Seriously? State-Controlled Bank Of Valletta Co-Financed Malta’s €4 Billion Privatization Fraud!

Bank of Valetta involved in huge privatization fraud deal
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The €4-billion privatization deal was the largest a Maltese government ever struck with the private sector. It ended before the courts. A Maltese judge rescinded the deal after finding it fraudulent throughout. The original concession for running three hospitals was given to Vitals Global Healthcare, which sold it to Steward Health Care. The Medical Association of Malta (MUM) has warned about the fraudulent deal signed in 2015 and co-financed by the state-controlled Bank of Valetta.

The Shocking Fraud Judgement

The deal was initially struck in 2015 when the Maltese government granted a concession for running three hospitals to Vitals Global Healthcare (VGH).  Less than two years after being granted the concession, VGH sold it to Steward Health Care with €55 million in debts for the nominal price of €1.

The landmark judgment concluded that Vitals Global Healthcare and Steward Healthcare had defrauded the country. After 44 hearings, Judge Francesco Depasquale found that the fraud started even before the Maltese government issued the hospital privatization tender and continued throughout the deal and the period during which Vitals and Steward held the concession. The court found the Maltese government culpable, as it quietly negotiated a memorandum of understanding with Vitals months before it issued a public call for tender for the hospitals project.

Under the court order, all agreements and amendments have been ordered to be rescinded and annulled, and the hospitals returned to the government.

The Medical Association of Malta (MUM) estimates that the Maltese Government has already paid some €390 million to Vitals Global Healthcare and Steward Health Care for the now-annulled hospital concessions.

The case to have the contracts and all ancillary documents rescinded – including Steward’s €100 million escape clause – had been opened in 2018 by then-opposition leader Adrian Delia in his personal capacity as an MP against then-prime minister Joseph Muscat.

The Bank of Vallette

The Bank of Valletta (BOV) brands itself as Malta’s largest bank. The bank’s largest shareholder is the Maltese state, which empowers the government to appoint its chair. BOV provided a loan of €35.9 million to Vitals and Steward, and the Maltese government acted as a guarantee. The court judgment indicates that the bank carried out no due diligence.

The opposition’s shadow finance Minister MP Jerome Caruana Cilia questioned whether the government would end up paying millions out of pocket due to the €35.9 million loan to Steward Healthcare that it chose to guarantee or whether Bank of Valletta would be shouldering the loss instead.

BOV refused to answer questions, insisting it did not comment on individual cases. The bank was the only one to provide Steward financing to enable it to take a concession that the courts have now struck down as “fraudulent.” The BOV Chairman is Gordon Cordina. He owns E-Cubed Consultants Ltd and enjoys hefty retainers from the Government for his private business (Fintelegram report here).

Various corresponding banks terminated their relationship with the Bank of Valletta over the past years. Malta’s FIAU has so far remained silent on this large-scale fraud that involves Malta’s largest bank.

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