Steward Gave Controversial Consultants an Interest in Malta Company at Heart of Huge Graft Scandal

For years, it’s been clear that a Pakistani businessman named Shaukat Ali played a key role helping U.S. company Steward Health Care land a massive public contract now at the heart of Malta’s biggest ever corruption scandal. 

What has been less clear is exactly what he got in exchange. 

OCCRP previously reported that Steward was paying Ali and his son, Asad, millions of euros in “consultancy fees” after they helped the Dallas-based company secure a 2.1-billion-euro contract to renovate and manage public hospitals in Malta. 

Those emails showed that the father and son had helped arrange meetings between Steward executives and senior Maltese officials, and that top Steward staff saw the two as instrumental to the company's business in the Mediterranean island country. 

In Ali’s telling, he and his son were paid only appropriate fees for their work. But documents obtained by OCCRP now show they were given even more than was previously reported: A significant interest in Steward Malta, the local subsidiary that held the hospital contract.

Maltese authorities annulled Steward’s contract last year over fraud allegations. Ali and his son have since been arraigned on corruption charges related to the deal, as have over two dozen Maltese officials, including former Prime Minister Joseph Muscat. All have pleaded not guilty. 

Contracts and company emails obtained by OCCRP show that, in April 2019, Steward signed an agreement that gave the Alis a 30-percent silent interest in the company’s Malta subsidiary.

This interest, referred to in the agreement as “participation rights,” entitled the Alis to receive a 30-percent cut of the dividends paid by Steward Malta to its shareholders.  If Steward Malta was sold, the Alis would also receive 30 percent of the earnings of the shareholders. However, the Alis’ future income stream was dependent on Steward’s investment costs being repaid first. 

It is difficult to determine how much the Alis may have received from this interest, but in a November 2022 email exchange, Shaukat Ali complained to the CEO of Steward Malta, Armin Ernst, that he was not receiving any money from his stake. (Ernst responded that no shareholders were receiving dividends at the time due to Steward Malta’s substantial debt.) 

By the time Steward agreed to give participation rights to the Alis, the relationship between Steward and the Maltese Ministry of Health was souring. 

The ministry was concerned Steward was using funds for purposes beyond the operations of the hospitals. In fact, as OCCRP has reported, Steward was using its Malta subsidiary to pay bonuses to the Alis and to pay corporate intelligence firms to spy on opponents, including Malta’s health minister. 

In the November 2022 emails, as Steward appeared to be at risk of losing the contract, Ali wrote that he would also be open to receiving payments that would help “consolidate” his position via an “exit clause” of “100M.” Although his email did not elaborate, he appears to have been referring to a deal Steward was given — since struck down — under which it would receive a 100-million-euro payout from the Maltese government if the contract was ended.

In addition to the stake in Steward Malta, emails show that there were plans made in September 2018 to give Ali and his son another seven-percent “participation interest” in Steward Health Care International LLC, Steward’s Texas-based international branch, which ultimately owned the Malta subsidiary via a branch in Spain. It is not clear if the deal ever took place. 

Shaukat Ali declined to respond to questions from OCCRP due to the ongoing legal proceedings against him in Malta. Asad Ali’s lawyer also declined to comment. Neither Steward US nor Steward International responded to questions from OCCRP.

Big Plans, Big Rewards

OCCRP has previously reported on leaked Steward correspondence showing that the Alis were key to the company gaining the Malta contract. In one message from November 2017, Armin Ernst, CEO of Steward Malta, wrote that Steward would “not even be close to having a shot at Malta” without the Alis. 

Over the next few years, dozens of emails about the contract were exchanged between the Alis, Ernst, and Keith Schembri, the chief of staff to then-Prime Minister Joseph Muscat. All have since been indicted for their role in the hospital deal. 

As far back as October 2017, months before Steward’s takeover of the hospital concession from another firm, Ernst wrote that the Alis would need to be given an interest in the newly formed Steward Malta: “If we give them a more substantial piece of Malta, we can contain what we are willing to give in non-Malta equity." Ernst proposed between 25 to 30 percent in Malta for both.

