01/04/2025
MORE CORRUPTION ? From €56k to €1 million : how public healthcare clinic costs skyrocketed
Internal probe exposes masive cost overruns at Qormi and Birkirkara clinics.
Refurbishment works at the Qormi Health Centre that were meant to cost €56,000 ended up costing €1 million, and similar works at the Birkirkara Health Centre that were initially slated to cost €264,000 ended up costing almost half a million euros, Times of Malta can confirm.
Sources close to the health sector said an internal investigation conducted last year revealed that the refurbishment projects at two of Malta’s largest and busiest health centres were riddled with overcharging, missing paperwork, double payments, hidden costs and unapproved work.
The probe uncovered shockingly bad planning, financial mismanagement and breaches of public procurement regulations.
While they did not find evidence of corruption or collusion, the investigators concluded that the failures were “at best gross negligence and at worst grave misconduct”, and that both the CEO and financial controller at the time must shoulder responsibility.
In a nutshell
The investigation found that Primary Health Care, which is a department within the Health Ministry, breached public procurement regulations when it handed several direct orders to different contractors for works whose cost required an open tender process.
It transpired that one of the contractors was aware of the refurbishment needed at the Qormi clinic, so much so that he sent a quotation for the work five months before the other contractors were asked to send in their quotations.
The department handed the direct orders to that same contractor even though his quotation far exceeded the amount allowable by the public procurement regulations for a direct order.
And when the work was done, he invoiced the government for much higher amounts than those quoted. He also sometimes invoiced work at higher rates than those in the quotation. And Primary Health Care approved and effected the payments, no questions asked.
Moreover, more than half of the works paid for were not quoted. The contractor told investigators that it was only because the government department was assigning him new tasks as the work was ongoing, and that was why the expenses ballooned by the end of the project.
Investigators found evidence that confirmed this. They found the project was not planned out well, did not have a project manager, and that government personnel were professionally incompetent to the extent that they did not even know what works were needed for the refurbishment.
Rates for works that were not quoted for were set by the contractor without any negotiation with the government department
The details
The Birkirkara Health Centre was closed for refurbishment in July 2022 and reopened a year later, in July 2023.
The one in Qormi was closed for refurbishment in August 2023 and reopened in March 2024.
The projects were part of the government’s broader efforts to modernise health services in the community, offer more efficient services to residents, and ease pressure on Mater Dei.
The projects were run by Primary Health Care, which is entrusted with services at 10 health centres and 56 community clinics across Malta and Gozo.
Experts had calculated that the Qormi project would cost €2.8 million in total, while the Birkirkara one would cost €1.8 million.
A big chunk of the funds was coming through the National Development and Social Fund (NDSF), which is the government agency that manages and administers money from Malta’s passport scheme to state and non-governmental projects.
NDSF had agreed to provide Primary Health Care with up to €10 million for the refurbishment of eight health centres – including Qormi and Birkirkara – and 54 community clinics.
Times of Malta understands the issue was first flagged at the Health Ministry last year, when a newly appointed financial controller noticed some anomalies in quotations and invoices for refurbishment works.
The anomalies were especially concerning as NDSF employs very strict rules on funding and insists it will not transfer funds unless all public procurement regulations are adhered to, and if not, could even blacklist the ministry from further funding in future.
Sources said that is when a board was set up to investigate whether public officials had diligently executed their duties and implemented necessary checks and balances during the refurbishment projects.
How payments ballooned
The investigation revealed serious problems with how public money was spent and paints a picture of systemic failures and blatant disregard for public procurement regulations.
GM Developments Ltd won the direct order for part of the refurbishment works at the Qormi clinic, because its quotation was the lowest among the three that were sought in a call for quotations – just over €56,000.
But Primary Health Care began to assign the company more tasks that were not quoted for, until what began as a seemingly modest project ballooned into a staggering €1 million worth of invoices.
Primary Health Care ended up paying GM Developments €947,000.
The same contractor also won a direct order for works at the Birkirkara clinic, after his quotation was, again, the lowest at €264,000. But by the end of the project GM had invoiced and was paid €489,000 in total.
Moreover, some work was invoiced at higher rates than those quoted. Skilled workers, for instance, were sometimes invoiced at rates as high as €35 or even €50 per hour, despite initial quotes of €25 per hour.
Investigators also found that finishing rates were generally higher than market rates, and that a day’s work for unskilled and semi-skilled labourers was sometimes set at a flat rate of €50 per hour, which is way above the market salary.
The contractor told investigators that Primary Health Care never negotiated the new rates and paid him for the invoices without contesting their amounts.
