How Much Was Pope Francis Aware of in the Vatican’s Financial Mismanagement of the London Deal?

Msgr. Alberto Perlasca, the key witness for the prosecution, claimed during questioning that the Pope prevented Gianluigi Torzi’s alleged extortion efforts from being reported.

Image of leaked videotaped interrogation of Msgr. Alberto Perlasca, April 29, 2020
Image of leaked videotaped interrogation of Msgr. Alberto Perlasca, April 29, 2020 (photo: Corriere della Serra / Screenshot)

VATICAN CITY — Pope Francis last month made his first “appearance” at the ongoing Vatican trial over a London property deal that led to massive financial losses for the Holy See when his name came up in videotaped testimony of suspect-turned-star witness, Msgr. Alberto Perlasca. 

During the most recent hearing on Nov. 17, the recording showed Msgr. Perlasca, who signed a deal on behalf of the Vatican, telling Vatican prosecutors last year that Pope Francis knew of the Vatican’s decision to sign the final agreements with Gianluigi Torzi, an Italian broker and investment manager.

The Vatican had hired Torzi in 2018 to exit the prestigious London property investment by arranging the Vatican to buy the remaining stake in the property to stem further losses. But Torzi ended up taking the controlling shares in the property and then allegedly extorted 15 million euros from the Vatican in order to surrender that control to the Secretariat of State. The Vatican says it was the victim of a clever fraud; Torzi maintains it was a “misunderstanding.” 

The allegation that the Holy Father knew of the Torzi negotiations coincided with previous published reports and Torzi’s own assertion that Francis attended at least two meetings during which the Italian broker claimed he discussed the final terms of the investment deal that took place on Nov. 22, 2018. It would also match observers’ speculation that Cardinal Pietro Parolin, the Vatican secretary of state, would not have given his belated approval on Nov. 27, 2018, without having consulted the Holy Father.

More significantly, the videotaped evidence shown to the court revealed that Msgr. Perlasca made a sensational claim during questioning last April — four months before he had agreed to become a star witness for the prosecution — that the Pope prevented Torzi’s alleged extortion efforts from being reported. 

In his testimony shared with journalists on Nov. 17, a portion of which was leaked to Corriere della Sera on Dec. 3, Msgr. Perlasca said he was “for reporting these men and requesting a preservation order and that is why I was cut off.” He also claimed he was the most resistant to Torzi, which is why his relationship with him eventually broke down. “I didn’t want to give him one penny,” he said. 

When deputy Vatican prosecutor Alessandro Diddi asked “who cut off” his suggestion, Msgr. Perlasca replied, “[Archbishop] Peña Parra” — Cardinal Parolin’s deputy, or sostituto. Asked why Peña Parra would do that, Msgr. Perlasca responded, pointing upwards: “Because instructions from the top were to negotiate.” 

“The Holy Father?” asked the interrogator, to which Msgr. Perlasca responded, “Certainly, certainly.”  

A heated discussion then followed: Diddi interrupted Msgr. Perlasca to insist that “the Pope did not say ‘Negotiate with Torzi,’” adding that nor did Vatican officials force the Pope into negotiations “because they wanted to carry out an extortion against [the Pope]. 

“You must realize this is an extremely serious thing for you to say,” Diddi said. “You make it sound as though the Pope told you to negotiate. I won’t accept this because the documents don’t say this.” He added later in a recording heard by the court that Perlasca’ claim “really screams of vendetta.”

Diddi then made an admission: “Before doing what we’re doing now, we went to the Pope to ask him what happened and I’m willing to doubt everyone except the Holy Father.” He said that Msgr. Perlasca’s story was therefore “ludicrous and fortunately the [legal] papers support this conclusion, and so to say that you negotiated with Torzi because the Pope told you to do so is something extremely shameful.” 

And yet other witnesses, including Archbishop Peña Parra, have suggested the Pope indicated the Vatican should negotiate with Torzi rather than sue the broker to recover full control of the property. In a 20-page memorandum obtained by Associated Press, the sostituto said Francis had made clear by November 2018 that he wanted to lose as little money as possible to finally secure ownership of the building and “turn the page and start over.” 

Faced with either suing Torzi or paying him off to regain control, Archbishop Peña Parra said the second option was chosen “because it was considered more economical, with more contained risks and in a more manageable time frame. It also simply aligned with the desire of the Superior” — a reference to Pope Francis.

Also notable in the leaked videotaped interrogation is another comment from Diddi in which he said that when negotiations with Torzi were interrupted, “at one point Torzi asserted himself, because he had something which we still haven’t deciphered but we have some idea.” 

Crasso’s lawyer, Luigi Panella, drawing attention to the hitherto unknown fact that the prosecution had questioned the Pope, asserted that the Pope now appears to have been a key witness for the prosecution, and therefore the transcript of his exchange with Diddi should be provided to the court. But Panella also conceded that the Italian penal code of 1913 in force at the Vatican “does not permit that the monarch be heard.” The Pope could nevertheless volunteer to testify if he believed it might help bring clarification.  

For his part, Diddi denied that his comments to Msgr. Perlasca implied he had interrogated the Pope, telling the court on Nov. 17 that he was referring to previous public statements the Pope had made, in particular remarks Francis gave during an inflight press conference on return from Japan in 2019. 

Those remarks, however, make no specific reference to Torzi but rather the London property deal in general. 

Asked by the Register Dec. 7 if the transcript of this alleged questioning of the Pope should be made known to the court, Diddi said the position of his office had already been made clear at the last hearing. 

On the matter of whether the Pope could or should testify, he said that such a question was up to the presiding judge but thought it would not happen.

For more on this story and how Msgr. Perlasca's exoneration has shifted the spotlight to top officials, please see here