Here’s What the Vatican Finance Trial Has Revealed About the London Deal
Mincione spoke before the court on June 6-7, with the support of 18 blue binders of documentation.
VATICAN CITY — This week at the Vatican finance trial, it was the broker Raffaele Mincione’s turn to be questioned. The responses of the Italian businessman — the first person to manage the London building at the center of the intricate trial — shed more light on the disastrous deal.
Mincione’s answers added to the information provided at previous hearings by Cardinal Angelo Becciu, the former Vatican investment manager Enrico Crasso, and the ex-Secretariat of State officials Fabrizio Tirabassi and Monsignor Mauro Carlino.
The same testimonies confirmed the contents of a text submitted by Archbishop Edgar Peña Parra, the current Sostituto (Substitute) for the Secretariat of State, who decided on the deal’s final steps.
Mincione spoke before the court on June 6-7, with the support of 18 blue binders of documentation. There were almost 16 hours of total interrogation, introduced by Mincione’s spontaneous statements recalling his career in finance, which included a collaboration with the Institute for Works of Religion (the IOR or “Vatican bank”) in the 1990s.
The Genesis of the London Deal
Before going into the details of Mincione’s responses, it’s worth recalling the gestation of the London deal, as revealed during the trial so far. Of course, this offers only a partial picture, but it highlights the mechanisms — including psychological ones — behind the operation.
It all began in 2012 when an investment in Falcon Oil, an oil extraction company in Angola, was proposed to the Secretariat of State via Cardinal Becciu, then the dicastery’s second-ranking official. The proposal came from the entrepreneur Antonio Mosquito, a benefactor of the apostolic nunciature in Angola, where Cardinal Becciu served for seven years.
Cardinal Becciu said he proposed the deal, but without applying pressure. Tirabassi, Crasso, and Mincione all confirmed this under questioning.
Credit Suisse managed the Secretariat of State’s funds, and the Credit Suisse man in charge of them was Enrico Crasso. This is an important fact. The Secretariat of State did not manage them directly. It could, of course, approve or disapprove of business decisions. It wanted profits. In general, however, when one relies on a manager, everything is in their hands.
Crasso was commissioned to study the deal, but he did not have the requisite expertise. So his Credit Suisse agency suggested that he seek advice from the London branch. Credit Suisse London recommended Raffaele Mincione.
It was now 2013, the year Pope Francis was elected. While studying the project’s feasibility, for which 200 million euros (around $215 million) were requested, Mincione set up the Athena Fund, where the funds were paid. This was so that, once the decision was taken, the funds could be immediately available. Both Tirabassi and Mincione confirmed this.
But the investment project in Angola slowly lost traction. Initially, Mosquito lowered its investment needs to 100 million euros (about $107 million), thus freeing up the other half of the fund for other investments. This is when the idea of investing in the infamous Sloane Avenue property arose.
Mincione suggested at the hearings that talking about the “London building” was inappropriate. It was rather a “project” that involved an investment in the property.
The former Harrods warehouses would have been converted into lofts. A floor would have raised the property, and then it would have been sold at a significant profit, considering that rents in that area of London are very high.
It was a large project, explained Mincione, because English law states that, when the intended use of an office building is changed, another office building must also be built to keep the tax burden unchanged.
It was also a project that came with favorable conditions because all the tenants of the Sloane Avenue property terminated their leases, Mincione explained.
By making all these assessments, the idea of an investment in the building became feasible, using the part of the fund not earmarked for the Falcon Oil proposal.
Pivoting From Angola to London
In the end, the Falcon Oil operation came to nothing. Mincione himself made it known that there were no necessary guarantees. At the same time, as Tirabassi told the court, there were also moral doubts about investing in oil when Pope Francis was publishing the environmental encyclical Laudato si’.
Yet it should be noted that Monsignor Alberto Perlasca, then head of the Vatican Secretariat of State administration, was said to have been “very determined” to move forward with the affair.
Cardinal Becciu, on the other hand, no longer appeared in the discussions. “I had faith in my collaborators. I had to have it,” he explained.
There was, therefore, a total of 200 million euros left to invest. Mincione said that he was willing to return it to the Secretariat of State. He expressed this verbally to Crasso, who included him in a report sent to the Secretariat of State that was shown in court by Mincione’s defense.
The Secretariat of State, however, decided to trust Mincione. He changed the destination of the Athena Fund, using it to take over the shares of the Sloane Avenue property, starting the operation. The Vatican entered into a so-called lock-up management contract, which lasted five years and could be extended by another two in the event of a particular disruption. The only way out of the contract would have been to pay penalties. This was still 2013.
Credit Suisse approved the investment, but, Mincione said, the Secretariat of State proved to be “a particularly restless investor.” For “Secretariat of State,” read “Monsignor Alberto Perlasca,” the one who, according to the hearings so far, took all the decisions.
