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The Vatican Trial Part I: Institutional Sleaze

A Vatican trial began on July 27. Ten defendants were charged with a various financial crimes including fraud and embezzlement. The accusations show an organization where corruption usually goes unnoticed in a city/state whose leaders consider themselves to be so superior in religious training and practice that they are the sole legitimate interpreters of what is sin for the rest of us.

Most of the defendants were involved in purchasing a commercial building in London.

Suppose you or I wanted to invest in commercial real estate. We would seek out honest and reputable brokers, bankers or other experts to help us locate and finance the best deals. We might even decide to incorporate for sound business reasons and not to hide our identity.

This is how the Vatican invested in the building at 60 Sloane Ave. according to the Financial Times.

In 2012, private bankers at Credit Suisse arranged a meeting in London. Archbishop Angelo Becciu, former papal ambassador to Angola and now the second highest prelate in the Vatican Secretariat of State – the most powerful department of the Vatican – met with the London-based Italian financier, Raffaele Mincione. A Vatican investment in “a risky oil project” in Angola was discussed and set aside.

(Credit Suisse admitted violating New York State and federal law in a 2009 agreement with the Manhattan District Attorney and the U.S. Department of Justice. “The scheme enabled Credit Suisse’s sanctioned clients to access the U.S. financial system in violation of U.S. sanctions.” In doing so, the bank had also “falsified the records of New York financial institutions.” Credit Suisse paid $536 million in monetary penalties.)

In 2014, Becciu, still the Secretariat’s no. 2  highest official and chosen by Pope Francis as his “chief of staff,” met with Mincione in the Vatican and gave his approval for a deal. A total of $200m was wired from the Vatican’s “ultra-high net worth” account at Credit Suisse and another account at Banca della Svizzera Italiana (BSI), a Swiss-based private bank, to a fund managed by Mincione. Mincionce established the Athena Global Opportunities Fund especially for the Secretariat as its sole client.

(Banca della Svizzera Italiana “In 2016, Swiss banking authorities effectively shuttered BSI by a forced extinctive merger, after concluding that it had committed “serious breaches of the statutory due diligence requirements in relation to money laundering and serious violations of the principles of adequate risk management and appropriate organization.” according to the independent Catholic News Agency (CNA).”

The loan from Credit Suisse had been “secured against a portfolio of securities that the Vatican described as ‘derived from donations’ according to documents seen by the Financial Times. The Vatican was not forced to sell charitable assets to pay down the loan from Credit Suisse but chose instead to voluntarily reduce its debts to the bank.”

Mincione then transferred shares in the building he owned at 60 Sloane Avenue – planned for development into luxury apartments – to the new Vatican fund. Mincione had bought the property in 2012 through a Jersey registered company he named 60SA and with a loan from Deutsche Bank, the Financial Times stated.

(Jersey, a self-governing Crown dependency of the UK, is an offshore tax haven.)

(Deutsche Bank’s “shadowy practices – which range from laundering money for Russian oligarchs to violating international sanctions” are disclosed in the book, Dark Towers, by David Enrich. “All told, Enrich estimates that Deutsche Bank loaned Trump some $2 billion – which helped pave the way for his political rise,” reported NPR.)

2018 – a deal with Torzi

On May 26, Pope Francis appointed Archbishop Becciu as the new Prefect of the Congregation for the Causes of Saints and elevated him to cardinal in June. The pope named the Venezuelan Archbishop Edgar Peña Parra as Becciu’s replacement on Aug. 15.

Peña Parra, “a man very close to the Pope, decided to pull out of Mincione’s fund.” The “exit strategy” involved the Secretariat purchasing Mincione’s shares of the property and owning the building in its entirety,” cruxnow.com reported.

Rather than a straightforward purchase, the decision was made – once again – to involve a shady middleman and dubious holding companies.

Someone in the Secretariat consulted with Manuele Intende, a lawyer for the management consultancy Ernst and Young. Intende recommended that Gianluigi Torzi, another Italian financier based in London, handle the transaction, as reported by the Financial Times

(Intendentesigned documents for the deal using Ernst & Young’s corporate address in Rome. However, the Financial Times learned that EY never authorized Mr. Intendente to work on [the] deal with the Vatican [and his] contract was terminated.”)

(Torzi already “had been a suspect in multiple criminal investigations [and] was flagged on a global anti-money laundering watchlist,” stated the Financial Times.)

“Torzi sold the Secretariat 30,000 majority shares in Gutt SA, the holding company through which he purchased the London property, while he retained the 1,000 shares with voting rights,” CNA reported.

Msgr. Alberto Perlasca; who had served under Becciu for nearly a decade as head of the Secretariat’s administrative office, “then went to his bosses at the Secretariat to get them to authorize the deal,” per the Financial Times.Perlasca was granted explicit power of attorney by Peña Parra to act on behalf of the Secretariat and the archbishop specifically approved [the transaction with] Torzi,” catholicpillar.com stated

Perlasca “signed an agreement with Mr. Torzi on behalf of the Vatican that would come to give Mr. Torzi complete control of the building” through Gutt SA, the Financial Times noted.

