Exporting fraud: How a scam on public hospitals in Malta reached the poorest, most corrupt European countries

  • The model for the privatisation of Malta’s public hospitals negotiated by Konrad Mizzi and Keith Schembri with the approval of Joseph Muscat was exported to Balkan States with weak democratic structures that enable large-scale corruption.

  • When the Prime Minister of Macedonia Zoran Zaev visited Malta last month on an official visit, he secretly met one of the hidden investors in Vitals Global Healthcare (VGH) — Pakistani Shaukat Ali Abdul Ghafoor — who has strong links to those in power in Malta who enabled the deal.

  • The Head of Steward Healthcare in Malta, Armin Ernst, is witnessed pitching the deal both for VGH and Steward. The doors opened in Montenegro suddenly resulted in opportunity for Steward in Albania.

  • Rather than Steward Healthcare being “the real deal”, the plans of VGH and Steward in different countries seem to coincide perfectly. Was this by design?

While Vitals Global Healthcare was pocketing millions of euros of taxpayer money, Ram Tumuluri and Shaukat Ali Abdul Ghafoor were busy negotiating deals in other countries, using the ‘success’ of the project in an EU Member State even as they packed their bags in Malta – the new twist being that Steward Healthcare seems to keep saving the day in these countries too, raising a number of questions.

Through a complex web of offshore companies, Memorandums of Understanding (signed agreements) and hidden investors, they negotiated deals with the governments of Balkan States to take over, renovate and build public hospitals.

They used Malta as an example of their ‘success’ despite the failure to deliver on a single commitment in the country. When Vitals Global Healthcare (VGH) turned up in Malta, there was nothing ‘global’ to its name. They had no track record in managing public hospitals, and yet it was the Maltese government’s preferred bidder. This public call, like many others routed through Konrad Mizzi’s Projects Malta, is the subject of scrutiny by the National Audit Office, as well as the subject of an ongoing criminal inquiry.

A side agreement — filed after the concession for three of Malta’s public hospitals was granted — even dismissed the vaunted €200 million that the concessionaire was meant to invest in Malta’s healthcare system in return for the lucrative concession worth up to €7 billion.

They got the money, but they did not deliver on their financial commitment — or on any of the requirements they signed up to. The government even gave them more money a few days before the announcement of their failure.

When investors panicked, late-night meetings were held at Castille, attended by Muscat’s chief of staff Keith Schembri and Minister Konrad Mizzi, who resigned only recently following revelations on the assassination of Daphne Caruana Galizia. Muscat and his closest aides pushed these projects in Montenegro, and opened the door to a similar project in Albania.

Muscat told the Montenegrin government as recently as 18 November, when he was still supporting deals by Mizzi on Malta’s behalf: “We support your membership in the EU. We are aware of the great progress that you have made”. Little did he know he would be in no position to do any of this as the alleged crimes of his closest associates came to light.

According to the narrative pushed to the Maltese public when evidence of wrongdoing on the VGH deal was exposed, Steward Healthcare swept in ‘to save the day’, with Labour Party Deputy Prime Minister and Health Minister Chris Fearne even calling it “the real deal”.

The Shift had pointed out the revolving door that propelled Head of Steward Healthcare in Malta, Armin Ernst, from Administrative Officer of Steward Health Care to CEO of Vitals, to President of a new branch of Steward called Steward Health Care International. Questions sent to Ernst two years ago remain unanswered.

While Vitals Global Healthcare was bought out by Steward Healthcare, one man was there from the beginning, and he remained key to the project: Ernst. He has walked in and out of both companies twice, and yet remained at the helm. What is clear is that Ernst was pitching in these countries, first on behalf of VGH, and now for Steward.


Ernst even worked for Vitals and new concession operator Steward simultaneously, according to The Times of Malta, fuelling speculation that the resale of Malta’s hospitals’ concession had been planned from the beginning.

Interestingly, the MoU with Montenegro, recorded under number 51-488/2016-2 in the Ministry of Health, signed by the Minister at the time Budimir Segrt and Tumuluri, had never been reviewed at government sessions.

When that agreement was torn up after a change in government, the Albanian Prime Minister stepped in. He signed an agreement on healthcare services between the two countries that paved the way for the deal to move forward.

