No due diligence in dodgy hospitals deal

Chris Fearne and Edward Scicluna were back in court today alongside 13 other defendants to face charges of fraud, misappropriation and fraudulent gains in connection with the dodgy hospitals deal that robbed Maltese taxpayers of hundreds of millions of euro. 

Lawyers for the former ministers and their fellow defendants hope to convince the court to withdraw charges due to insufficient evidence against their clients. I write “lawyers” in plural because the room was packed with so many of them it resembled Dante’s Eighth Circle of Hell. 

Malta’s inexperienced young prosecutors are facing off the country’s most seasoned criminal lawyers, and Attorney General Victoria Buttigieg is nowhere in sight. She may not be competent to handle such cases herself, but given the gravity of the scandal, you’d think she could at least show up.

Today’s key testimony came from Auditor General Charles Deguara, who pointed out how strange it was for the health ministry to be absent from a massive deal involving public hospitals. His office had issued a scathing report on the concession.

“The health ministry should have been a key stakeholder when designing the deal,” Deguara said, but “the key ministry in this deal was practically never consulted”. 

“How can one undertake such a project, with huge amounts involved, use health care employees and not have the health ministry involved or even experts in the field?” he asked.

You won’t be surprised to learn the reason was political.

The Auditor General’s investigation into the deal points out that “the Minister for Energy and Health maintained that this was a matter of political imperative. The Minister argued that this project had been assigned to him by the Prime Minister and that he had kept Cabinet abreast of developments.”

When asked to elaborate on the report, Deguara said, “The minister at the time was given a mandate by the then-prime minister.” And in case it wasn’t clear enough, he added, “The deal was signed off by the tourism minister”. He was referring to disgraced former prime minister Joseph Muscat’s boy wonder, Konrad Mizzi.  

Deguara pointed out that when it came to selecting the bidder for the concession, no due diligence was carried out, and few, if any documents, were retained relating to the negotiations.

“The way the process took place,” he said, “it seemed that it was all in the hands of the energy minister [Konrad Mizzi], and health was not involved at all.”

Were things done in this way in the interests of efficiency, simply to speed the massive public-private partnership along? They certainly seemed to be in a hurry to close the deal with Mizzi’s preferred bidder.

The law firm Ganado Advocates assisted Mizzi’s ministry in drafting the hospitals concession agreement as well as the Request for Proposal. Antoine Cremona, a member of the legal team, told the court that they were under pressure to draft the legal parts of the agreement quickly.

“We had pressure from the government consultants who were not lawyers,” he said. “They wanted us to send the draft as is, but this is not our style, and it’s not a professional approach.” The firm later abandoned the deal.

When asked for details, Cremona named David Galea of Beat Ltd and the accounting firm RSM.

Galea, described as Konrad Mizzi’s right-hand man, was also involved in the Electrogas deal through his one-man consultancy firm Beat Ltd. He was paid over €1.5 million in consultancies during Mizzi’s time in Cabinet. RSM was set up by the Labour Party’s auditor, Deo Scerri.

The Auditor General insisted the multi-million-euro concession would have never been granted if proper due diligence was carried out. But he found “no shortcomings” in the behaviour of former finance minister Edward Scicluna or former health minister Chris Fearne.

“Of course not!” some readers might say. “Wasn’t Fearne framed?”

According to an OCCRP investigation, Fearne was the target of a smear campaign by Steward Healthcare for his frustrating ‘by the book” adherence to the contract Steward had signed with the government — a campaign Keith Schembri must have known about since, as the hospitals inquiry said, he was involved every step of the way. 

Disgraced former prime minister Joseph Muscat has denied being involved, but diligent readers would be wise to recall Schembri’s December 2020 testimony at the public inquiry into the murder of Daphne Caruana Galizia, where he said: “I never did anything behind the prime minister’s back.”

As for Fearne, his is a tale of the shameless and spineless. As health minister, he told the Maltese people Steward was “the real deal”. He held firm to technicalities, doing nothing to expose the corruption while making sure the dirt didn’t get splashed on his own white linen pants by his Cabinet colleagues.

The outrage Fearne is expressing isn’t at the highway robbery perpetrated by the hospital fraudsters, both corporate and political. He’s outraged that they targeted him.

Edward Scicluna used his testimony at the Daphne Caruana Galizia inquiry to wash his hands of his government’s corruption in a similar way. “Whoever wants to hijack a system is responsible,” he said. “I am not.”

He wasn’t responsible for the corrupt deals that tainted every corner of Joseph Muscat’s government. He simply cashed his pay cheques and minded his own ministerial backyard.

The Auditor General testified today that he didn’t find fault with Fearne or Scicluna for anything they did. It’s up to the court to decide if the two are criminally responsible for their failures.