Steward did not even pay for water, electricity and cleaning

Steward Malta Management Ltd, the former operator of three of Malta’s public hospitals, has been ordered by the courts to pay close to €1 million in unpaid utility and cleaning bills, adding to the mounting liabilities left behind after the collapse of the fraudulent hospitals concession.

In two separate judgments delivered in recent weeks, Maltese courts upheld civil actions brought by ARMS Ltd, the state-owned utilities provider, and Zenith Malta Division Ltd, a private contractor responsible for cleaning and sanitation services at St Luke’s Hospital, Karen Grech Rehabilitation Hospital and Gozo General Hospital.

ARMS told the court that Steward had failed to settle water and electricity bills amounting to more than €283,000, accrued during its operation of the hospitals. Steward argued that it should no longer be held liable for the arrears after the courts had annulled its 30-year hospitals concession, which had been declared “fraudulent”.

That argument was rejected by Judge Lawrence Mintoff in the Court of Appeal, who ruled that Steward remained responsible for utility payments until it formally completed the procedures required to transfer responsibility for the relevant meters back to the state.

The court noted that the annulment of the concession did not, in itself, extinguish contractual obligations incurred while the company was in control of the facilities.

In a separate ruling, Judge Mark Simiana ordered Steward to pay €841,000 to Zenith for unpaid cleaning, sanitation and upkeep services. Steward again sought to rely on the cancellation of the concession to avoid payment, but the court dismissed the claim, holding that the services had been provided and must be paid for.

The judgments add to the fallout from one of Malta’s most contentious public-private partnerships.

In 2015, the Labour government awarded a concession to Vitals Global Healthcare to manage the three hospitals, with a commitment to invest around €200 million in the first two years, including the construction of a new Gozo hospital and the redevelopment of St Luke’s and Karen Grech.

Those investments never materialised.

Vitals ran out of funds within two years and transferred the concession to Steward Health Care, a Boston-based hospital operator. The agreement was publicly defended at the time by then health minister Chris Fearne as “the real deal”.

Despite the government paying an estimated €400 million in fees during the first few years of the concession, Maltese courts later found that the project had been tainted by fraud and ordered its termination following a case brought by opposition MP Adrian Delia.

Steward has since left behind substantial unpaid debts, including an estimated €37 million in unpaid VAT, a €30 million loan with Bank of Valletta, and numerous court cases involving suppliers ranging from food and security services to outsourced human resources.

It remains unclear what assets, if any, the Maltese company holds to satisfy its creditors, including public coffers in unpaid taxes.

Steward’s US parent has filed for bankruptcy protection, while its chair, Ralph de la Torre, is under investigation in the United States, adding further uncertainty over the recovery of funds owed in Malta.

Disgraced former Prime Minister Joseph Muscat and his collaborators are facing criminal charges in Court in connection with the fraudulent deal.