Sources confirmed that the evidence suggests the rates for works that were not quoted for were set by the contractor without any negotiation with the government department. Moreover, the financial controller accepted those rates and approved the payments, no questions asked.
In Qormi, over €372,000 of paid invoices included rates that were not quoted for, and in Birkirkara the same amount reached nearly €182,000.
Investigators found the accountant would sometimes notice that the invoiced rates were higher and would alert the financial controller, who would order that they go ahead with the payment anyway.
The financial controller denied that he was ever alerted about such discrepancies or that invoices with higher rates were ever paid.
Endorsing invoices
The probe also found the CEO may have authorised payments without checking whether invoices for works were covered by a contract, or otherwise knew there was no contract and authorised them anyway.
Evidence shows that the then-CEO of Primary Health Care, Roseanne Camilleri, endorsed 10 GM invoices for payment, some of which were also signed by the financial controller.
Camilleri told investigators she was not aware the works were not covered by a contract, and neither was she aware there was a breach of procurement regulations in the way the work was assigned to the contractor.
She said she was under the impression that works were awarded through a tender, that she was not involved in the procurement process, and that she signed invoices after the financial controller assured her that everything was in order.
The director of GM Developments Ltd, however, said that she and her office were, in fact, directly involved in the commissioning, supervision, and part payment of the works.
In a reply to Times of Malta questions, Camilleri said she asked for the investigation herself, “upon discovering alleged discrepancies”.
“Indeed, after becoming aware of potential discrepancies, I promptly informed the permanent secretary to request an investigation,” she said. However, she declined to comment on the findings of the investigation, saying that despite having started the investigation herself, she does not have access to the conclusions and does not know whether her “statements have been accurately reproduced”.
“Given this situation, I am unable to confirm or deny the details mentioned in your e-mail, as I am not privy to the facts you are quoting,” she said, adding that it was concerning that the press had access to the findings while she did not.
“Furthermore, it is important to note that other individuals were involved in processing these documents. As CEO, I do not delve into the fine details of the documents when there are professional and warranted individuals directly responsible for scrutinising and handling these matters.”
Camilleri is not Primary Health Care CEO anymore, as she was appointed CEO of Mental Health Services last August.
Minister’s reply
In a reply to questions, Health Minister Jo Etienne Abela only said the investigation was an “internal, preliminary, fact-finding exercise” that is now subject to further external investigations and scrutiny.
“I assure you that when we have the conclusions at hand, the ministry will take all the necessary action,” he said.
The projects in question were carried out before Abela was appointed health minister, but officials like Camilleri still occupy senior roles on his watch.
Double payment
The investigation also found that at one point in 2022, Primary Health Care even paid twice for the same works at the Birkirkara clinic – €7,300 each time.
Investigators also discovered that a payment of €18,000 for scaffolding for a false ceiling installation was made, even though this cost was already included in the original tender and should not have been billed separately.
They also found irregularities in other working relationships with contractors.
The aluminium works at the Qormi clinic – contracted to another company, not GM Developments – were originally tendered for €59,000 but ended up costing €130,000 because the department did not list all the required work in the original tender.
Quotation five months early
Crucially, several works were not covered by formal contract agreements and there was evidence of bad governance, lack of internal controls, professional incompetence, and lack of planning, sources said.
The probe also found that GM Developments had been made aware of the required refurbishment works in Qormi as early as January 2022, submitting a quotation nearly five months before the Primary Health Care department officially requested quotations from three contractors, including GM.
This early knowledge and quotation raised serious concerns about the fairness and transparency of the procurement process, given that the original quotation was for an amount that exceeded the threshold for a call for quotes.
GM Developments appears to have no website or online presence, and therefore, efforts to contact the company for comment were unsuccessful. Attempts to contact its director and sole shareholder Simon Grech were also unsuccessful.
Investigators concluded that the works were awarded in violation of official public procurement regulations, which mandated an open tender procedure.
Primary Health Care, however, defended its decision to go directly for quotations, saying it wanted to avoid delaying the project by several months to avoid inconvenience for the residents of the areas.
No project manager
The investigation also found the refurbishment projects lacked a project manager or project management team, and no project plans or documents were drawn up for them.
Furthermore, the project administrator, who was deemed incompetent and unqualified to certify that the completed works were up to standard, was the sole signatory of 20 invoices.
Sometimes invoices were paid with the signature of the CEO or the financial controller, or both, despite no assurances having been provided that the works were done or certified.
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Internal probe exposes masive cost overruns at Qormi and Birkirkara clinics
