Malta: Vitals investor chases Steward for $5 million in London courts
15 Sep 2020

Steward Healthcare is facing a $5 million claim in a London court from an American investor who loaned Vitals Global Healthcare millions in their initial bid to obtain the controversial hospitals privatisation in Malta.

A London court will allow Steward to defend its case against the claim made by medical professional Ambrish Gupta, whose Medical Associates of Northern Virginia (MANV) was an early investor in the Vitals project, back in 2015.

But apart from fighting the claim, Steward is acknowledging that Gupta’s claim might be invalid because of allegations of corruption made against Vitals in the Maltese press, an ongoing magisterial inquiry into the Vitals concession, and a recent NAO audit of the hospitals’ privatisation.

The court case opens a new front on the controversial hospitals deal, which has been marred by irregularities on a hospitals’ privatisation believed to have been a fait accompli by the former Muscat administration, and a group of unknown investors.

The claim concerns a multi-million loan that Gupta had made to Vitals’ ultimate beneficial owner – Bluestone Investments – when it was negotiating the concession for St Luke’s, Karin Grech and Gozo hospitals in January 2015.

In March 2015, Gupta reached a deal on how to finance the Vitals project, with Bluestone owners Mark Pawley and Ram Tumuluri, Portpool Investments (PIL) and Bluestone Special Situation #4 (another Bluestone offshore company).

Vitals was granted the government contract in November 2015.

But Gupta and MANV had advanced $4 million to Bluestone Investment Management, as well as another $650,000 as a bond payment for the Vitals concession.

A dispute arose in September 2016 over Gupta’s and MANV’s share in the Vitals project. Gupta was accused of endangering the €200 million project, and the opposing sides lawyered up.

A settlement was soon reached in December 2016 to pay MANV $10 million – $5 million was settled straight away, but another $5 million, at 8% interest, had to be paid up by February 2017.

But the second tranche was never paid, and Vitals eventually sold off its concession to Steward Healthcare International in December 2017, and the dispute dragged on into 2019.

Gupta is chasing his money in a London court, asking it for a summary judgement to uphold the settlement deal.

But it turns out that Steward, in requesting a trial in which it can make a proper defence. is acknowledging the possibility of corruption or money laundering in the €200 million concession that preceded the American company’s acquisition of the Vitals operation in December 2017.

In oral submissions to the London judge, Steward’s counsel referred to press reports that Vitals’ investors had already obtained an MOU with the Maltese government in October 2014, five months before the official process for the hospitals concession started. It also referred to the NAO investigation and an ongoing magisterial inquiry into money laundering and corruption allegations.

In their submissions, the Steward defence counsel wanted a court trial that would enable a proper inquiry into the circumstances surrounding the grant of the concession, which had led to the dispute between the Vitals investors.

According to the court decision, Steward’s counsel said Gupta’s settlement could be impugned because the Vitals “concession was obtained illegally, since it was obtained as a result of the wrongful conduct referred to in the press reports” and because a first memorandum of understanding with the Maltese government was “unlawful because it predated the tender process.”

The court also said that when pressed, the Steward defence accepted that “the obtaining of the concession involved other illegal acts, such as money laundering, on the part of currently unspecified parties.”

“Thirdly, it might be the case that the settlement agreement, and in particular the confidentiality agreement, were designed to ensure that a conspiracy to obtain the concession unlawfully, did not come to light. Fourthly, therefore, that because the settlement agreement was entered into for an illegal purpose, it was void or unenforceable.”

By Matthew Vella, Malta Today, 14 September 2020

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