A senior health ministry official has reported suspicions that funds intended for the operation of three public hospitals have been misappropriated from Vitals Global Healthcare.
The admission that the Ministry of Health suspected the misuse of public funds emerges from a 460-page review of VGH contracts by the National Auditor General.
VGH collapsed from the dealership after just two years, having recorded losses of 27 million euros.
The decision to hand over the management of St Luke, Karin Grech and Gozo hospitals to a company with questionable medical credentials has been harshly criticized by Auditor General Charles Deguara.
In his report, he highlighted the “serious concerns” raised by the official, who has not been identified.
These suspicions were based on the simple fact that, although VGH is paid enough by the government to cover the existing operations of the three hospitals, the company has still amassed a significant list of creditors, according to the report.
“The observations made by the Department of Health aroused the greatest concern of the NAO; however, this office is not in a position to dig deeper to determine that the alleged audit would require access to the financial transactions of the VGH, the analysis of which is beyond the mandate of the NAO, ”said the Auditor General.
He noted that the ministry official’s allegation is credited with VGH’s dire financial situation.
“If proven, public funds have been embezzled”
If this were to be proven, it could lead to the conclusion that public funds have been misappropriated, the report says.
The Auditor General recommended further investigation by “competent authorities” to establish whether there had been embezzlement of public funds and financial mismanagement in connection with the hospital deal granted to VGH by the government.
The Department of Health also pointed out to the Auditor General how the concessionaire failed to secure funding and submitted its mandatory financial statements late.
The report also looked at VGH’s financial situation before the concession exit, based on its public accounts.
He notes that the remuneration of former VGH directors Ram Tumuluri and Mark Pawley reached 6 million euros in 2017, a marked increase from the previous year.
Cash, bank reserves in free fall of nearly € 1 million
VGH’s cash position and bank reserves fell by nearly € 1m between 2016 and 2018, from € 1,152,509 to € 156,686.
Its share capital of only € 1,200 was a “subject of concern” which had been highlighted by the Ministry of Health during a meeting held with the National Audit Office.
“The representatives of the Ministry of Health questioned the attribution of a project worth several hundred million euros to a company with a net asset value of 1,200 €”, indicates the report.
“Similar concerns have been raised in terms of government acceptance of a parent company guarantee given this limited share capital.”
The same report also details how the finance ministry was never properly consulted on the hospital contract, worth 4 billion euros.
Former Minister Konrad Mizzi declined to meet with the Auditor General in connection with the investigation.
The Auditor General noted a similar lack of cooperation from Malta Enterprise, now headed by Kurt Farrugia, a close associate of former Prime Minister Joseph Muscat.
The position taken by Malta Enterprise was deemed “questionable” because the information requested of it would not have violated any obligation of secrecy under Malta’s Business Act.
The National Audit Office was seeking documents on the establishment of a committee to oversee aspects of the concession, the advancement of certain contractual requirements from the concessionaires, and a rental agreement between the government and VGH for the Barts medical school in Gozo. .
Former opposition leader Adrian Delia said on Wednesday that a criminal investigation into the case should be opened.
Addressing a press conference, the Nationalist MP criticized the government for voting in parliament to give more money to current Steward Health Care dealers on the same day the report was released. The company will receive 69 million euros of public funds in 2022, an increase of 40% compared to the previous year.
Delia, who is leading a legal bid to quash the hospital deal, said: “If the government was serious, it wouldn’t continue to reward a corrupt contract.”
The government and Steward reportedly found themselves at an impasse in negotiations to cancel the deal.
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