Julian Delia reports live from Hall 22
LIVE | Labour-linked financial consultants tried to rush hospitals concession
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13:58 | Addressing the court as a whole before adjourning today’s session, magistrate Leonard Caruana asks all parties to be as concise as possible in their submissions to ensure that the remaining witnesses are heard as expediently as possible.
“We are doing the best we can with the resources we have at our disposal,” the magistrate adds.
13:55 | Vanessa Grech, registrar of the civil court, takes the witness stand. She is asked to exhibit an email exchange between former VGH / Steward Healthcare CEO Armin Ernst and disgraced former chief of staff to the prime minister Keith Schembri.
Reading from the email in which Ernst was asking Schembri about what to do with Fearne’s queries on the deal, Tonna Lowell asks the registrar to confirm its authenticity. The registrar obliges.
13:48 | Herman Grech, editor of the Times of Malta, is the next witness and asked to comment about the contents of an article published by the Times. The article, which was co-produced with OCCRP, refers to the smear campaign funded by Steward in Chris Fearne’s regard. The editor confirms the veracity of the contents of the article and steps off the stand.
Similary, Kevin Schembri Orland, the editor of the Malta Independent, confirms that two articles cited by the defence – referring to Fearne’s request to the police for further investigation and the smear campaign – are genuine.
13:35 | The witness is asked about whether Ganado Advocates was present for a meeting held in the beginning of 2015 in which VGH’s investors had presented the outline of the project. The witness states that even back then, it was obvious to his team that the only way this deal could have been executed in compliance with the law is if it was subject to full public procurement scrutiny.
Facing examination from defence lawyer Stefano Filletti, Cremona is asked questions which are almost identical to the questions from fellow defence lawyer Giannella de Marco in spite of magistrate Leonard Caruana’s warning to avoid repetitive questions. Psaila asks about the NAO’s questions which Ganado Advocates had failed to answer.
The witness says that Ganado Advocates had hired specialists to trawl through its entire email server to double check whether official summons or emails from the NAO were sent to the firm and that they had not found any such requests from the NAO.
13:22 | By July 2015, Antoine Cremona states that external financial consultants roped in by the government (David Galea from Beat Consultants Ltd and RSM Malta Ltd) had started applying pressure to Ganado Advocates to finalise the process of drafting a request for proposals. An internal draft was finalised by 11 July 2015.
13:17 | As the questioning loops over and over about the same point, the witness repeatedly feels compelled to clarify that his firm’s involvement was solely limited to the drafting of the request for proposals itself as well as the legal aspects of the process itself in general (e.g.: whether to issue a full public procurement process or not).
The witness states that the content of the RfP was delineated by Aron Mifsud Bonnici on behalf of the government and that Ganado Advocates had limited itself to ironing out the details of an RfP that was already drafted by the government.
“We were not involved in the adjudication or the evaluation process in any way at all,” Cremona adds.
12:58 | Cremona is asked about whether any external experts were engaged to assist with the engagement in question. Cremona states that this was not the case. He is then asked about what advice he had given about the process, and he says that his team’s legal advice was that such a deal should have been set up as a public service concession. The witness notes that when the request for proposals was first drafted in 2015, it was subject to a European directive which regulated public procurement processes. The transposition of the directive – which was formally issued in 2014 – had not yet occurred in Malta. The witness says they had strongly recommended the issuance of a request for proposals, which was the case.
Cremona now adds that, through several meetings with Aron Mifsud Bonnici, which were all held around February 2015, he was given further details about the project via an unofficial presentation. Shortly after, the witness then received an email from Mifsud Bonnici with two attachments: the VGH MoU and a bit of generic legal advice from DF Advocates who had suggested going down the route of treating the whole transaction as a transfer of real estate.
De Marco: “Was there any reference to who signed the MoU? Were you aware?”
Cremona: “Yes, we were.”
De Marco: “Did you name these investors to the external expert you consulted with?”
Cremona clarifies that they had in fact engaged one external expert from Arthur Cox who confirmed Ganado Advocates’ preliminary legal advice to Projects Malta.
The witness says that, while they were aware of the contents of the MoU when providing legal advice, the concession should have never been subject to an MoU or a basic property concession agreement but a full public concession agreement. He answers affirmatively when the defence asks him to confirm whether the MoU was non-binding. “Such an agreement could have never been set up with an MoU,” the witness emphasises.
