by Carlo Bonini
Predictably familiar figures were at the centre of the scandal. The initiative was the legacy of John Dalli, the product of the consultancy he had provided to Joseph Muscat as ‘advisor on health matters’ following his resignation from the European Commission after he had floundered in corruption allegations.
In 2014 Konrad Mizzi met a group of people who called themselves the Vitals Healthcare Group. They had no hospital to their name and did not appear to exist except for a purpose that had not yet materialised.
Economy Minister Chris Cardona would follow up on that discussion and sign a memorandum of understanding with this ‘Group’ whose shareholding included a 30% stake buried in the secrecy and anonymity of the British Virgin Islands.
Six months later, the government issued a request for proposals for anyone interested in taking on the running of three government hospitals. Vitals, signatories of the memorandum of understanding that came before the public procurement process, were rather predictably awarded the deal. The announcement came in September 2015.
The public still did not know who was in control of the three hospitals the government used to own. Malta was instead introduced to a Canadian citizen by the name of Sri Ram Tumuluri who talked up the deal as a major development for healthcare in Malta.
Ram Tumuluri’s background did not provide much bedside comfort. In his previous job he ran a health spa in rural Canada which went bust within two years.
A company Ram Tumuluri owned with his wife in British Columbia was dissolved by the regulator after declaring bankruptcy three years after it was set up.
In November 2016 Daphne showed that his assets were all tied up as collateral for his debts in Canada. He had no way of covering the guarantees he needed to bid for the Malta hospital contract, let alone win it.
And yet, win it is what he and his unknown associates did. The hospitals were granted as a concession for 30 years during which the government would pay the new owners €2 billion to cover operational costs to continue providing free healthcare. That’s €67 million a year: a 30% increase on the operational cost budgeted for the same hospitals while the government still owned them. A classic lose-lose arrangement.
The government refused to publish the contract and details about the scandal trickled out as journalists tried to understand what had really happened. All the equipment in the hospitals, some of which was relatively new, was transferred to the new owners for the princely sum of €1. Vitals held an exit clause of an €80 million payment should any future government decide to terminate the concession before it expired.
The supposed plus side was that the Vitals Group undertook to refurbish two and rebuild one of the hospitals. In two years not much has happened, much like Mr O’Reilly’s construction project at Fawlty Towers. Thus far, no garden gnome has been inserted à la Basil Fawlty into Mr Ram Tumuluri or his associates.
By the end of 2017, 21 months into their 30-year concession, Vitals said they had run out of money. They took out an emergency loan to pay salaries and, incredibly, put up one of the state hospitals as surety for the loan. They somehow secured the government’s permission to sell on their concession to an American for-profit hospital business when the government had every legal right to rescind the concession on the simple grounds that Vitals failed to deliver on several of their commitments.
The project appeared designed to fail. Secret owners stood to gain from the speculative flip of a public concession with their profits stashed in off-shore jurisdictions away from prying eyes.
In 2017 the Maltese investigative news website The Shift News, set up by Caroline Muscat in the aftermath of Daphne’s killing, cracked the secret identity of the shareholders of the Vitals Group. Ram Tumuluri was in business with Gupta Ambrish, a Virginia cardiologist, Ashok Rattehalli, a Washington DC ‘healthcare executive’ and Mark Pawley, a Singapore based consultant.
Mark Pawley had already outed himself in an earlier newspaper interview on Malta’s The Sunday Times. He was only the second known face in the outfit that called itself Vitals Global Healthcare. In a November 2014 post Daphne wrote:
Vitals is neither global nor has it ever carried out any healthcare to speak of. It was incorporated last year and is, to use industry jargon, a start-up. You might give your website development project to a start-up if they gave you a good enough pitch, but the running of three public hospitals on a budget of $55 million a year? I don’t think so.
Chris Cardona and Konrad Mizzi, as well as finance minister Edward Scicluna who was responsible for public procurement, deny any wrongdoing.
Simon Busuttil disagreed and made this one of his loudest battle cries.
