Julian Delia reports live from Hall 22
LIVE | Vitals Case Day 13
Reporting about this case has become a full-time job for us on certain days. We are not getting paid for delivering this public service, but greatly appreciate your donation to NEWZ.mt using our Revolut payment page.
Please leave a reference to ‘Court Blog’, so we’re able to allocate the amount received to this project.
12:40 | We’re done for today. Thank you for following!
12:37 | Witness Lucienne Pace Ross (PwC) is back on the stand. She presents all the relevant letters of engagement which explain on what specific aspects of the hospitals concession PWC was asked to assist on.
July 2015: Bluestone’s request to PWC to update their preliminary business plan (after RfP, no deliverables attached to project)
May 2016: Review of Bluestone’s financial model (this review was never finalised)
July 2016: Bluestone asks for high-level indication of concession value
October 2016: Bluestone asks for professional advice on company tax structure
August 2018: Technical accounting advice, international accounting standards (Steward)
March 2020: Provision of company tax services (Steward)
April 2020: Provision of further tax services (Steward)
February 2021: Accounting advice, review of asset classification (Steward)
September 2022: VAT services (Steward)
November 2022: Request from Steward to update financial model to reflect new agreements that were in place
December 2022: Quality performance reports review, improvement recommendations (Steward)
In February 2023, PWC decided to terminate their services, shortly after judgement was passed which decreed that the hospitals concession was fraudulent and riddled with collusive behaviour.
The witness is asked whether she is aware of the relationship between Bluestone, Cross Range Holdings, and Pivot Holdings (the last two being offshore companies which formed part of the VGH offshore network). She says she is not aware and that she is not aware of any additional services (beyond compliance) which may have been provided by PWC to these three companies.
12:20 | Cabinet secretary Ryan Spagnol is back on the witness stand.
Spagnol is asked to refer to a set of minutes from October 2019 and he confirms they are authentic. The defence then refers to the MoU that is cited in the minutes from Cabinet meetings in October 2019 and asks the witness whether it is correct to state that this MoU was created to lay the groundwork for additional payment increases and whether it was approved by the finance ministry.
Spagnol said that during this meeting, the finance minister had stated that this additional funding must not go to Steward unless an MoU is signed. In the previous meeting, Cabinet was asked to endorse the principles set out by the MoU. The MoU was, as previously stated, signed by tourism minister Konrad Mizzi.
The specific dates were: 1 October 2019 (approval of MoU in principle) and 10 October 2019 (final approval of MoU).
11:38 | The sitting is again suspended, until 12:15.
The prosecution asks the defence to confirm whether the remaining 12 witnesses on the list are all necessary for the purposes of the compilation of evidence stage.
The remaining dates are: 16 July (witnesses), 17 July (final submissions on prima facie evidence), 24 July (decree).
11:34 | Joseph Camilleri is the next witness on the stand. He represents several of Steward Healthcare’s companies, and he is therefore invoking the client confidentiality principle. He confirms that he was not given permission by his clients to testify.
The defence clarifies that the witness is not being asked specific questions about his working relationship with his clients and is only asked to state when he picked up the brief. He was engaged in May 2018 and remains their lawyer to this day.
Debono is trying to establish who he took the brief over from. The witness states that he is not aware whether there were any other lawyers involved but that he is only sure of the fact that DF Advocates were previously responsible for the brief.
Camilleri is asked to state whether he is aware of any continued involvement from DF Advocates in relation to Steward after he took over the brief, and he states that he does not know.
11:13 | The sitting is suspended for 10 minutes.
11:12 | Claudette Fenech, representing the Malta Business Registry, was previously asked to confirm whether DF Advocates was ever registered as a company, and today, back in the witness stand, she confirms that the company was not registered. She also confirms that Kenneth Deguara was not directly involved with DF Corporate Advisory Services Ltd.
10:41 | The next witness is Mark Borg, director-general of budget affairs.
He has been in this position for the past 15 years, and worked closely with finance minister Edward Scicluna. The witness is asked to explain how the budgeting process works. His office calculates the financial estimates that accompany the Budget speech every year.
The defence asks the witness to specify how the budgeting process differed with the hospitals concession case. The concession was legally classified as an additional item in the overall financial plans of the health ministry at the time so the relevant funding can be allocated to it accordingly. The estimates were to be formulated in such a way as to ensure they were as close as possible to what would be spent by the concessionaire throughout the year. These estimates are set by the finance ministry while the implementation would be the responsibility of the relevant ministry.