Mincione said that he never started work on Sloane Avenue but had begun work on the other office building to be built as compensation for the change in use. There was no way to get the investment going, and then Brexit came, with its disruptive effects. In this situation, the extra two years on the contract should have been guaranteed. But the Secretariat of State was dissatisfied and decided to change management.
Mincione said that as early as February 2018, he began to understand that the Secretariat of State was having second thoughts. He felt pressure to sell the shares of the property, and set out to satisfy his client. The possible purchase price was 350 million euros (around $375 million), considering the project, not the state of the building.
Torzi Enters the Picture
There was an offer of 350 million euros from Invest, a company belonging to Luciano Capaldo. Capaldo was at the time a partner of the broker Gianluigi Torzi, whom Mincione met at the end of 2017.
Mincione recalled: “He had his office across the street. Sometimes I saw him in breaks, taking a breath of fresh air. Torzi has presented thousands of projects, some I have read, very few perhaps I have approved.”
In the second half of 2018, Torzi was the man to whom the Secretariat of State turned to take over the shares in the Sloane Avenue building. Torzi said he would be able to convince Mincione to sell the shares and proposed new management in which the stakes were anchored to his Luxembourg-based company Gutt SA.
On Nov. 20, 2018, there was a meeting in Mincione’s London offices. It was attended by Mincione, Torzi, Tirabassi, Crasso and the lawyer Manuele Intendente.
Under questioning, Crasso complained about being involved in the matter, saying that “going to that meeting was the biggest mistake of my life.”
Tirabassi said that he was in constant telephone contact with Monsignor Perlasca and that Monsignor Perlasca himself told him that Torzi would be representing the Holy See’s interests. Everyone confirmed that the Vatican did not have a lawyer to represent it at the meeting.
But what of Intendente’s role? Mincione said: “I thought he was the head of the Gendarmerie. He sat at the back, never speaking, with a slightly grim look that confirmed the idea that he was a policeman.”
Mincione was very disappointed that control of the building was taken away from him. He believed that the contract should have come to an end. Disappointed, he left his lawyers with the task of developing the exit agreement. “I could ask for any price, refuse, but I let it go,” he said.
Torzi assigned almost all the shares to the Secretariat of State, but kept 1,000 of them: the ones with the right to vote.
Both Tirabassi and Crasso said they did not know about the nature of the 1,000 shares. Monsignor Perlasca insisted in interviews before he became the trial’s star witness that when he realized what had happened, he wanted to denounce it. But in his view, a complaint could have been counterproductive. There were contracts, and contracts had to be respected.
Archbishop Peña Parra’s Headache
In mid-2018, Archbishop Peña Parra was appointed Sostituto and immediately faced a remarkably complex situation. He decided to take matters into his own hands. The most logical solution, in his opinion, was to acquire the property directly, ending contracts with intermediaries and thus allowing the Secretariat of State to invest directly.
Meanwhile, Capaldo had become a consultant for the Secretariat of State. His defense claimed that he had cut off all contact with Torzi. Mincione said that, after making the first offer for the acquisition of the building by his company, Capaldo arrived with another offer of 350 million euros, representing a Sheikh Salah. Indeed, the Holy See took away the property management and made Mincione suspect that it had decided to resell it to Salah, and then to pocket the capital gain. But it would not be so.
Archbishop Peña Parra entered a world of mutual suspicion. Monsignor Carlino said during the trial that he had been placed under control by Giuseppe Milanese, a personal friend of Pope Francis, and that the pope was involved in mediation to persuade Torzi to leave the deal.
Crasso said that he was asked to find, in the fund of the Secretariat of State, six million euros (around $6.4 million) to finance the sale of bonds of a cooperative run by Milanese.
Monsignor Carlino recalled that Archbishop Peña Parra also put Gian Franco Mammì, director general of the IOR, under observation. The Secretariat of State asked the IOR for a loan to take over the mortgage on the London building and renegotiate it. The IOR at first said yes, with an official note. Then it suddenly changed course. Mammì made a report to the Vatican’s auditor general, who started an investigation.
This was followed by searches at the Secretariat of State and the Vatican Financial Intelligence Authority, a summary procedure decided by the Pope, and the trial that is presently taking place at the Vatican.
Mincione has always stressed that his relationship was with Credit Suisse and not directly with the Holy See. “I don’t understand why I’m here and not Credit Suisse,” he said.
At this point in the trial, the hearings have created more questions than answers. It must be remembered that the accused are questioned but they do not give a formal testimony, swearing an oath to tell the truth. They can therefore potentially lie to defend themselves. This needs to be borne in mind when considering their declarations.
But there is a striking harmony in their accounts, albeit with various nuances. And so, we can begin to grasp the wider picture, even if some parts have yet to come into focus.
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