No. 2/HOSPITAL PRIVATISATION SCANDAL: John Dalli deals with subcontractors in Dubai ahead of tender/Keith Schembri pledges business to those who work with front man Ram Tumuluri
A due diligence report leaked to this website reveals corruption and trading in influence in the government’s Gozo General Hospital and St Luke’s Hospital privatisation deal with Vitalis Global Healthcare. Vitalis Global is a shell company whose shareholding is concealed by companies registered in the British Virgin Islands. We don’t know who the real owner is, and the due diligence investigation was unable to uncover the true ownership.
At the time the deals were struck, Konrad Mizzi was the Minister for Health and also the Minister responsible for Projects Malta. Godfrey Farrugia had been summarily removed from the position of Health Minister with no reason given, so that Mizzi could be installed instead and these deals carried through.
The process was on the face of it the subject of a call for expressions of interest, but this website had revealed months earlier that the deal had been fixed already with a shady front man, a Canadian Indian called Sri Ram Tumuluri, and people linked to Oxley Capital, and that Projects Malta’s call for bids was a sham. (For the connection between Oxley and Vitalis, see report below.)
The due diligence report you will read below was prepared by a major consultancy firm for a client company which had been approached by Vitalis Global Healthcare for involvement in the Gozo General/St Luke’s project. The report recommends that the client should stay well away, because the main contractor is “a sham company” that cannot manage the project, there is “risk of reputational damage”, and Sri Ram Tumuluri is a front for “the same coterie who have been exposed by the Panama leaks”.
It describes how “a very senior former government minister” – clearly John Dalli, who was at the time the Prime Minister’s special adviser on health and hospitals – flew to Dubai to negotiate with subcontractors ahead of the public call and explain to them how to win the bid.
It also describes how the Prime Minister’s chief of staff and “Maltese ambassador to Dubai” (consul-general Anthony Tabone, who sits with Keith Schembri on the board of Smart City) promised those subcontractors that the job would go to them if they worked through Sri Ram Tumuluri.
The due diligence report is reproduced in full below. It ends with the damning words:
Based on the above, my recommendation is that our client should not be involved in the project in any shape, size or form. The main contractor is a sham company, and has no wherewithal to either execute or manage a project of this magnitude. Additionally, the risk of reputational damage is extremely high as the parties behind Mr Tumuluri are the same coterie who have been exposed by the Panama leaks. There is a very serious risk of an EU investigation into corruption in government contracts in Malta, particularly those awarded by Projects Malta.
This newspaper article gives some additional context.
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As directed, I visited Dubai four times in April/May, with the intention of collecting information from the subcontractors of the target company.
The main subcontractor is a company called Global Health Care, a subsidiary of Aster Healthcare. Their contract with Vitalis Global Healthcare (VGH) is to provide all equipment and consultancy services. The value of their subcontract is in the region of USD 60m.
The EPC is Shapoorji Pallonji, one of India’s major contractors. Their chairman is now the CEO of Tata Holdings. Both companies are reputable and sound. I established a good rapport with senior staff in both companies on the pretext of doing a medical project in Montenegro, and have established the background to their connection with VGH.
Both companies were approached in late 2013 by a Pakistani advisor to the Maltese PM, Shawkat Ali (please see separate docket) and a Canadian Indian, Sri Ram Tumuluri, with the proposed outline for the project. Global refused to bite initially, but Mr Tumuluri organised a visit by the Prime Minister’s chief of staff and the Maltese ambassador to Dubai. Both gentlemen confirmed that if (Global) worked with Mr Tumuluri, the project would be awarded to them.
This was followed by a visit to Malta by Shapoorji and Global, along with Mr Tumuluri, where they were given VIP treatment. They were invited to Mr Shawkat’s office, which was in the Prime Minister’s secretariat, and met with the CEO of Projects Malta. The government agreed to fast track the project for them.
