Steward: why privatisation is bad for us, and only benefits shareholders (especially when thieves are working so hard on the deal)
Labour’s disgraced minister for all-PPPs-fucked-up Konrad Mizzi misled Cabinet, naturally under the benevolent purview of prime minister Joseph Muscat
Here is the story I broke in 2020 in MaltaToday on the secret €100 million ‘prize’ for Steward Healthcare should its contract be rescinded by a court of law. It was negotiated as a kind of super-default by the disgraced minister for PPPs Konrad Mizzi and then prime minister Joseph Muscat.
Both seemed to have set so much store by this hospitals privatisation deal, that the tendering process devised by Projects Malta (under Mizzi’s stewardship) has since been confirmed in court to have been fraudulently instrumentalised for the benefit of the chosen ones: unknown investors Vitals, and later conveniently sold to former Vitals CEO Armin Ernst’s American masters, Steward.
The NAO’s third Steward report published today 15 May 2023 now confirms conclusively the following:
Konrad Mizzi refused to cooperate with the NAO in establishing his involvement in the entire PPP – yet he uses Facebook to issue his denials. The stuff liars do, of course.
As early as September 2017, three months before the official handover, the OPM and Steward were in touch over the handover of the concession. The shit had hit the fan with Vitals, who were unable to deliver on the milestones they had been contractually bound (merely two/three years after... thanks to the fraudulent concession).
The health ministry was not part of the talks held in New York and London – no records kept – between Steward, and OPM and Mizzi’s tourism ministry. As Mizzi’s permanent secretary told the NAO (paraphasing): “[Steward] was probably aware of this situation and had inside information as to the difficulties in the implementation of the concession and in the securing of financing. The PS MOT understood that this could have been perceived as a commercial opportunity by the SHC and it was in this context that the SHC approached the OPM.”
It was Vitals’ CEO Armin Ernst who made the play in these negotiations with Steward thanks to his “anomalous yet central role” – up until January 2017 he was CEO of Vitals, and then was placed on leave of absence for breaching his contractual obligations while still paid a salary, until resigning in August. Then in September he asked Vitals to waive his employment contract’s non-compete clause. Vitals refused, but of course Ernst did not care, because he was working for Steward in a clear conflict of interest, having been then appointed president of Steward Healthcare International. He even managed to crowbar his way into the credit facility Vitals was trying to secure from Deutsche Bank. When Vitals protested, Ernst “submitted correspondence to the bank wherein he defamed the VGH and the director VGH. According to the director VGH, the defamatory statements made led Deutsche Bank to engage its anti-money laundering department, which in turn triggered an evaluation by its risk committee.”
The big pay-off: Steward entered negotiations with Mizzi and Muscat in 2018 to make the concession “bankable”, and gained a “most evident exploitation” with the €100 million liability from government, as well as any lenders’ debt, in case of court-declared nullity of the concession agreements, “irrespective of the party attributed the default, a situation precipitated by the Minister for Tourism and engineered through his misleading of Cabinet.” So much for big brains, Konrad Mizzi made it profitable for Steward to be kicked out (and, note, that this was after Adrian Delia filed the case for rescission of the Steward deal!).
“Compounding matters was that Cabinet’s authorisation was not sought by the Minister for Tourism in instances when Government acted as guarantor in several financing agreements entered into by the SHC and the Bank of Valletta plc (BOV).”
And what did Malta gain from this contract?
1. Steward failed to do the required capital investment in the hospitals it took over (it never cared, that’s how the Steward/Medical Properties Trust hospital sale-leaseback works – don’t invest and hike up the rent so that they pay back the shareholders’ dividends); the hospitals were left derelict;
2. Government – the taxpayer, us – kept paying for the labour inside Steward’s hospitals (wow, smart deal) for a total of €456 million: €52m to Vitals, and €214m to Steward; plus another €188 million for salaries of resources.
3. The NAO said the value for money here was “fundamentally undermined” by the fact that taxpayers were financing the 1,536 workers transferred to Steward (from the formerly-State hospitals) at a value higher than the reimbursement secured, €32 million. Government was also paying these workers higher salaries above real annual increases, “aggravating the discrepancy between the real cost to government of resources made available to the concessionaire and the amounts recovered in relation thereto.”
Get the drift? All the risk for the privateers in this deal concocted by Joseph Muscat for the mystery investors from Vitals (Bluestone finance bros and middleman Shaukat Ali’s medic friends in the US) and Steward, was borne by us, the taxpayer. We paid high costs for a sub-par medical service that was not worth the ink on paper - all risks socialised, all gains and profits ‘privatised’ for shareholders and Steward’s top brass.
What a fucking cop-out.