Editorial | The rule of law does not deter foreign investment

The court judgment that annulled the Steward Healthcare concession contract was scathing on the behaviour of the companies involved in the deal.

Mr Justice Francesco Depasquale attributed “fraudulent intent” to Vitals, the original concessionaire, “bad faith” to Steward Healthcare, the American company that took over the concession, and “ingenuity” to public officials who allowed the government to end up with its back against the wall.

The judge singled out former minister Konrad Mizzi for striking agreements that kept benefitting the concessionaires and described the €100 million buy-out clause agreed between the government and Steward in August 2019 as “possibly criminal”.

The judge also described the concession milestones as “a complete farce” and called government’s due diligence on Vitals as “amateurish checks”.

The court went on to annul the contract and all side agreements to it, ordering the return of Gozo, St Luke’s and Karin Grech hospitals back to the State. The judgment is unequivocal.

This leader trusts that the court reached its conclusions after careful consideration of the proof it had at hand. It still has to be seen whether any of the parties will appeal the judgment, in which case the takeover of the three hospitals cannot happen until the judicial process is exhausted.

In its initial reaction to the court ruling, Steward Healthcare came out all guns blazing. The American company accused the court of overstepping its remit and even questioned the state of the rule of law in Malta. It claimed the judgment would serve to push away foreign direct investment and reserved the right to take any action it deemed fit.

Steward is within its rights to appeal the ruling but making empty threats that such a judgment will deter investment does the company no good. If anything, it strengthens the perception of an American company trying to bully its way out of a serious problem.

But Steward is very wrong to argue that a legitimate judicial process should scare off foreign investment simply because the outcome was scathing in its regard.

Malta has a judicial process governed by rules intended to protect the rights of all parties involved as one would expect from any EU member state. There is nothing to suggest that Steward did not have a fair hearing and if they are dissatisfied with the outcome they can appeal.

It has to be noted that during the court case, Steward could only produce a dossier with photos of the works they purportedly carried out as part of the concession agreement, most of which concerned minor investments. They did not produce proof of a new state-of-the-art hospital in Gozo because it was never built. They did not produce proof a functioning hospital at St Luke’s that is catering for medical tourists because the refurbishment never happened.

This country is not perfect but Steward’s remark that such a judgment will deter investment is not only spurious but also detrimental to its reputation and even raises question marks on its true intentions.

Honest businesses want a clear rules-based system that includes courts where the right to a fair trial is safeguarded. The rule of law creates a level playing field and benefits everyone.

But the court judgment was also a slap in the face to government for entering into a very dubious concession agreement, which the National Audit Office had described as a done deal.

Terminating the concession should only be the first step and this leader hopes that a pending magisterial inquiry tasked with determining whether there was criminal behaviour, reaches its conclusions soon.

Bringing anyone who did wrong to justice is as important as closing the Steward chapter and moving forward with new plans.