St. Peter's Basilica, in the Vatican

Prosecutors uncover “serious indications” of embezzlement, fraud, money laundering in Vatican investments

Vatican prosecutors have uncovered “serious indications” of wrongdoing in their investigations into the Holy See’s $200 million investment in luxury London real estate.

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Italian magazine L’Espresso published Thursday new documents related to the raid October 1 on the Vatican’s Secretariat of State and anti-money laundering Financial Information Authority (AIF).

Those documents include the complaint from the Institute for the Works of Religion (IOR), or ‘Vatican Bank’, along with the Vatican prosecutor’s 16-page search decree and files related to the investment property at 60 Sloane Avenue, Chelsea.

At the heart of the investigation is the alleged misuse by Secretariat of State officials of hundreds of millions of dollars taken from Peter’s Pence, the Pope’s charity for the poor to which Catholics around the world contribute directly.

In the files, Gian Piero Milano, the Vatican’s chief prosecutor, revealed that the investigation has uncovered “serious indications of embezzlement, fraud, abuse of office [and] money laundering” with regard to the conduct of Secretariat of State personnel.

Alessandro Cassinis Righini, of the Vatican’s Office of the Auditor General, added that the investigation involves “very serious crimes such as embezzlement, corruption and abetting”.

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Go deeper

At the heart of the scandal is the alleged Secretariat of State misappropriation of $250 million of Peter’s Pence funds in the purchase of the Sloane Avenue property, a 17,000-square-metre former Harrods warehouse converted into 50 luxury apartments, allegedly now used by Roman clergy for immoral purposes.

But the new L’Espresso documents reveal that another $250 million in Vatican donations could have been used by the Secretariat of State on a “complex system of companies” to screen the London investment.

The L’Espresso documents also show that the Vatican money for the Chelsea purchase was earmarked first for a 2012 projected investment in Falcon Oil, a company that operates a platform off Angola.

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Then-Vatican Secretary of State Cardinal Tarcisio Bertone and then-Substitute for General Affairs now-Cardinal Angelo Becciu – nuncio in Angola from 2001-2009 – engaged external consultants to undertake due diligence on the Angola investment.

Bertone and Becciu ultimately decided against investing in Falcon Oil, preferring instead to turn the Chelsea property into flats they hoped would double their investment once sold.

“The investment about oil was not considered attractive, unless one considers it a bit further in consideration of the novelty of the proposal”, former staffer in the Secretariat of State’s administrative section and now Promoter of Justice at the Supreme Tribunal of the Apostolic Signatura Monsignor Alberto Perlasca told the Financial Times.

“But to take something under consideration does not seem to me to be a fault”, Perlasca explained.

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Why it matters

Beyond the Chelsea and Angola deals, L’Espresso also discovered that the Secretariat of State is managing up to 715 million euros “deriving in large part from donations received by the Holy Father for charitable works [Peter’s Pence] and for the sustenance of the Roman Curia”, in the words of Vatican prosecutors.

That Secretariat of State money is being managed in a number of speculative off-shore operations by the Credit Suisse bank, “in whose Swiss and Italian branches the Vatican is paid up to about 77% of the assets managed”, with the bank taking a cut of about 8% in fees, the prosecutors said.

The fact that the Secretariat of State manages such a large portfolio of investments is highly irregular, given that the IOR or ‘Vatican Bank’ is the organism charged with managing Peter’s Pence donations.

L’Espresso said that Vatican prosecutors even have doubts over the “unclear role” played by the anti-money laundering AIF in the Chelsea property purchase.

The AIF Board of Directors were allegedly “negligent” with respect to the anomalies of the London investment, prosecutors suggested.

Suspended AIF director Tommaso Di Ruzza, moreover, could have engaged in correspondence with London lawyers who gave the green light to the deal and to millions of dollars in profits and fees to financiers Raffaele Mincione and Gianluigi Torzi.

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