Another scandal broke over the American University of Malta (AUM). Somewhat like Voltaire’s remark that the Holy Roman Empire was neither holy nor Roman nor an empire, the American University of Malta is an optimistic misnomer.
The project was announced in 2015 by the government. The promoter of the project was Hani Hasan Al Salah representing a Jordanian construction company called the Sadeen Group. The group’s educational portfolio was limited to for-profit schools for expatriates in Jordan. They had no higher education institution in their portfolio.
The connection to America was the school’s provost, John Ryder. His last academic posting before the AUM was a rector of something called the Khazar University in Baku, Azerbaijan.
The government granted the Sadeen Group use of waterfront historical buildings in the Valletta harbour and a whopping 90,000 square metres of pristine land on which to develop their campus. After nationwide uproar, the concession was reduced to 18,000 square metres. Had the proposed concession been 18,000 square metres to begin with, it would still have been a controversial plan. As it turned out, going from 90,000 to 18,000 square metres satisfied most critics that the government’s worst excesses had been curbed and the new deal was an improvement on the old.
The AUM promised to attract 4,000 students by 2021. It hasn’t reached one hundred yet.
Simon Busuttil, Daphne Caruana Galizia, and many other people in Malta criticised the AUM scheme as a cover for the transfer of valuable open space to a construction magnate.
One further detail would emerge that would do nothing to dispel that suspicion.
One of the revelations of the Panama Papers was that Adrian Hillman, at the time managing director of the company that owns Malta’s newspaper of record, The Times of Malta, had a British Virgin Islands shell company.
Keith Schembri owned companies that supplied paper to the newspaper as well as the machinery used by its printing press.
Keith Schembri paid over $600,000 into Adrian Hillman’s BVI account.
Daphne wrote in May 2017:
Adrian Hillman – Keith Schembri’s friend, unofficial business associate and, at the time, managing director of Allied Newspapers Ltd (Times of Malta, The Sunday Times) – laundered more than €600,000 after the Labour Party was elected to government in March 2013, according to his own accounts which were prepared by corrupt accountants Karl Cini and Brian Tonna of Nexia BT.
The money was laundered through Hillman’s company in the British Virgin Islands, Lester Holding Corp, which was not declared to the Maltese authorities or to his employers at Allied Newspapers Ltd.
Lester Holding Corp was set up in 2011, but restructured for greater secrecy, using layers of nominees to hide his ownership, by Mossack Fonseca, Brian Tonna, and Karl Cini shortly after the Labour Party came to power in 2013.
At the same time Lester Holding Corp was set up for Adrian Hillman in 2011, another two companies were set up in the same jurisdiction for Keith Schembri and his business partner Malcolm Scerri, both of the Kasco Group, the leading supplier to Allied Newspapers and Progress Press, the companies controlled by Hillman.
These British Virgin Islands companies, Colson Service Corp (Schembri) and Selson Holding Corp (Scerri), were also restructured for greater secrecy after March 2013.
Adrian Hillman, Keith Schembri, and Malcolm Scerri are all the subjec
ts of a report prepared by the Financial Intelligence Analysis Unit because of these and other money-laundering transactions.
Adrian Hillman resigned his position as managing director of Allied Newspapers in disgrace. Both Adrian Hillman and Keith Schembri deny any wrongdoing. A magisterial inquiry continues.
Editors working at the newspaper at the time insisted Adrian Hillman never sought to influence editorial content and, if they had appeared supportive of Joseph Muscat in the years leading up to the 2013 elections, that had been an editorial judgement they reached autonomously.
There is no doubt, however, that the episode caused considerable harm to the otherwise solid reputation of The Times of Malta.
Daphne Caruana Galizia, almost by accident, picked up in May 2017 that there was a connection between the disgraced Adrian Hilllman and the Jordanian promoters of the so-called American University of Malta. A source had told her Brian Tonna was meeting people from the Sadeen Group at a hotel. Her source was wrong and lawyers sent her a threatening letter.