The defence asks the witness whether his office has any visibility over the payments which are issued, and he states that such payments would be verified and issued by the ministry, a statement which matches with what was stated by the treasury’s representative earlier this morning. The witness adds that the financial estimates which his office is responsible would not include an itemised list of what payments were issued, but rather a comparative data table which shows both estimated and actual expenditure over a three-year time span (example: a 2024 budget document would also include 2023 end of year expenditure + 2025 financial estimates).
Cabinet meeting minutes October 2019: The defence refers to a Cabinet-approved MoU which had prohibited further upward revisions to the budget which can be allocated to the concession (the minutes contain a reference to a Cabinet discussion about potentially increasing the allocated expenditure by 10%). The witness confirms that there were ongoing discussions about increasing the allocation when Steward Healthcare took over.
It is important to note that throughout Steward’s tenure, these annual payments were in fact increased almost year-on-year.
Debono shows the witness an email, which shows former finance ministry permanent secretary Alfred Camilleri effectively stopping any payments or budget which goes over what was stipulated in the contract.
The witness confirms that Camilleri had insisted that the concessionaires must only be allocated that which the government is contractually obliged to provide and not a cent more.
The witness states that in terms of the budgetary allocation for 2020, Camilleri’s insistence seems to have worked as Steward were only provided that which they were contractually obliged to provide.
Defence lawyer Alex Sciberras asks the witness to elaborate further about who asked for a 10% increase in the allocation, and he says that in every case in which an increase in allocation is requested, it would be coming directly from the relevant ministry (in this case, health).
The finance ministry had objected to the increase in allocation during the preliminary budget planning stage.
10:39 | The court accepts a request from the defence to ask a representative from the treasury to provide specific reasons why the payments to VGH and Steward were issued.
10:37 | Defence lawyer Tonna Lowell takes over questioning. Witness Anthony Cachia insists that they were not involved at all in this process, and he refers again to the legislation at the time which clearly excluded public private concessions from the DoC’s remit, which is why Projects Malta was repeatedly referred to as the contracting authority at the time.
It is pertinent to note that yesterday, multiple executives from Projects Malta testified that the entity they were representing was not the contracting authority at all. It is not yet evident how this grey area is going to be cleared up.
10:28 | The next witness is Anthony Cachia, the former director general of the department of contracts.
Franco Debono asks the witness whether the DoC had any involvement in the issuance of the request for proposals. He states that this was not the case. At the time, public service concessions were not regulated by the relevant legislation which regulates his department (this legislation was then changed in 2016). The defence hands the witness a copy of an email he had sent himself to then-finance minister Edward Scicluna, Konrad Mizzi, and Ronald Mizzi.
The email refers to consultants who were roped in by Projects Malta to assist with this process, and the witness says he does not remember any details about who these consultants were. At the time, the witness states that he had written to the ministries to ensure that there were tight selection criteria as part of the conditions of the concession. The witness confirms that he had issued these recommendations and notes that the DoC had clearly distanced itself from the deal.
Cachia says he does not remember who represented Projects Malta throughout the exchange.
10:22 | Caroline Portelli notes that according to the treasury system, no money paid to VGH was traced between 2015 and 2016, meaning payments were made from 2017 to 2019. As for Steward, documentation from 2019 to 2023 is presented.
The witness explains that there was a change in the treasury’s database system midway through 2020 and that there are slight differences in the record-keeping for that reason.
The defence asks the witness about how the payments were classified, and she states that the payments were issued to the hospitals directly and that the specific reasons why payments would be made to the concessionaire would need to come from the relevant ministry or department.
Portelli is asked about whether it would be possible for the treasury to exhibit the ‘voucher’ chits which would be given to the treasury from the relevant department or ministry and would have a brief description of why certain payments are issued.
The witness explains that these vouchers are used to keep track of these payments but the treasury’s officials themselves would not be able to access them or present them without an explicit go-ahead from the relevant ministry or department.
10:21 | PN challenge to recover Vitals’ funds thrown out
Another court has dismissed a PN case challenging the State Advocate to recover the defrauded funds in the now defunct hospitals’ deal.
