Hundreds of pro-Muscat demonstrators gathered outside the courthouse in Valletta, Malta’s capital, in support of the former prime minister, chanting Labour Party slogans and decrying the criminal charges.
Muscat’s former chief-of-staff Keith Schembri and ex-minister Konrad Mizzi were also arraigned, along with 19 other individuals and companies accused of facilitating corruption around the 2015 contract.
“Absolutely not guilty,” Muscat declared when asked for his plea. All defendants pleaded not guilty.
Following hours of intense arguments between prosecutors and defense lawyers, the court upheld freeze orders requested for each defendant. Muscat, Schembri and Mizzi are each prohibited from transferring assets up to 30 million euros, which could be seized by the courts if found guilty.
Last year, OCCRP and media partners Times of Malta and The Shift revealed that individuals behind the privatization deal used taxpayer money to buy personal and luxury items, and funneled millions of euros to themselves and relatives under the guise of loans, salaries or consultancy fees.
The investigation also uncovered a connection between a company that paid Muscat soon after he left office and the beneficiaries of the contract. The former prime minister defended the payments as fees for legitimate consultancy work.
Also last year, a civil court annulled the hospitals contract, citing fraud and collusion between the concessionaires and senior political officials in Muscat’s administration. Last month, a magistrate concluded a four-year criminal inquiry into the controversial deal, and turned the findings over to the attorney general.
Tuesday’s charges are based on that inquiry’s scathing conclusions, outlined in a 1,200-page report accompanied by 78 boxes of evidence.
The inquiry implicated dozens of other individuals and companies, including additional former public officials, in what it described as a “massive diversion” of public funds.
More arraignments are expected, including against the local companies owned by Steward Health Care International, which took over the contract in 2018, as well as Steward executives. The company is related to the American hospital chain Steward Health Care, which declared bankruptcy in the U.S. earlier this month.
The companies allegedly funneled Maltese government funds intended for hospitals to secretive beneficiaries under the guise of dubious consultancy agreements, according to evidence outlined in the inquiry.
“It is recommended the appropriate authorities in USA, be informed specially [sic] taking into consideration their Foreign Corrupt Practices Act (FCPA),” the inquiry states.
One of the individuals charged today was Steward Malta Management’s legal representative, David-Joseph Meli. The allegations against Meli include corrupting of public officials - namely Muscat, Schembri and Mizzi.
In a personal Facebook post earlier this month, Muscat called the criminal charges against him “laughable” and “completely made up,” and vowed to “destroy” the allegations.
Schembri and Mizzi have also publicly denied any wrongdoing.
Slain journalist Daphne Caruana Galizia was the first to report on potential corruption in the hospitals deal in 2015 on her Running Commentary website.
In 2016, she published articles about shell companies allegedly set up by Schembri and Mizzi in Panama. The inquiry concluded that her reporting caused “key players to change their plans” with regard to offshore firms they allegedly later used to launder money.