That’s when she found out who was really meeting the Sadeen visitors.
Henley & Partners, Pilatus Bank, Keith Schembri, Joseph Muscat, Konrad Mizzi, Phyllis Muscat, Chris Cardona – now I’ve got Hani Hasan Naji Al Salah, the Jordanian to whom Joseph Muscat gave a large tract of public land at Zonqor Point, and who is represented in Malta by Deo Scerri, the Labour Party’s accountant and the Labour government’s appointee to the chairmanship of the Bank of Valletta, on my case with threatening letters too.
It’s a very crooked queue.
A few days ago, I received a letter from a firm of lawyers, who are linked to Chris Cardona, about a blog-post in which I reported that Brian Tonna was at a meeting with the Jordanian Zonqor Point fixers and Prince Jean of Luxembourg at the Hilton hotel. The letter was exactly what you would expect from people with no breeding who use outrage as a form of defence. It was not Brian Tonna … sue you … libel … unfounded … blah blah blah.
I rang up the friend … who had told me it was Brian Tonna. ‘I’ll just check with X who was with me at the time. I don’t know Tonna that well so I might have made a mistake.’ Two minutes later he was back on the phone: ‘It was Adrian Hillman, not Brian Tonna,’ my friend said. ‘X is 100% certain and can say it on oath. He knows him very well.’ How did you confuse them, I said. ‘Oh, they’re both as bald as an egg, the same height and involved in the same crooked business.’
I must confess that I was delighted. There the Jordanian camel-trader was, ranting and raving through Chris Cardona’s favourite firm of lawyers (after Pawlu Lia) that they’re going to sue me for libel for saying that they were in a meeting with Brian Tonna, and all the while they were in a meeting with Adrian Hillman, which is just as bad if not worse.
That shows you the value of libel suits, doesn’t it? They sue you for saying they were with Brian Tonna, when all along they were with Adrian Hillman and think that you have no way of knowing this.
In October 2017, the month Daphne was killed, the government appointed Adrian Hillman as its representative on the board of trustees of the American University of Malta.
The June 2017 electoral clash took on a Manichean dimension. Joseph Muscat campaigned on the back of the economic success of the country. The campaign mantra was l-aqwa żmien (the best of times). The pitch was that prosperity required the flexibility of a government like Muscat’s and the rigid moralising of someone like Simon Busuttil would endanger it.
The message was resoundingly received by a majority of the electorate.
A post written by Daphne in March 2013 went some way towards explaining the sway of the electorate:
Amoral familism is the reason people in Malta use their vote as currency and do not think in terms of the common good or choosing the right government, but in terms of spiting/rewarding, getting/preventing others from getting.
It is also the reason why even monied and supposedly educated individuals are not embarrassed – rather, they are proud because they think it is a heroic act and that it is perfectly normal and civilised – to talk openly about not voting for this or that party, or not voting at all, on the basis of personal matters and what they wish to obtain personally (or prevent others from obtaining).
This sort of talk, and the reasoning it betrays, is completely unacceptable and questionable in societies more civilised and democratically developed than ours. It is considered to be irrational, inward-looking thinking that is completely at odds with what more developed European societies, built on the notion of the common good, stand for.
Daphne applied this analysis to the 2013 election results that had just seen the PL returned to government for the first time since 1998:
The Labour Party campaigned in the context of amoral familism, fully understanding it and working with it. The Nationalist Party failed at garnering the support of sufficient numbers of people precisely because it took the more European, civilised approach – the truly progressive and liberal approach.
In public relations terms, the situation was turned on its head and the positions of both parties reversed in the public mind. The Labour Party, campaigning on the basis of really backward amoral familism, became the progressive and liberal one. The Nationalist Party, campaigning on the true European ticket, became the retrograde outfit.
The Labour Party’s leaders no longer just hinted at ‘flexibility’. They promoted the notion to attract disgruntled PN voters denied some development permit, say, because of a strict and faceless enforcement of rules.
