Malta's ex-PM Muscat faces corruption charges in court

VALLETTA (Reuters) - Maltese prosecutors on Tuesday formally charged former prime minister Joseph Muscat with corruption over a 2015 public health contract as hundreds of supporters cheered for him outside a courthouse in Valletta.

The 50-year-old former Labour leader, in office from 2013 to 2020, pleaded "absolutely not guilty" to a list of charges including money laundering, soliciting bribes and criminal association.

His former chief of staff Keith Schembri and former health minister Konrad Mizzi faced the same charges and also pleaded not guilty.

Former deputy prime minister Chris Fearne and Central Bank Governor Edward Scicluna, who was finance minister in 2015, are set to face lesser charges including fraud and misappropriation at another hearing on Wednesday. They too have denied any wrongdoing.

Muscat's arraignment came weeks after a four-year inquiry, instigated by rule-of-law activist group Repubblika, said it had uncovered foul play in how his government had handled a four billion euro ($4.35 billion) contract for the management of three hospitals.

The contract was awarded to the previously unknown Vitals Global Healthcare group, which had no prior experience in the health sector. The group later handed the contract to U.S.-based Steward Healthcare group, but a Maltese court nullified the deal on account of fraud.

Muscat arrived at the hearing accompanied by his wife, waving to his supporters before entering the courthouse, across the road from a makeshift monument to anti-corruption journalist Daphne Caruana Galizia.

Caruana Galizia had investigated the hospitals deal and was killed in a car bomb explosion in 2017. Her death and subsequent investigations shocked Europe, raising questions about the rule of law in Malta, the smallest EU member state.

Muscat resigned as prime minister in January 2019 after media revealed that he and Schembri had ties with Yorgen Fenech, a businessman who is awaiting trial for complicity in the murder of Galizia.

Muscat and Schembri have not been linked to the murder case.

($1 = 0.9191 euros)

(Reporting by Christopher Scicluna, editing by Alvise Armellini and Gareth Jones)