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Key questions, no answers

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While Vitals Global Healthcare was bought out by Steward Healthcare last week, one man who was there from the start remains key to the project – Armin Ernst –  who has walked in and out of both companies twice and yet remains at the helm of Vitals now. As questions are raised following the controversy in recent weeks, Ernst remains silent.

From Steward, Ernst joined Vitals as CEO in 2016. In October 2017, he left Vitals to join Steward and he is now managing director of Vitals after Steward bought it last week.

The Times of Malta has reported that he even worked simultaneously for Vitals and new concession operator Steward, fuelling speculation that the resale of Malta’s hospitals’ concession had been planned from the outset.

Despite the structural changes within Vitals last week, he retains the role he held before despite the revolving door. Health Minister Chris Fearne has said that it was Ernst who suggested that his ‘new’ employer Steward should purchase the 30-year hospitals concession (which can be extended to 99 years).

There is no information on how much the share transfer was worth.

As questions on the deal continue to mount, Ernst has avoided the controversy. Yet he has been in the know on the deal since 2016.

He also travelled to a number of countries to market the Vitals brand abroad. Ernst joined a delegation to Montenegro that included Shaukat Ali Abdulghafoor (Chaudry) and his relative Asad Ali Shaukat which were only recently exposed as being connected to the hospital deal. In Montenegro, just as in Malta, Vitals signed another secret deal with the government, The Shift News has revealed.

Armin Ernst Montenegro
For Vitals, Armin Ernst seated next to Albert Fenech (far right) in Montengro.

Ernst was also in Kosovo, and one of the 12 companies Vitals set up in Jersey called VGH Kosovo showing the company has plans there. It is likely these 12 offshore companies were inherited by the new owners of Vitals led by Ernst. The indication is that Vitals global expansion plans will continue. When asked Ernst did not answer.

The Shift News has shown how Vitals was busy negotiating international contracts even as it was seeking a bailout in Malta.

Taxpayers have forked out €50 million since 2016 while Vitals has not delivered any new service or constructed or refurbished any of the hospitals. Salaries amounting to many additional millions a year are still paid by government. Yet the company still managed to accumulate debts of over €55 million, The Times of Malta reported.

There are a number of questions that remain unanswered on a deal designed for Vitals. Documents have confirmed that the hidden investors had signed a secret agreement with the government of Malta five months before a public call for proposals was made.

In the new Vitals structure, one of those investors, Ashok Rattehalli, got 5% of the shares, leading to even more questions. Rattehalli justified his entitlement to 5% arguing that he was involved in obtaining a Memorandum of Understanding from the government pre-tender, signed an agreement with the other secret investors pre-tender and signed a hidden share option agreement. Lawyers have argued this put the validity of the concession into question.

Furthermore, Vitals was insolvent because they lacked funding. Yet it was clear from the start that the shareholders did not have the necessary capital, according to court documents.

The concession contract required funding agreements to be in place before the concession became effective (clause 3.3.1.9), according to the redacted concession tabled in Parliament. Yet, six months later, Tourism Minister Konrad Mizzi (who negotiated the deal with Vitals) signed a side letter with Vitals waiving that requirement, journalist Daphne Caruana Galizia had revealed. She was assassinated on October 16.

No answers have been given to these questions raised, no answers provided on where taxpayers’ money has gone and no reasons given on why Vitals can continue to hold the concession.

Other hidden investors were shown to be tied to supply companies positioning them to profit from the lucrative contracts signed for years to come.

In sum, the original shareholders have ‘left the scene’ and those behind the deal will continue to profit from lucrative contracts while the country is left with the problems and the questions surrounding the deal.

Ernst is now tasked with driving the ‘vision’ forward. Who that will benefit remains to be seen.

The Shift News is publishing below the questions sent to Ernst that remain unanswered:

 

 

 

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