In a small island like Malta, the government is always a major player in people’s lives. There are obvious needs like healthcare and schooling, though corruption in those sectors is relatively rare. Slipping a €20 note to a policeman to try to dodge a parking ticket would be as alien in Malta as it would be in Sweden, say.
But on the other hand, politicians have traded votes for public sector jobs for generations, retaining a bloated public sector of grossly under-employed, under-skilled armies of salaried loyalists. Famously, on the eve of the 1987 election, a Labour Party facing electoral defeat employed 8,000 people in the space of three months. The burden of that rush would continue to be paid until the 2010s when the last of that intake retired.
The mass recruitment of 1987 was the biggest offence but the PN was not innocent of this system of patronage.
By 2017 the PL had reinstated jobs-for-votes as a system of government. It started by transferring the PL’s payroll cost to public expenditure employing ‘as persons of trust’ analysts, propagandists and salaried mobilisers of the PL.
On the eve of the 2017 election an estimated 1,000 people were engaged on the island of Gozo alone. The island has a total population of 35,000, making this a staggering intake.
Another currency traded by Maltese politicians for votes is land, the most valuable asset in the country, its price held high by virtue of its mere scarcity.
Foremost on many people’s minds when voting in 2017 was the question whether a new PN government would again tighten restrictions on construction and development, whether the green ‘outside development zone’ would revert to a status of protection, whether building heights in traditional village cores would be enforced.
People who owned a previously unused basement or a holiday apartment that was now the address of an invisible billionaire who called themselves Maltese were nervous their effortless inflow of money would be dried up by PN puritanism.
Estate agents, cashing commissions from selling and reselling the same properties changing hands on the back of enthusiastic speculative trading, did not want the party to stop.
Some outspoken people who voted PL for the first time in 2013 switched back to PN in disgust. But for most people, it did not matter who was right or who was wrong. The PL was resoundingly victorious in June 2017 and Simon Busuttil’s brief sojourn as leader of the PN was over.
Writing a few days after the 2017 election, Daphne said:
People, on the whole, tend to d
o what’s best for themselves. This is quite normal. The thing that has gone wrong in Maltese society is that the link between what’s best for yourself and what’s best for society in the medium to long term was never forged. There are glimmers of hope, though. It seems quite obvious to me that the ABC1 switchers who voted Labour for the first time in 2013 and who now switched back in droves – they were visible everywhere – did so because they fully understand that a society poisoned by top-to-bottom corruption and the undermining of institutions is one in which it becomes increasingly unsafe to live.
She was commenting after one of Konrad Mizzi’s supporters posted a selfie with the beaming minister on Facebook, captioned ‘Thank you Panama! Thank you Pilatus! Thank you Konrad!’
Supporters of the PL held a celebratory street party outside the offices of Pilatus Bank. Corruption had won. Hallelujah.
After the June 2017 elections, Daphne Caruana Galizia took a break from her blog, her first in a long time. For years she had barely stepped away for longer than a couple of days. Speaking to co-author Manuel Delia after her death, her husband Peter said Daphne had spent the last five years of her life tethered to her blog. When she travelled, she rushed to find time to keep up with her blog. She couldn’t socialise, she had to be around to give meaning to what was happening in Malta.
For around three weeks in June and July 2017 she flirted with the idea of calling it a day. Perhaps to begin with, the apparent futility of it all had got to her. But in conversations with friends at the time, Daphne also spoke about how good it felt to focus on what she enjoyed doing best.
Apart from being a powerful investigative journalist, an influential commentator, an abrasive critic, a witty satirist, and a defendant in 42 civil libel suits and five criminal defamation cases, Daphne was also an accomplished editor and producer of a food and home magazine that by far exceeded the expectations of the minute Maltese publishing market.
Her Taste & Flair magazine was a professional reflection of her personal side: an aesthete, a lover of colour and unpolished beauty, a collector, and a foodie. Through her monthly magazine, one could catch a glimpse of the very private woman behind the very public journalism.