building of such facilities has not even started except for excavations on the site in Gozo. The government also failed to answer questions on whether it had called upon the performance guarantee since such targets were not met.

The industry sources said the controversial Vitals contract was the cause of considerable political tension between the health and tourism ministries.

Read: Revealed: VGH to be paid €188,000 a day to provide hospital beds for government

Mr Fearne is seen as distancing himself from the contract although government sources noted that the ball was now in his court since he is now responsible for the health sector.

Yet, the Office of the Prime Minister placed the implementation of the health services agreement with Vitals under Projects Malta’s remit, meaning Dr Mizzi was tasked with keeping control over the contract, the sources added.

“There is utter confusion over the contract and no clear direction from the Office of the Prime Minister on who is responsible for what. This might also be by design,” the industry sources said.

Following the surprise announcement that, less than two years after the signing of the contract, Vitals sold the 30-year concession to an American company for an undisclosed sum, the government admitted it had only given its conditional written consent more than a week after the deal’s announcement.

The doctors’ union is insisting the deal should be put on hold until a thorough investigation by the National Audit Office was is concluded.

However, the government appears adamant in proceeding with the deal.

Mizzi says guarantee made through 'international bank'

Minister Konrad Mizzi said on Friday morning he could not remember the name of the bank which had facilitated a €9 million performance guarantee that Vitals Global Healthcare was contractually bound to make with the government.

Fielding questions from reporters, Dr Mizzi did not bind himself to provide proof that the guarantee had been made, but insisted this had been done shortly after the agreement was first reached with VGH.

Asked which bank had been used, he would only say that it had been made “through an international bank” he could not remember.

Asked if Pilatus Bank had been involved, Dr Mizzi replied: "no, this was an international, reputable bank".

Pushed to answer if the government would take any of the performance guarantee, after media reports emerged that VGH had missed several deadlines and faced mounting financial difficulty, Dr Mizzi would only say that VGH had honoured its agreement with government.

He added that the new concessionaire Steward Healthcare would be making the same €9 million guarantee.

Soon after it was announced that Steward would be taking over the agreement, Health Minister Chris Fearne had tweeted that this was “the real deal”.

Asked what sort of "deal" VGH had been involved in, Dr Mizzi first declined to comment. He later said only that VGH had been cleared when due diligence had been carried out by the government.

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