Malta's ex-PM named in money laundering probe linked to 'fraudulent' hospitals concession

Source: EurActiv.com

Malta's former socialist Labour Party (S&D) prime minister Joseph Muscat, his former chief of staff Keith Schembri and former minister Konrad Mizzi have been named by the country's attorney general on suspicion of money laundering in connection with a controversial public-private partnership for hospitals.

Judge Edwina Grima ordered the trio, as well as around a dozen other individuals to give police access to their assets and funds, and to declare the source of their wealth to the authorities. They have also been banned from selling any of their assets.

The bombshell follows the conclusion of a magisterial inquiry last week, the findings of which have now been handed over to Attorney General Victoria Buttigieg. Some 78 boxes of evidence have been passed to the attorney general, who will now sift through them and decide who will face criminal charges.

Muscat has been preparing for the inquiry's outcome for several months, describing it as a personal "vendetta" and accusing the magistrate who led the inquiry, Gabriella Vella, of waging war against him and the Labour Party.

"The institutions are working- working against Labourites", Muscat said. He added that he has "no doubt" that he will face criminal charges, but maintains his innocence.

"If justice exists, I will be a free man and then receive compensation for damages suffered...I know I did nothing wrong", he said.

In 2014, a group of investors signed a memorandum of understanding with the newly elected Labour government. This group would then form Vitals Global Healthcare and win a government tender in 2015 to run three state hospitals, create new beds, and build new premises. Despite receiving hundreds of millions of euros in taxpayers' money, they did not deliver on their promises.

A few years later, Steward Healthcare, linked to the US healthcare giant, took over the concession. The concession continued to fail to honour its obligations and eventually gave up, leaving the island with piles of debt and unpaid bills to tax authorities and vendors. None of the tender promises were delivered on.

In late 2023, a court found the deal appeared to be "fraudulent" and that there had been "collusion between Steward and senior government officials or its agencies."

While the findings of the magisterial inquiry have not yet been made public, it is believed that, aside from his involvement in the fraudulent deal, he may have received over half a million euros in kickbacks.

Muscat resigned in December 2019 after weeks of nationwide protests following revelations of his links to Yorgen Fenech, the man currently on trial for masterminding the assassination of journalist Daphne Caruana Galizia. He was then designated Corrupt Person of the Year 2019 by the Organised Crime and Corruption Reporting Project (OCCRP).

He was replaced by current Prime Minister Robert Abela, who has also attacked the work of the inquiry and the judiciary. He claims it was timed to coincide with the European Elections on 8 June. This is despite the fact the inquiry was requested four years ago, and Caruana Galzia sounded the alarm over the deal back in 2015, two years before she was murdered.

He said "the establishment" which works "in the background" and "does not forget or forgive and that believe that they have a divine right to rule" are behind the results. He said it is up to the electorate to decide whether to allow "the establishment steal the sovereignty of the leadership of the country."

A source close to civil society told Euractiv that Muscat has been attacking the magistrate who handled the inquiry for "years".

They added that "there was a case where a young man named Jean Paul Sofia died at his workplace and a magistrate was in charge of investigating it. As it became clear the government and its institutions were responsible for what led to the tragedy, Prime Minister Robert Abela publicly criticised the magistrate. This is an example of how they try to interfere with the judiciary, especially when they don't like where it's heading."

Nationalist Party and opposition leader Bernard Grech said on Wednesday that justice must be allowed to take its course irrespective of whether you are a former prime minister or a citizen.

Schembri and Mizzi are yet to comment publicly on the news.

But this is not the only scandal involving Muscat, Mizzi, and Schembri. The trio have also been implicated in the Electrogas scandal, dubbed by a Parliamentary Committee of the Council of Europe inquiry as "sinister".

A few months after the ruling Labour Party came to power in 2013, a major public contract was awarded to a consortium of companies, including Electrogas and Azerbaijan's state energy company SOCAR. Under the deal's terms, Maltese taxpayers signed up to pay double the rate for LNG from SOCAR for ten years.

Electrogas' previous director was Fenech, and he and his family members still own key stakes in the company.

Further revelations showed that through a company called 17 Black, Fenech was set to make payments of €150,000 a month to Panamanian companies owned by Mizzi and Schembri.

Omtzigt's 2019 report stated that the "facts have given rise to widespread suspicions of corruption and money laundering".

Investigations into the deal, the ministers involved, and Fenech are ongoing.

Meanwhile, the EU is set to plough funding into the Melita TransGas Hydrogen Read Pipeline, which runs between Malta and Sicily and is powered by LNG imported under the Electrogas deal.

Under the terms of the deal, Fenech would receive millions of euros in compensation because the gas used by the plant would come from a different source.

Muscat maintains his innocence in this scandal, despite misleading the European Commission about the details of the deal, while the Commission maintains that it will not fund projects linked to crime or corruption.