Robert Abela stopped from renegotiating ‘fraudulent’ deal at eleventh hour – NAO

Prime Minister Robert Abela was all set to sign a new deal with Steward Health Care in December 2020, less than a year from taking office, and was only stopped at the eleventh hour on the advice of the State Advocate and the Department of Contracts that what he was negotiating was illegal.

The National Audit Office investigation published on Monday rubbished Abela’s claims to parliament that he had changed the government’s course with Steward by giving a step-by-step account of what happened when Abela assumed power.

The account shows that following a lull of just a few weeks, Abela continued negotiations with the company and its president and CEO Armin Ernst over changes to the 2015 concession.

The NAO described the negotiations in which the Prime Minister, Deputy Prime Minister and Health Minister Chris Fearne and Finance Minister Clyde Caruana were directly involved as an exercise in “poor management”.

Discussions culminated in a draft agreement, and a memo presented to and approved by Cabinet on 18 December 2020.

“The conclusions of this process led to the drafting of near-final agreements for the remodelling of the concession,” the NAO stated.

According to the information Steward gave the NAO , “by early December 2020, the parties were so confident of concluding negotiations and finalising the agreements that 18 December 2020 was formally set at the date of the signing of the renegotiated agreements.”

Among the new terms agreed upon but not yet signed, the government was to acquire the new Barts medical school building from Steward for €35 million and Steward would start being paid as a management contractor providing health services at Gozo General. Karin Grech and St Luke’s Hospitals .

A new Management Services Agreement was also drafted. That agreement was to regulate Steward’s provision of non-hospital management services for the remainder of the concession, until 18 May 2046.

Steward was to be paid a management fee that was still to be specified in the agreement.

The agreement, which already had Cabinet’s stamp of approval, was not signed only following the intervention of the State Advocate and the Department of Contracts, who advised that what was about to happen was illegal.

This was confirmed by Fearne, who told the NAO that “the State Advocate and the Department of Contracts advised that the agreed changes could not be effected, as these would constitute the government granting a direct contract to Steward”.

Only then, on the eve of the signing, Abela got cold feet and scrapped the whole process.

Lambasting Abela’s attempts to come out with a new deal, the NAO noted that “determining the permissibility of that being negotiated (by Robert Abela) ought to have been established at the outset and certainly prior to the approval of cabinet.

“This awareness (of illegality) was not evident as negotiations proceeded, only for it to be brought to the fore at the eleventh hour.”