Maltese central bank governor, deputy PM face charges in snowballing corruption case

Malta’s political elite is facing a reckoning as a long-running investigation into alleged corruption under former Prime Minister Joseph Muscat comes to a head.

Central Bank of Malta Governor Edward Scicluna and Deputy Prime Minister Chris Fearne, who both served under Muscat, are set to face charges of fraud and misappropriation, according to a judicial document seen by POLITICO.

Scicluna is already facing calls to resign as the attorney-general completes a probe into the granting of a concession to run three hospitals in Malta in 2015.

Allegations of corruption around the so-called Vitals deal figured prominently in the work of the Maltese investigative journalist Daphne Caruana Galizia, who was assassinated in 2017. Caruana Galizia published extensive investigations into privatization deals brokered by the Muscat administration.

Charges are also pending against Muscat, who was prime minister from 2013 to 2020, as first reported by the Times of Malta. Anticipating legal action against him, Muscat retorted on Facebook: “This is no longer just a political vendetta, but has transformed itself into a disgrace and abomination.”

Scicluna was finance minister at the time of the Vitals deal, while Fearne — who was recently tipped by Prime Minister Robert Abela to form part of the next European Commission — was health minister from 2016.

A Maltese court struck down the agreement between the government and Vitals Group Healthcare (VGH) last year in a scathing ruling that found VGH had failed in all its obligations, along with Dallas-based Steward Health Care, which bought the concession in 2018. Steward, which had continued to make payments to VGH’s shareholders after the closure of that deal, filed for bankruptcy protection in the U.S. on Monday, after a series of missteps managing its network of 31 hospitals in its home market.

Scicluna declined to comment for this article. He had testified in a related court case in 2020 that he had not known about the details of negotiations between then-Health Minister Konrad Mizzi and VGH.

Mizzi, along with Muscat’s former chief of staff Keith Schembri, are also expected to face charges as a result of the inquiry, according to the charge sheet seen by POLITICO.

Maltese Prime Minister Robert Abela cast doubt on the integrity of the inquiry on Monday, while insisting he hadn’t yet seen its conclusions. He added that it was too early to consider the resignations of Fearne or Scicluna, praising their track record in government.

In a Facebook post on Saturday, Fearne — who held the title of the longest-serving health minister in Europe until a cabinet reshuffle in January — again rejected any suggestion of wrongdoing.

“Not every initiative or project I undertook as minister was successful, but I am sure that I always acted in the interest of patients and the country. Above all, absolutely never have I tolerated any breach of the law or ministerial ethics,” Fearne wrote.

Fearne’s team declined to comment on the charges for this article.

Struggling opposition calls for resignations

Both Fearne and Scicluna emerged largely unscathed from an investigation into the deal by Malta’s National Audit Office last May.

Neither of them is in the ‘first tier’ of suspects likely to be charged.

Even so, David Casa, a Maltese MEP representing the opposition Nationalist Party, called on Scicluna Tuesday to resign in order to of protect Malta’s reputation as a financial center. The island nation has depended relatively heavily on financial services to support growth in recent years.

“Your continued tenure at the Central Bank will irreparably damage the reputation of our country as a financial center,” Casa warned in an open letter.

“It would be disastrous to have key figures … that are meant to convince the world of the nation’s regulatory integrity while concurrently fighting criminal charges over their own impropriety.”

The European Central Bank is no stranger to controversy in its ranks. Slovak National Bank Governor Peter Kažimír is currently defending bribery charges dating back to his time as finance minister in the first government of Robert Fico, while the former Latvian central bank Governor Ilmārs Rimšēvičs was sentenced to six years in prison on bribery and corruption charges last December.

The ECB declined to comment for this article.

The inquiry is winding up only weeks before Malta is due to vote in local elections, for which Abela’s Labour Party currently enjoys a comfortable lead in opinion polls.