12:46 | Lawyer Giannella de Marco asks the next witness, Antoine Cremona – partner at Ganado Advocates – about his involvement on behalf of the firm he represents. After referring briefly to the fact that the information his firm has on the deal is protected by client-attorney privilege, he says that he did obtain formal permission from the clients which had previously engaged his firm, including Projects Malta and the health ministry, to testify about the facts at hand.
The witness describes how his firm came to be engaged with the request for proposals which was issued in relation to the hospitals concession. He says that Aron Mifsud Bonnici was the lawyer who sought Ganado Advocates’ assistance with the drafting of the original RfP. Their engagement came to an end in July 2015. All other arrangements between the firm the witness is representing and the government are unrelated to that original arrangement.
12:37 | In the prosecution’s cross-examination, Debattista is now asked about the response he got from the minister, which he claims he does not remember. He is asked about what he did after receiving this response, and the witness declares that he does not remember whether he followed up with an in-person conversation with the minister.
Under further questioning by the defence, Debattista insists that the only point he wanted to raise with the minister was the fact that he was not aware of Camilleri’s role as director with Projects Malta. Debattista emphasises that neither he nor the former finance minister were even aware of Camilleri’s role as director.
Debattista is further taken to task about another bit in his email: one of the issues he had highlighted with Camilleri’s response to the press’ questions at the time was that he had failed to ‘leave the door open’ for the possibility that the decision to award the concession to VGH was indeed ratified by Cabinet as a whole and not by the finance ministry itself. Debattista claims that his memory fails him and that he does not remember the rest of the email exchange well.
12:35 | Filletti briefly steps in to follow up on Debono’s line of questioning. Debattista describes this email purely as a comment made to the minister and that he did not feel it would have been within his remit to speak directly to the permanent secretary about his observations, arguing that this was the minister’s responsibility.
12:27 | Magistrate Leonard Caruana asks the witness to specify the extent of his involvement as chief of staff in the context of decision-making within his ministry. He describes his role as an advisor with whom disgraced former finance minister Edward Scicluna frequently consulted with him. Debono bluntly asks the witness how he had come round to condemning Camilleri in such a manner when he just said that he was unaware of Cabinet discussions on the subject.
Debattista waffles with his answer, claiming that he no longer has access to his government email account and that he cannot comment further about this point, beyond saying that he commented only on what he saw in the press. He emphasises that this was a “private comment” made in confidence with the minister. The witness is asked again to elaborate on why he had condemned Camilleri so strongly if he was not aware of the fact that Cabinet had ratified the whole deal.
Debattista’s comment was along the lines of ‘Camilleri is either dumb by accepting to be on the board, was getting paid to close an eye, or knew it was happening and chose to do nothing’. Debattista is asked to substantiate his comment, and he explains that when he said “getting paid to close an eye” meant that Camilleri was not fulfilling his duty as permanent secretary well due to the remuneration he was receiving as a director of Projects Malta at the same time.
12:25 | Franco Debono now questions Paul Debattista, the former chief of staff of former finance minister Edward Scicluna. Referring to the procès-verbal of the inquiring magistrate’s report, Debono asks the witness about statements he had made when testifying in front of the inquiring magistrate. Debattista was quoted as saying that he had sent an email to the minister in 2020, in which he had accused former permanent secretary Alfred Camilleri of failing in his duty as permanent secretary.
He is asked to confirm whether he was aware that Cabinet had approved the deal or not when he had sent that email, and he says that he was not aware of anything beyond what was publicly reported by the press.
12:15 | The magistrate is back in the hall and the sitting resumes. A representative of Parliament is the next witness and there is some confusion about who actually summoned this witness to the stand. The sheer complexity of the case makes the proceedings difficult to keep track of, sometimes, even for the court itself.
Eventually, it is confirmed that the witness was asked to testify about whether contracts awarded to VGH were brought to the finance ministry’s attention and whether the finance ministry had any involvement in the negotiations which led to the arrangement. The finance ministry had denied all involvement, and the witness confirms this was the case.
12:00 | The sitting is suspended for 15 minutes.