It showed that rather than Steward Healthcare being “the real deal”, the plans of VGH and Steward in different countries seem to coincide perfectly. Was this by design?

When Macedonian Prime Minister Zoran Zaev visited Malta in May 2018, the Department of Information issued a statement lauding mutual cooperation. What they did not say is that while on a State visit, he secretly met with Abdul Ghafoor, one of the hidden investors in the VGH deal. Besides Montenegro, Steward sought opportunities in Albania, Kosovo, Macedonia, Croatia and Serbia.

Putting the ‘Global’ in Vitals Global Healthcare

There was nothing ‘global’ when the consortium fronted by fraudster Ram Tumuluri, as revealed by the late journalist Daphne Caruana Galizia, turned up in Malta. VGH’s hidden owners used payments by Maltese taxpayers to build a network of companies that would bid for similar projects in other countries – putting the ‘global’ in ‘Vitals Global Healthcare’.

The Shift has shown the role Abdul Ghafoor played in Malta and his links to the corridors of power. His connections only grew stronger under a Labour government, with Joseph Muscat, Keith Schembri and Konrad Mizzi turning up in Montenegro on more than one visit that reinforced VGH’s pitch (plus some other projects in the pipeline).

Tumuluri is seen as Abdul Ghafoor’s frontman and, over time and in different countries, Ernst makes a regular appearance.

Speaking at a glitzy presentation in the Montenegrin capital of Podgorica in October 2016, VGH announced a “€375 million project to revitalise Montenegro’s healthcare system”. The government referred to VGH as “reputable international investors who have already proved themselves in the reform of the healthcare system in Malta”, and said the partnership was the best way to “raise the quality of health services”.

As in Malta, doctors in Montenegro were not convinced. They claimed that public healthcare in the country would be subject to the whims of the free market, putting profit before the health of citizens. The scepticism of the public in Montenegro must be assessed in the context of a country where nearly every strategic investor entered the country via offshore companies, and every capital project has been tainted with scandals and corruption.

As the multi-billion euro VGH contract in Malta was sold to Steward Healthcare for €1, as revealed by The Shift, after devouring over €50 million of Maltese taxpayers’ money, the Montenegrin government signed a new agreement; this time, with Steward Healthcare.

Ram Tumuluri with Shaukat Ali Abdul Ghafoor at the presentation in Montenegro.

The similarities of the patterns in Montenegro and Malta raise serious concerns on the links between VGH and Steward. And then Albania comes into the picture.

Tumuluri and Abdul Ghafoor had visited Albania in the meantime. Negotiations had started with the government, and plans had been drawn up for a new hospital in the port city of Vlore in the south of the country.

The name of VGH had been sullied as a result of press reports in Malta, and people were starting to ask questions about where all the taxpayer’s money went, why they had not delivered on any of their promises, and how they managed to go bankrupt in just 18 months.

The next milestone

When Montenegro signed the MoU with VGH on 26 August 2016, a deal with Albania was not far behind.

Eight months later, on 3 April 2017, the Montenegrin Ministry of Health signed an agreement with the Albanian Ministry of Health to “promote cooperation in the field of health and medical sciences, inspired by the principles of equal and mutual benefit.”

Armin Ernst Montenegro

Armin Ernst at a VGH presentation in Montenegro.

The MoU, seen by The Shift, also agreed that the two countries would promote contacts between the two ministries, as well as hospitals and organisations operating in the field of health. “Other corporations in the field of health” and “management of health facilities” were also laid out in the terms of the agreement.

As ownership changed from VGH to Steward in Malta, Montenegro signed a new MoU, but the agreement between Montenegro and Albania stayed in place with an extension automatically renewed every two years.

The Albanian government denied any dealings with VGH but did not respond to questions about any plans to work with Steward, who now own the VGH brand.

The existence of this web of agreements could pave the way for Steward to branch out into Albania without being detected by journalists, members of the public, or anyone who could potentially object or reveal the shady past of Tumuluri, Abdul Ghafoor, and VGH.

Finance Minister Edward Scicluna, Economy Minister Chris Cardona and former Minister Mizzi are under criminal investigation in Malta following a court ruling last week in favour of a request filed by NGO Repubblika, based on evidence published by The Shift.

This article was developed with the support of Journalismfund.eu


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