UPDATED | EU directive loomed on Vitals’s secret owners

Updated with Socialist MEP Ana Gomes’ tweet over Joseph Muscat’s socialist credentials

The sale of the 30-year concession awarded Vitals Healthcare for the operation of the Gozo, St Luke’s and Karin Grech hospitals to Steward Health Care comes just a few days before EU anti-money laundering laws come into force.

The EU directives against money laundering oblige companies to make their owners known, as from 1 January 2018.

In response, Socialist MEP Ana Gomes tweeted that she had warned about such eventualities during the negotiations over the anti-money laundering directive and shed doubts on Prime Minister Joseph Muscat’s socialist credentials.

This is an outrageous example I used on #AMLD5 negotiations.
And @JosephMuscat_JM’s Gov pretends to be socialist? @TheProgressives beware! https://t.co/SFFVQ9usYN

— Ana Gomes (@AnaMartinsGomes) December 22, 2017

Government has refused to reveal the identity of the company’s owners and Vitals Global Healthcare’s ultimate beneficial ownership remains unknown given that it is sheltered by nominees in the British Virgin Islands.

The deal signed two years ago saw Vitalis Global Healthcare agree to invest some €220 million to upgrade three old hospitals and in return government has agreed to pay some €70 million a year (€30 billion over the 30 year period) for health services provided by the private company.

The Opposition has in the past queried the ownership layers of Vitals, which pass through multiple companies in the British Virgin Islands and lead up to a Singapore-based investment group, Oxley Capital.

In a comment on his Facebook page former Alternattiva Demokratika chairperson Arnold Cassola questioned whether the sale of the company amounted to a “race against time before 1 January 2018” when the new EU directives against money laundering oblige companies to make their owners known, come in place.

“Is it coincidence that Vitals Global Healthcare, that got millions in salaries from Joseph and Konrad’s taxpayers, was sold on 20 December?” Cassola asked.

According to Cassola this means “that we will never get to know who the real owners of Vitals were”.

The directive will require member states to provide access to information on the beneficial ownership of companies. It will enable tax authorities to access that information in monitoring the proper application of rules on the automatic exchange of tax information.  It is still not clear how different countries including Malta will enforce this directive.

The Shift is informed that the coming in place of the directive may not have resulted in the immediate release of the owners of Vitals but would have resulted in greater pressure – backed by an EU law – on the Maltese government to seek and publish this information.

No details have been given on the profit made by Vitals when selling their concession to the US firm. This raised questions on whether Vitals has speculated on a concession awarded by government to make a profit from its sale.

“First they make a fake invest in Malta, with all guarantees and securities provided by the Maltese government and Maltese Bank loans… again guaranteed by the Maltese tax-payer. Then after a year or two they sell everything. What’s the game?” Cassola said.

A hospital deal wrapped in secrecy

The original deal for the concession was negotiated by former Health Minister Konrad Mizzi who was outed in 2015 for owning a Panama company.

The investor group behind Vitals Global Healthcare signed a Memorandum of Understanding (MoU) with the government before it actually won the tender to run three State-owned hospitals,according to leaked documents cited by the Times of Malta.The MoU was mentioned in a presentation dated February 2015 given to financial institutions by Vitals in Malta.

Under his successor Chris Fearn the government had agreed to pay Vitals Global Healthcare, the private operator running the Gozo, St Luke’s and Karen Grech hospital facilities, at least €55 million annually for medical services that are currently offered through the national health service.

Who are Steward Medical?

On Thursday, Lovin Malta revealed that Steward Medical bought the concessions from Vitals. The company has a track record of buying public assets to turn them in to profitable assets.

Steward Medical was established after the sale of Caritas Christi Health Care – a non-profit Catholic health service in Boston employing 12,000 – to the private equity firm Cerberus Capital Management in 2010 for $838 million.

But in Quincy Massachusetts this led to a controversial closure.

In a 2011 agreement Steward agreed not to close the hospital for at least seven years. But the hospital was closed on 26 December 2016.

The hospital opened in 1890 and was a city-owned hospital for most of the 20th century.

The Hospital has been suffering financially for decades, long before Steward bought the hospital, as a result of increased competition from hospitals within 10 miles of Quincy, including Boston’s world-renowned facilities, South Shore Hospital in Weymouth and Milton Hospital.

Without Quincy Medical, the city of Quincy, which has a  population of more than 93,000, became the largest city in New England without its own hospital. Despite the closure Steward agreed to maintain an emergency room open.