A former prime minister has become the first in Malta to have criminal charges brought against him over a corruption scandal.
ADVERTISEMENTFormer Maltese prime minister Joseph Muscat is among several former and current officials on the Mediterranean island facing criminal charges in a corruption scandal over a scheme to sell public hospitals to a private company.
The charges, which mainly relate to money laundering, were brought by prosecutors on Monday but the hospital deal itself dates back to 2015 and has been the subject of multiple civil court rulings, audits, and investigative reports.
Muscat has denied wrongdoing, writing in a Facebook post that if the charges were not so serious, they would be "laughable".
Experts said this was the first time that criminal charges have been brought against a former prime minister in Malta.
While the full investigation report that resulted in these charges is not yet public, here’s a look at the background of the scandal.
Hospital contract awarded to a company ‘without health sector experience’
Following a call for competitive proposals, Malta’s government signed an agreement with a private company called Vitals Global Healthcare (VGH) Ltd in 2015 to redevelop and operate three public hospitals.
The process for awarding that contract was later called into question.
Malta’s National Audit Office said in 2020 that the government’s work to verify the deal with VGH and its capacity to run three public hospitals was “grossly inadequate”.
Of particular concern was that VGH was not known to “have experience in the health sector,” Maltese unions said in a letter calling for the audit.
Indeed, auditors confirmed that VGH did not provide sufficient evidence that it had healthcare management experience, and yet it was picked by the government for a 30-year, multi-billion-euro contract to manage the public hospitals.
The contract was transferred in 2018 to a company named Steward Health Care which runs more than 30 hospitals in the US and appears to have created an international office that year.
Deal annulled by court due to fraud
A Maltese civil court annulled the deal in February 2023 after an opposition politician filed a case against it.
The court said the Maltese government had signed a Memorandum of Understanding in 2014 with a group of investors who later formed VGH with the idea that it would take over the hospitals.
There were also concerns about the transfer of the contract to Steward.
In 2021, the Times of Malta newspaperreported that Muscat had been wired money from the Swiss firm Accutor which had received millions from Steward during the hospital takeover. VGH investors were also paid by the Swiss firm, according to the newspaper’s reporting.
“The work I carried out over a number of months was not in any way related to projects related to the Maltese Government,” Muscat responded in a 2021 Facebook post addressing the article.
Steward International said in a statement that the Swiss firm was engaged for "legitimate business services during this period" and that the company did not have a "commercial or other relationship" with Muscat.
The National Audit Office said in May 2023 that conflicting accounts and a lack of records of initial interactions between the government and Steward Health Care were concerning and “obscured visibility" of the deal.
ADVERTISEMENT'Collusion' between government and companies
The judge that ruled to cancel the hospital contracts in February 2023 found that fraud had been committed before VGH was awarded the contract, after it got the contract, and when Steward assumed VGH’s contractual obligations, according to court documents.
While Steward appealed the February decision, an appeals ruling confirmed the contract’s annulment in October 2023. The judges said, however, that instead of fraud by one party, there was collusion between the government and the companies.
Judges wrote in the appeals ruling that those who were supposed to protect the interests of the country failed to do so. These cases, however, were in civil court and did not result in charges.
The criminal charges this week came following an investigation sought by the rule of law organisation Repubblika.
The Dallas-based company Steward Health Care, the US’ largest physician-owned for-profit hospital operator, filed for bankruptcy in Texas on Monday. The company said in court documents seen by Euronews that it initiated a process to sell its US hospital facilities in late January.
ADVERTISEMENTThe company closed a Massachusetts hospital earlier this year and has faced investigations and criticism. Senator Ed Markey said the company “put investor profit over people’s lives”.
"This is the first time in Maltese political history that a former prime minister was able to answer for such criminal charges," Kurt Borg, a lecturer in public policy at the University of Malta, told Euronews.
"It's incredibly, high profile, and it comes after a series of court judgements that have been, emerging in these last couple of months and years over the privatisation of three state hospitals under Joseph Muscat’s administration".
Borg added that the deal was “shrouded in mystery” from the beginning, with many “accusations” against the companies awarded it.
“It’s not just the former prime minister but also his chief of staff and a prominent minister of that cabinet,” Borg said.
ADVERTISEMENTThe charges also implicate two officials who were close to Muscat: Keith Schembri and Konrad Mizzi, according to documents seen by Euronews. The charges include promoting and organising a criminal organisation and bribery.
Muscat left office in 2020 amid pressure over the 2017 assassination of journalist Daphne Caruana Galizia.
'Attacks on judiciary'
Malta’s current prime minister, Robert Abela also came under criticism this week for his response to the scandal as he has stood by Muscat and called into question the judiciary.
In a statement, the rule of law organisation Repubblika said it was deeply concerned by Abela and other officials’ responses, saying there was an "attack" on public officials in the judiciary, police, and prosecution service.
Repubblika added that Abela had started "a public, planned, and powerful campaign that targeted the inquiring magistrate" before the news about the end of the inquiry and criminal charges.
ADVERTISEMENTBorg at the University of Malta explained that Abela has claimed that the timing of the inquiry is politically motivated amid the local and European election campaigns.
"They are attempts to politicise the judiciary, which of course is a very kind of dangerous move… There's a lot of criticism of the way in which the prime minister is handling this saga," Borg added.
