Vitals Global Healthcare (VGH) had completely run out of cash by the beginning of this year and could not pay the salaries of its 85-member staff last month, senior VGH officials told the Times of Malta yesterday.
Confirming a story published in the The Sunday Times of Malta that VGH was penniless and technically insolvent, senior officials said that staff salaries could only be issued after the new company acquiring the VGH concession stepped in with the necessary funds.
“The situation turned dramatic at the beginning of January, when staff were told that there was no more cash available, not even to pay their salaries,” a senior official working at the Gozo General Hospital said.
“It was only through the intervention of the new owners – Steward Health Care– that we managed to get our pay cheques.”
It was only through the intervention of the new owners – Steward Health Care– that we managed to get our pay cheques.
After knocking on various doors, including financial institutions and banks, which all turned down its requests, VGH turned to Steward Health Care to be able to pay its staff at the end of the month.
“At the moment all procurement of medical equipment is on hold until Steward Health Care takes over and are on the ground. We were told that although the agreement was signed, it could not take effect before a pending injunction was lifted.”
The injunction filed by Ashok Rattehalli – one of the original VGH shareholders who accused VGH of not honouring its obligations – was lifted last Thursday after he informed the court that he had reached an out-of-court settlement with VGH.
According to VGH sources, Steward has already passed on messages to the staff that their contracts will be respected and the plans to transform the three hospitals will be honoured.
However, no formal meetings between Steward and the staff have been conducted, and many of the employees say they are anxiously awaiting their fate.
As of the end of last year, VGH had been paid over €50 million from government coffers for the first 18 months of the concession agreement. Some of these funds are still unaccounted for, as no tangible investment has taken place in the three public hospitals as originally agreed.
Despite VGH not reaching any of the concession milestones in the contract with the government, on December 18, the last day of Parliament before the Christmas recess, the government got the green light to double the payments to VGH for 2017 from €16.5 million to €33.5 million.
Health Minister Chris Fearne did not explain the need for this sudden increase to VGH.
However, a day later, he surprisingly announced that VGH was selling the government’s 30-year concession to Steward, describing this as “the real deal”.
According to the €2.1 billion contract negotiated by former health minister Konrad Mizzi and VGH in 2015, the government had the right to take back the concession in case of insolvency.
But the government instead decided to issue a written consent approving the deal between VGH and Steward.
Asked for a copy of the written consent and proof of a €9 million obligatory performance guarantee that VGH was to put in place, the government has so far refused to provide the documents.
Clause 32.1: A Non-Rectifiable Concessionaire Event of Default
“The occurrence of any event where the concessionaire is, or is deemed, in accordance with the applicable law to be unable to pay its debts as they fall due or to be insolvent or where the concessionaire admits inability to pay its debts as they fall due.”