The following month, Ernst told Steward staff that they would need to compensate the Alis three months before the firm landed the Malta concession. Ernst proposed that both Asad and Shaukat Ali be offered an “equity opportunity” of up to 15 percent in the Spain-based subsidiary that controlled Steward Malta. (It is not clear if this referred to a combined share or individual stakes.) 

“This may require a separate contract outside the consulting I suppose. This does not include Malta, as they will receive a separate stake in that,” Ernst wrote in the email. 

For unclear reasons, the proposed stake in the Spain subsidiary does not appear to have ever been assigned to the Alis. But a year and a half later, the father and son were given the 30-percent participation rights in Steward Malta. 

In a report from a Maltese criminal inquiry into Steward’s conduct, investigators noted that Ernst appeared to be secretly preparing a participation rights contract for someone, although the inquiry was not able to determine who. 

It noted that Ernst had asked a Steward employee to print out the agreement, then asked her to “please delete these files immediately!!!!” 

“It is not clear to us why Mr Ernst was seemingly so intent that the files be deleted immediately,” the investigators wrote, although they speculated it could be due to the fact that the agreement revealed “the existence of the unnamed participant with rights over the dividends of Steward Health Care International Limited… and Steward Malta.”

Payments Through Switzerland

The money the Alis earned through these rights would not be paid directly to them, but funneled through Accutor Consulting AG, a Swiss company owned by a Pakistani lawyer that had been used earlier by Steward to make other payments to the Alis. (Maltese authorities have also accused Steward of using Accutor to funnel bribes to Muscat. Steward and Muscat deny the accusations.) 

Later, after the Swiss bank UBS froze Accutor’s accounts due to investigations by the Maltese government, Steward began to pay the Alis through another Swiss company, Canberra International GmbH, this one controlled by Asad Ali himself, emails and wire transfers show. 

In a document from March 2021, Accutor and Canberra asked Steward to reassign a 500,000-euro debt for consulting fees it owed from Accutor to Canberra. And a leaked email sent to Armin Ernst containing payment records shows that around 1 million euros in consulting fees were paid to Canberra through Spain’s Santander bank and Bank of America in separate payments throughout 2021.

But Canberra, like Accutor, also began to come under scrutiny. In April 2021, Asad Ali sent Ernst an agreement transferring their Steward Malta participation rights, still held by Accutor, to yet another entity — a Delaware-based company called K4C LLC. Asad asked Ernst to transfer the rights quickly, citing difficulties in dealing with Accutor.

Meanwhile, the hospital deal appeared to be falling apart. In September, Maltese authorities told Steward it was "in default regarding various obligations." 

It was two months later, in November, that Shaukat Ali emailed Ernst to request payment due from their 30-percent participation rights in Steward Malta — “in order for us to keep receiving funds as everyone else is getting paid from this operation.” 

Ali said that having to request the money was an “embarrassing ongoing subject” for him.

Ernst responded saying he’d need “to discuss this with Ralph [de la Torre] as he is the one who will have to clear this,” but noted that Steward Malta was heavily indebted and nobody was being paid dividends.

“We are not relying on dividends but on our understanding to regulate a process that will not stop our livelihood,” Ali responded. He referenced an “exit clause,” citing a figure of “100M,” but said he would be open to an “ongoing admin fee” as well. 

Maltese media have reported that government officials had promised Steward a payment of 100 million euros if its contract was canceled, but a leaked document obtained by OCCRP provides new details on what Steward — and its silent partners, the Alis — might have envisioned receiving. The undated document, marked as “Strictly Private and Confidential” and sent to Ernst, Steward CEO Ralph de la Torre, and general counsel Herb Holtz, noted that if the Maltese government terminated the deal and was at fault, Steward would receive “Lender’s Debt plus EUR 100M.”

Matthew Caruana Galizia (The Daphne Caruana Galizia Foundation) contributed reporting.