11:57 | Questioned by Tonna Lowell, the witness confirms that he was stationed at the FCID last year and is asked to confirm the contents of an email. The witness confirms that the email refers to a criminal complaint which was filed by Fearne, in which he had asked the FCID to look into allegations of wrongdoing.
The witness confirms that the FCID had looked into these claims and that they had also liaised with inquiring magistrate Gabriella Vella. After receiving confirmation that Vella was not investigating these specific allegations, the police was given the green light to carry out its investigations on the matter, which it did.
The police’s decision to immediately spring into action to exonerate Fearne and his aide Carmen Ciantar from this allegation contrasts starkly with the police’s reluctance to look into wrongdoing committed by Cabinet members in relation to this deal.
Superintendent Grech further confirms that the investigation into Fearne and Ciantar’s alleged passport kickbacks deal did not unearth any evidence of wrongdoing from Fearne or Ciantar.
11:46 | Deguara explains how there was a total lack of record-keeping in terms of the negotiations which were carried out in relation to the deal, a clear breach of the two previously cited pillars of good governance (accountability and transparency). The witness also explains that ultimately, good governance is dependent on the responsible use of public funding, describing his office as “a guardian of the public purse.”
Lead prosecutor Francesco Refalo asks the witness about Deguara and Farrugia’s involvement (DF Advocates) as VGH’s consultants. The witness confirms they were, in fact, mentioned in this report. The witness says he can confirm where exactly in the report the two lawyers are mentioned and is given a few minutes to do so.
The witness confirms that the lawyers in question were referred to multiple times in his office’s report (in relatively neutral terms) as advisors who were brought in by VGH.
The prosecution asks whether it’s normal for an MoU and RfP to be signed in that order and whether this is acceptable in the context of the good governance principles he was describing earlier. Deguara: “Of course not.”
11:40 | Giannella de Marco takes over questioning – she asks further about the link between Ganado Advocates and Projects Malta. She asks the auditor general to confirm whether his office ever looked into whether Ganado Advocates or Projects Malta themselves carried out due diligence, and the auditor general says his office did not do so.
De Marco asks about whether there are any formal laws or guidelines which dictate how such a request for proposals should be issued, and the auditor general says this was not the case. He is asked about whether due diligence was carried out in other similar instances, and the witness says that this does not happen in every circumstance.
The defence asks whether the request for proposals was conformant with European law at the time, and the auditor general confirms this was the case.
Cross-examination from the prosecution: the witness is asked about how his office defines good governance: “accountability and transparency”.
11:34 | Franco Debono picks up with the needling right where Psaila left off, putting words in the witness’ mouth by suggesting that it was him who claimed that the involvement of major auditing firms should yield less scrutiny from the NAO. The witness denies he tried to give that impression and says that he did not suggest this was the case at any point. The magistrate patiently reminds the witness to avoid arguing with the defence and solely stick to answering the court’s questions about the involvement of Projects Malta at the RfP stage and how the evaluation and adjudication process was handled.
11:26 | Psaila now asks about how come the NAO felt the need to investigate the request for proposals in such detail, including about how Projects Malta had subcontracted Ganado Advocates to assist with the process of drafting the request for proposals. Deguara briefly explains that replies about this consultation process were not forthcoming from either entity. The auditor general is now asked about PWC’s onboarding as an auditing firm that was involved in the bidding process, and the NAO is asked to explain whether the vetting process from private auditing firms is taken into consideration by the NAO.
Deguara stands his ground and insists that “if we are not going to acknowledge the need for due diligence in such a case, then I don’t know what we’re supposed to be doing.”
Psaila: “What else did the NAO expect from the bidding process? What else should have been included in this process?”
Deguara stands by his office’s reporting, arguing that whether external auditing processes were carried out or not is irrelevant and that his office’s sole remit is to scrutinise public spending.
11:17 | Lawyer Ezekiel Psaila on behalf of Manuel Castagna (member of the evaluation committee, formerly with Nexia BT) is taking over questioning, asking about the evaluation criteria which were used to determine the fitness of the bidders. The NAO had outlined that there was no due diligence carried out on the private bidders. Psaila needles the witness about an emphatic statement he made earlier when outlining what the NAO’s reporting is based on. Deguara insists that his office bases its findings on evidence and its conclusions on whether principles of good governance were adhered to.