Fabrizio Tirabassi, a Secretariat official, was appointed as a director of Gutt SA, on Nov. 23, 2018, and removed on Dec. 27, reported CNA.

(“Tirabassi had a contract with Swiss banking giant UBS paying him a 0.5 percent commission on every Vatican deposit, and also for deposits by new clients recruited by Tirabassi,” according to cruxnow. com. The deal dated from 2004 until Tirabassi was suspended from his Vatican post in 2019 because of his involvement in the London property scandal.)

(UBS agreed to pay $780 million and identify certain U.S. clients to settle criminal fraud charges that it helped rich Americans to evade taxes in 2009. In 2012, UBS’s London trader, Kweku  Adoboli, was jailed for seven years for fraud over “a $2.3 billion rogue-trading loss”, the biggest in British history,” as reported by Reuters. In Dec. 2020, “a Dutch court ordered prosecutors to open a criminal investigation” into UBS CEO, Ralph Hamers, “for his role in a money laundering scandal” while he was CEO of ING bank, according to marketwatch.com.) 

“On Nov. 28, Peña Parra sent a request to Credit Suisse asking for payment to be made to Gutt SA,” reported catholicpillar.com “The attorney, Manuele Intendente, became a board member of Gutt SA on Christmas Eve, 2018.”

2019 – 60 Sloane Ave. purchased in its entirety

The Secretariat still had no control of the property and the decision was made to break with Torzi.

Peña Parra sent Torzi an email on Jan. 22, 2019. In response, Torzi asked for 20 million euros to leave his shares, and the Secretariat offered 5.5 million euros. Peña Parra replied to Torzi that he was “convinced that the amount is adequate and congruous unless the parties raised other issues,” as reported by the National Catholic Register.

“In April 2019 Torzi left the scene collecting 10 million euros in commissions.” He told the Financial Times “he was paid this money fairly by the Vatican for the work he did related to the London property.”

And again, rather than buying the building outright, the Secretariat set up their own holding company, London 60 SA Limited incorporated in the UK, through which the Vatican controls the company, 60 SA Ltd, registered in Jersey which in turn owns the property on Sloane Ave. This time, however, the ownership was clear. “The UK’s registrar of companies lists the Holy See Secretariat of State as the single shareholder and legal person with … the right to appoint and remove directors” CNA stated.

Msgr. Mauro Carlino, head of the Information and Documentation Office in the Secretariat, was listed as a director of London 60 SA Ltd in May 2019 and removed in August 2019. Carlino had been Becciu’s personal secretary between 2011 and 2018.

Caterina Sansone, another Secretariat employee, was also briefly listed as a director and terminated.

Luciano Capaldo has been London 60 SA Ltd’s sole director since November 2019  ”leaving him effectively in control of the Vatican’s investment” CNA stated.  

(Capaldo, a British-Italian architect, “previously served as a director of several companies at which Torzi has also served as a director, or in which Torzi and his companies have had financial interest,” per CNA.)

Secretariat seeks loan from the Vatican Bank

The Secretariat now wanted to refinance the expensive debt attached to the property. They turned to the IOR (Italian acronym for the Vatican Bank, officially the Institute of Religious Works) for a loan with interest.  

Vatican prosecutors first began investigating the London property deal in July 2019 when the IOR filed a “suspicious activity” report with the Vatican’s Financial Information Authority (Italian acronym AIF), an internal financial watchdog.  The report was made after senior officials at the Secretariat, including its head, Secretary of State Cardinal Pietro Parolin, “attempted to pressure the IOR into approving a 150 million euro loan to help finance the Secretariat’s investment,” wrote pillarcatholic.com

“In total, the Secretariat had paid a reported 200 million for the building at 60 Sloane Avenue” in addition to the “150 million euro mortgage on the building,” the Financial Times reported.

The trial – Pope Francis postures as tough on corruption

This trial – like all of Pope Francis’ actions against prelates, creation of committees and laws, regarding child sex abuse – is for show. It is meant to give the appearance that this pope takes financial corruption seriously. “I think this [proceeding] marks a turning point that can lead toward greater credibility regarding the Holy See’s financial affairs,” Fr. Juan Antonio Guerrero, head of the Vatican’s Secretariat for the Economy, said to the official Vatican News.  

As absolute dictator, Pope Francis is the supreme executive, legislative and judicial power in Vatican City. One of his prosecutors, Alessandro Diddi, “confirmed that the pope intervened personally to authorize various stages of the investigation, including the issuing of arrest warrants,” stated pillarcatholic.com

Some of those involved in the London property deal – Becciu, Mincione, Torzi, Tirabassi, and Carlino were indicted. “According to prosecutors, shady Italian financiers connived with Becciu and others in the system to bilk the Vatican for exorbitant fees. Part of what they charge was a ‘rotten predatory and lucrative system’ on Becciu’s watch as the former papal chief of staff,” cruxnow.com reported.