10:20 | Enough evidence against Shaukat Ali
Meanwhile, another court has ruled there is enough evidence for a corruption case to continue against Shaukat Ali, the man believed to be the secret majority owner of VGH.
10:12 | The next witness is Caroline Portelli, assistant director at the treasury.
Debono asks Portelli to explain what kind of payments were disbursed to the concessionaire. The witness explains that the treasury serves as an intermediary between different ministries and entities and that it does not go into details about what kind of payments are disbursed.
The treasury effectively serves as an ATM on behalf of the Central Bank, according to the assistant director. She presents documents to the court which attest to the payments which were made to VGH and Steward Healthcare throughout the entire concession.
Portelli confirms that the figures cited in her documents were extracted directly from the treasury’s system by herself, confirming their authenticity on the witness stand.
10:01 | Lucienne Pace Ross (PwC) takes the witness stand. The witness is exempted from professional secrecy before the defence begins questioning.
Franco Debono asks the witness to confirm whether she was directly involved in the onboarding process related to VGH. Pace Ross explains that her role was to outline what procedure needs to be followed when onboarding clients in order for them to go through basic due diligence procedures.
She explains that part of the process included obtaining identifying documentation for both shareholders as well as their companies, including additional supporting documentation related to ownership structures. When asked how her firm came to be involved with VGH, the witness refers to the letters of engagement which were cited by her colleagues yesterday.
Debono asks Pace Ross what legislation regulates her profession and therefore, the process of due diligence, and she refers the court to the Prevention of Money Laundering Act. She further explains that the processes which they must follow are set out and regulated by this law.
Given that there seems to have been a misunderstanding from the witness’ end about which engagement letters she was supposed to bring with her to court, she will be testifying again.
Lawyer Stefano Filletti takes over questioning, asking the witness about the other services which were offered to both VGH and Steward Healthcare. Pace Ross is told to bring every single letter of engagement which is linked with the hospitals concession. Her testimony is suspended.
09:47 | Today’s first witness is cabinet secretary Ryan Spagnol.
If you recall, the last time Spagnol was on the witness stand in this case, he was asked to confirm the authenticity of Cabinet meeting minutes in which the hospitals concession was discussed. The prosecution had also asked Spagnol to obtain formal permission from Cabinet to authorise the admission of the minutes in question into the acts of the case.
Commenting on an email from January 2018, Spagnol confirms that it refers to when a collective Cabinet decision was taken on the concession. The witness also does the same for Cabinet meeting minutes from October 2015, a decision taken in June 2015 (to move forward with the deal), another meeting held in December 2017, and a document which was given to the auditor general in October 2019.
Given that there seems to be additional documentation that needs to be confirmed by the Cabinet secretary, the witness is asked to testify again on 16 July. The defence now has questions for the witness about a document which refers to a decision taken by Cabinet in October 2015. Cabinet decided that disgraced former health minister Konrad Mizzi is to sign the contracts with VGH and provide access to the concession sites to the private entity.
The witness confirms that this document is therefore referring to Cabinet’s initial ratification of the deal. Spagnol is now asked about an email from January 2018 – the approval of the MoU from Cabinet’s end. Specifically, Mizzi, who by then was tourism minister, was the signatory given that the public-private partnership portfolio was transferred to him.
The 2018 MoU referred to the transfer of the concession to Steward Healthcare following VGH’s evident failure to bring the required financing to the table. Effectively, the agreement referred to how the money flows to the first concessionaire were redirected and effectively extended for Steward’s benefit – in spite of the clear failure of the concession and the fact that none of the contractual milestones were achieved.
Spagnol is asked about the minutes from the Cabinet meeting held on January 2015 – this refers to the meeting in which Mifsud Bonnici, Manuel Castagna, and David Galea had given a presentation to Cabinet to outline the concession’s specifics. The meeting’s minutes also refer to how Cabinet had agreed to award the concession to VGH following the presentation.
09:45 | The defence suggests picking up where we left off yesterday by reviewing the list of witnesses and assessing which testimonies need to be heard and which ones would be effectively repeating facts that were already established. Renounced: former Projects Malta CEO Adrian Said.
It’s important to note that any witnesses renounced in these early stages of the case can be recalled at any point during the criminal trial stage.
09:40 | Good Morning! We’re in session.