Psaila (paraphrased): “The evaluation and adjudication committee had followed the letter of the law when making decisions. So how come the NAO claims to have reached conclusions based solely on evidence when, even though no laws were breached, you are nonetheless describing this process as lacking in good governance?”
Deguara emphasises that, although the letter of the law was in fact being followed throughout the evaluation and adjudication process, the fact remains that there was no adequate due diligence carried out about VGH and/or the other bidders and that the NAO’s duty is to ensure that government funds are adequately spent, irrespective of whether the law specifically outlines such good governance principles or not.
11:03 | NAO auditor general Charles Deguara steps back into the hall after he was given time to review a specific note in his office’s reports about the hospitals concession. Defence lawyer Franco Debono again asks the witness to clarify the note about how capital and recurrent expenditure paid to the concessionaire were split across the energy and health ministry during Konrad Mizzi’s time.
Referring to the management contract, Deguara explains how the whole point of such an arrangement should have been to enable a major cash injection into the hospitals without obliging the government to cough up hundreds of millions in capital expenditure up front. As we now know beyond any doubt, the major cash injection which was supposed to lead to a total overhaul of the hospitals in question never materialised. In its reports, the NAO had already highlighted how the main cash flow which was supposed to be generated by the deal from medical tourism was a baseless, speculative projection which could have never sustained a concession of that scale.
10:54 | Franco Debono asks the witness about DF Consultancy Services Ltd. The police officer is asked about whether any of those keywords popped up during their search in DF Consultancy’s offices. Spiteri says that his role was to log all documentation which was picked up from this search. Debono asks the police officer about who might be able to answer the defence’s question, and the witness suggests that police inspectors Anthony Scerri and George Frendo are better placed to answer the question. Spiteri insists that he was not directly involved in the act of seizing evidence itself.
Harping on about a now familiar tune, Debono asks Spiteri to confirm whether the police mixed up DF Consultancy Services with the name of DF Advocates. The prosecution objects to the defence’s questioning, which leads to a rephrasing: “How did you draw a distinction between DF Consultancy and DF Advocates?” The witness confirms that he did not draw this distinction himself.
10:50 | The next witness, police officer Shawn Spiteri, presents a list of keywords – requested in the last sitting – which were assigned by the inquiring magistrate to police officers who were carrying out searches on her behalf.
10:45 | Cabinet minutes June 2015 – July 2015: Spagnol is asked to explain the content of the memo. The memo refers to Konrad Mizzi’s presentation to Cabinet in which the VGH MoU was first referred to. Cabinet had approved the MoU, taking the decision to effectively endorse what was later deemed evidence of collusion between the government and the private investors. Spagnol confirms this was a decision taken by Cabinet in its entirety.
10:38 | Filletti asks about minutes which note how Cabinet decided to amend relevant hospital concession contracts to provide further guarantees to the concessionaire. There is some back and forth about whether the specific minutes which the witness is being asked to testify about were submitted as evidence in the case or not. The Cabinet’s secretary is asked to obtain formal approval from Cabinet to ensure that this point of procedure is adhered to.
10:30 | Spagnol proceeds to confirm the authenticity of the memoranda and Cabinet meeting minutes which were submitted in the acts of the case. The Cabinet meetings which were authenticated were held between 2017 and 2020, a turbulent time which saw a snap election, the murder of the journalist who first exposed the hospitals concession deal as corrupt, and the eventual resignation of all three former government officials which now form part of the dozens of individuals accused in this case – Joseph Muscat, Konrad Mizzi, and Keith Schembri.
Defence lawyer Stephen Tonna Lowell asks the witness about a minute from September 2019 which states that Fearne had insisted the real estate linked with the concession must remain in public hands. Spagnol says that he was not present for the meeting but that the minutes confirm what the defence lawyer referred to.
10:21 | The next witness is Cabinet secretary Ryan Spagnol, who recently filed a libel suit against criminal lawyer Jason Azzopardi on a separate case. The prosecution refers to a court request filed in relation to the witness, which states that the cabinet secretary cannot be allowed to exhibit certain documents due to the confidentiality of his role. Tonna Lowell states that Spagnol was asked to testify today to confirm the authenticity of specific Cabinet documents which were included as evidence in the acts of the case.
Tonna Lowell refers to the 2015 MoU given to Cabinet by Konrad Mizzi among other documents which have been submitted in the acts of the case. The Cabinet secretary confirms the authenticity of these documents.