However from day one, both subcontractors had serious misgivings about Ram Tumuluri and VGH, even though there were no doubts about his close relationship with top Maltese officials. The main concern was the completely opaque shareholding structure of Mr Tumuluri’s company and his continuous demands for fees to be paid to local consultants.
Senior management in both companies agreed to pursue the project after another visit to Dubai by a very senior former Maltese minister, who laid out the plan of action to ensure victory for their consortium.
Now almost two years after the contract award, both subcontractors are ruing the day they got involved with VGH and Mr Tumuluri. Both are out of pocket by substantial amounts and Shapoorji has had an engineer twiddling his thumbs in Malta for the past year. VGH has not been able to raise any money, as no lenders are willing to lend to a shell company with no experience. Both subs have paid out substantial sums in consultancy fees to Mr Tumuluri. Not a penny has yet been paid to the subs by VGH. There was a showdown between Mr Tumuluri and the subs last week in Dubai, and Tumuluri has stated that he is now looking to get funds from Allianz, the insurers.
It should be noted that in a Times of Malta article dated 22 October 2015, it was stated that VGH was still searching for funding then.
VGH is supposedly owned by Bluestone Investments Malta Ltd, which was set up on 9 December 2014. Registered office is at their notary and company secretary’s office in Paola, Jonathan Vella. In addition to Mr Tumuluri, another legal representative of Bluestone Investments Malta is a Mark Edward Pawley who resides in Singapore. Both Sri Ram Tumuluri and Mark Pawley are listed as directors. VGH does not have its own office in Malta. See attached Malta company registry information.
Mr Tumuluri states that his local consultant in Malta is iAS Design, project management company. Malta company registry lists the owner of the company as Kevin Zammit, the Arches, Hal-Sajd Street, Zebbug, Malta. See attached company registration report.
To raise further doubt, Bluestone Special Situation 4 Ltd, which is registered in Tortola (British Virgin Islands), supposedly owns Bluestone Malta. This company is supposedly owned by Bluestone Malaysia and managed by Oxley Capital in Singapore. Bluestone Malaysia has now changed its name to Allstone. Bluestone Malaysia was supposedly a strategic partner of Oxley Capital in Singapore. A call to Nancy Yap, executive director of Allstone, revealed that she has no knowledge of Bluestone in the BVI, nor of VGH. It should be noted that the previously mentioned Mark Edward Pawley is shown on the Oxley Capital website as the CEO of Oxley Capital.
Facts to consider
VGH has no history in healthcare.
A cursory internet search shows no mention of VGH except for articles appearing in the Times of Malta.
VGH is not a registered company in Malta. Bluestone Investments Malta Ltd, a Maltese registered company, supposedly owns VGH. There is no documentation to support this connection.
Bluestone Investments Malta Ltd is supposedly owned by Bluestone Special Situation 4 Ltd, which is registered in Tortola, British Virgin Islands. Again, there is no documentation to support this connection.
Allstone Malaysia has no knowledge of Bluestone in the BVI or Malta.
VGH owes a lot of money to their supposed partners.
If Mark Edward Pawley has the credentials stated in the Oxley Capital website, why can he not find funding for this project?
The other two companies which bid on the project, BSP Investments Ltd and Image Hospitals, also have no track record in healthcare. According to UK Companies House records, a BSP Investments Ltd was dissolved on 29 July 2014. There is a record of a BSP Investments Ltd having an address in Malta at Merril Court, Triq il-Fuxa, San Gwann. There is no information available on Image Hospitals.
Based on the above, my recommendation is that our client should not be involved in the project in any shape, size or form. The main contractor is a sham company, and has no wherewithal to either execute or manage a project of this magnitude. Additionally, the risk of reputational damage is extremely high as the parties behind Mr Tumuluri are the same coterie who have been exposed by the Panama leaks. There is a very serious risk of an EU investigation into corruption in government contracts in Malta, particularly those awarded by Projects Malta.
Konrad Mizzi, interviewed as he drove away from Girgenti Palace at night, where he had just been appointed Health Minister and Godfrey Farrugia removed from that position. We now know why.