All ten defendants claimed their innocence

Perlasca, Peña Parra and Parolin were not charged. Perlasca had worked in the Argentine Vatican embassy from 2006 to 2008 and currently lives in St. Martha’s House where Pope Francis lives according to Vatican expert, Andrea Gagliarducci. Peña Parra and Parolin were appointed by Pope Francis; all the indicted Vatican employees were appointed by his predecessor.

The indictment exposed another tiny glimpse into the largely opaque Vatican finance.

Defendant Enrico Crasso managed investments for the Vatican for over 25 years. He is a former banker with Credit Suisse and managed the Vatican’s money held on deposit at that bank, CNA reported. Recall that Credit Suisse had violated New York State and U.S. federal law.

Crasso set up his own holding company, the Centurion Global Fund, in which the Vatican invested millions of euros. Gamma Capital – Centurion’s formal investment manager – executed all of its client trades through two banks – Banca Zarattini and Sparkasse Bank Malta in 2017-2018” CNA noted.

(Enzo Filippini, “founder and owner of Gamma Capital, previously served as head of the treasury department of BSI,” according to CNA. Recall that BSI was dissolved in 2016 by Swiss authorities for failure to adhere to anti-fraud regulations and that the Secretariat received a substantial loan from BSI to invest in 60 Sloane Avenue in 2014.)

(Banca Zarattini – “A small Swiss bank holding all of Centurion Global’s investment funds. In 2018, Zarattini was named in indictments filed by U.S. prosecutors in a $1 billion money laundering case, involving the Venezuelan national oil company PDVSA and Venezuela’s president Nicholas Maduro,” CNA reported.)

(Sparkasse Bank Malta –“The bank was reported to have ties to a money laundering scandal involving the Venezuelan national oil company PDVSA, as well as links to the infamous money-laundering Panamanian law firm Mossack,” CNA wrote.)

More sleazy business as usual

Not only the Secretariat, but also the Administration of the Patrimony of the Holy See (APSA),
“asked and were granted standing as civil parties in the trial,” reported Andrea Gagliarducci.

APSA was created after the 1929 Lateran Pact with Mussolini’s government. The Vatican received the equivalent of $1.5 billion in today’s money in return for their support of the fascist dictator. APSA administers the lion’s share of Vatican investments “hidden behind layer after layer of false fronts and holding companies,” according to John F. Pollard, Money and the Rise of the Modern Papacy: Financing the Vatican.

APSA investments include “holding companies for commercial properties in London, Paris and Switzerland … APSA also has 187 million euro in currencies, 32,232 ounces in bullion and 3,122 ounces of gold coins (worth 30.8 million euro) in Switzerland and England,” according to Emiliano Fittipaldi’s 2014 article “Vaticano, un tesoro da 10 miliardi” in L’Espresso.

The bullion allegedly includes gold stolen from Serbs, Jews, and others who suffered torture and death by the Ustaše, the Vatican-supported Nazi allies who controlled Croatia during World War II. In the lawsuit named Alperin v. Vatican Bank, the plaintiffs and their heirs sought restitution from the Ustaše Treasury that, according to the U.S. State Department wartime records, had been transferred illicitly to the Vatican “in order to further the goals of the Ustaše regime in exile and fund the Vatican ratline,” according  to Wikipedia. The case was dismissed by a U.S. federal court in 2007 on the basis of the Vatican’s sovereign immunity.

A holding company’s primary business is holding a controlling interest in the securities of other companies. Although not always done for illegal purposes, “hiding ownership is accomplished by creating the separate company and placing the assets into the new company. Then, the company can be used to open bank accounts or to make purchases. In some countries, it is almost impossible to link a company back to its owner,” according to the legal website upcounsel.

Pope Francis is well aware that this is how the Vatican does business. “The pope shut down nine holding companies based in the Swiss cities of Lausanne, Geneva and Fribourg, all of which were created to manage portions of APSA,” cruxnow.com reported in May 2020.

Additionally, a number of APSA accounts “held for private individuals, including senior churchmen and Vatican citizens” were “anonymized” in the past few years, CNA reported also in May 2020. “Essentially, named accounts became private numbered accounts” to keep the identity of the account holders hidden.”

Hypocrisy

Pope Francis told a group of investment bankers in October 2020 “that fair conduct and transparency are essential in the field of finance,” CNA reported.

In March 2021, Fr. Juan Guerrero, the pope’s CFO, “stressed that the Vatican under Francis now is fully committed to transparency and integrity,” as reported by the cruxnow.com.

In June, Pope Francis said in a video message to participants in a meeting of the Argentine Association of Christian Business Executives, “Invest in the common good, not (by) hiding money in tax havens.” cruxnow.com related.

In July, Fr. Guerrero said, “In economics we have learned that transparency protects us more than secrecy,” as quoted in the National Catholic Register.

Betty Clermont is author of The Neo-Catholics: Implementing Christian Nationalism in America

See also “The Vatican Trial Part II: Long on Process, Short on Justice.”

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