10:17 | The next witness, a jobsplus representative, is asked to testify about Deborah Ann Chappell’s employment history. She was employed with DF Advocates from 2011 to 2012, re-employed from August to December 2013, and re-employed again up until August 2017. She began working as chief legal officer for VGH in 2017 and now is listed as a self-employed legal and financial services provider.
10:15 | Before stepping off the stand, the auditor general is asked to check specific details about a note in his office’s report (the note refers to the way capital and recurrent expenditure given to the concessionaire for the purposes of maintaining the concession was split between the energy and health ministry during Konrad Mizzi’s time)
10:11 | Tonna Lowell now quotes a response from the disgraced former health minister, in which Konrad Mizzi had told the NAO that the project was entrusted to him with the full backing of Cabinet and the office of the prime minister. When asked about former finance minister Edward Scicluna and former finance perm sec Alfred Camilleri, the witness states that he does not have any negative comments to make about them and that they fully cooperated with his office’s investigations.
10:06 | The auditor general is now asked about whether his office looked into why this deal was set up as a concession and not a contract. The NAO asked about this aspect of the deal and he says that the entire process was coordinated by Projects Malta. The NAO underlines that the health ministry should have been involved from the outset, way before the initial request for proposals was issued. Last week, the auditor general had also flagged his concerns about the fact that a memorandum of understanding was signed between VGH investors and the government months before any such request for proposals was made public.
Tonna Lowell asks about another note in the NAO’s report which outlines that this concession should have been set up as a public service agreement with onerous conditions that would have obliged the concessionaire to uphold its end of the bargain. Deguara adds that there is nothing intrinsically wrong with concessions as long as they are executed properly.
10:00 | Tonna Lowell quotes further from the NAO’s extensive reports about the deal, referencing the multiple instances in which the auditor general reiterated his office’s concerns about how “the health ministry was practically sidelined” when it was taken over by disgraced former minister Chris Fearne. Tonna Lowell asks the auditor general to explain more concretely what his office’s grave concerns were, and he insists that it was “inconceivable” for a health project to be carried out “without practically any input from experts in this field.”
The witness confirms that Fearne, Rapa, and (Ronald) Mizzi were cooperative when the NAO was carrying out its investigations.
09:54 | Stephen Tonna Lowell takes over questioning on behalf of his clients Fearne and Scicluna. He asks about references to his clients in the first of three reports published by the NAO. The defence lawyer quotes a line from the report which expresses the NAO’s grave concerns about the ministry of health’s almost total exclusion from the negotiation process. Deguara highlights how at the time, the process was almost entirely handled through disgraced former health minister Konrad Mizzi after he was no longer formally responsible for the same ministry.
09:49 | Defence lawyer Franco Debono now takes over questioning. He asks Deguara about capital expenditure funding that was given to the concessionaire for them to be able to manage the hospitals. while the concessionaire was in turn obliged to use funding generated by medical tourism to reinvest into the hospitals themselves. Debono repeats the question about whether VGH and Steward were audited by the NAO, and Deguara reconfirms that his office could not audit private companies.
09:46 | Filletti now asks Deguara about the NAO’s legal powers and its remit as a public finances watchdog. Filletti asks whether the NAO carried out any due diligence on VGH and Steward Healthcare. Deguara states that his office’s remit extends solely to public authorities.
09:43 | Today’s testimonies begin with Charles Deguara, the auditor general of the NAO. Last week, he attested to the extent of his office’s investigations about the hospitals concession case, the methodology that was used in their investigation, and what was uncovered by his office. The NAO’s reports on the hospitals concession had served an instrumental role in outlining the fraudulent nature of the deal.
Defence lawyer Stefano Filletti asks Deguara about what kind of wrongdoing was uncovered by his office – specifically, whether permanent secretaries Ronald Mizzi and Joseph Rapa had committed any wrongdoing when carrying out their duties in relation to the deal. Deguara reminds the court that the health ministry had been almost entirely excluded from the tendering process on the hospitals concession deal.
09:37 | Good Morning! Following our week-long hiatus, we are back in Hall 22 for this week’s hearings in the historic hospitals concession case. We’re live as we speak as magistrate Leonard Caruana goes through the roll call of the accused.
