The Vatican-London investment scandal: A CNA explainer

Vatican City, Dec 18, 2019 / 16:50 pm

Since October, CNA has been covering a Vatican financial scandal involving an investment in a London luxury apartment development through a controversial broker, a loan from a Swiss bank account associated with money laundering, and an attempt to hide the loan from the Vatican's books.

The financial scandal is one of several unfolding at the Vatican, and covered by CNA. Having trouble keeping them straight? You're not alone. This is the second in a series of CNA explainers, designed to help you keep track of the money trails in and out of the Vatican.

Here's the 60 Sloane Ave scandal in a nutshell:

In 2014, the Vatican Secretariat of State invested hundreds of millions of dollars – including money donated by Catholics around the world – into a luxury apartment development in London at 60 Sloane Ave. The investment was arranged and is being managed through a complicated network of individuals and businesses linked to previous and current lawsuits and criminal investigations for fraud and money laundering.

As part of the investment, the Secretariat used money borrowed from a controversial Swiss bank known for violating safeguards against money laundering and fraud, and then attempted to disguise the loans through an accounting maneuver prohibited by Vatican financial transparency regulations.

In October, Pope Francis authorized raids at the offices of the Secretary of State, as well as the Vatican's Financial Information Authority (AIF), which monitors for suspicious financial transactions. Five people were suspended as a result, including two Secretariat employees listed as directors of London 60 SA Ltd, the Vatican's UK holding company now managing the building investment. The pope later called the matter "a scandal," while also emphasizing that proof of illegal activity was "not yet clear." The Holy See press office confirmed in early December that several investments and funds used by the Secretariat of State are currently under investigation.

Here are the major figures and developments in the ongoing story of the London investment scandal:

Raffaele Mincione – An Italian businessman who served as financial advisor for the Vatican Secretariat of State. He helped the Secretariat invest millions of dollars in Peter's Pence funds, which are donated by Catholics around the world. Mincione encouraged the Secretariat to buy a stake in a London building he owned, through funds they had invested in another one of his companies, and then gradually sold them the property, marking up the price each time and charging them management fees throughout the process, leaving him with millions of euros in personal profit. Mincione has also been involved with other high risk business ventures, and was involved with a company fined in 2016 for misleading investors.

BSI – A controversial Swiss bank known for violating safeguards against money laundering and fraud. Vatican sources have confirmed that a significant portion of the Secretariat of State's $200 million loan to invest in the 60 Sloane Ave property came from BSI. The bank was dissolved by Swiss authorities for failure to report suspected money laundering and adhere to other anti-fraud regulations.

Cardinal Angelo Becciu – Formerly the number two official at the Vatican Secretariat of State. In 2015, he reportedly was behind an attempt to disguise the $200 million loans on Vatican balance sheets by cancelling them out against the value of the London property purchased with the money, a maneuver that is prohibited in general accounting practices and forbidden by Vatican financial policies approved by Pope Francis in 2014. Becciu has denied that there was any impropriety in his proceedings.

Cardinal George Pell – Former head of the Prefecture for the Economy, charged with overseeing the Vatican's financial accountability. In this role, Pell reportedly questioned the Vatican Secretariat of State's purchase of a luxury development in London through credit extended by the disreputable BSI Swiss bank, as well as the attempt to disguise the loans, but he was reportedly met with resistance from Cardinal Becciu, who said he was interfering in internal matters of the Secretariat of State. Pell is currently in prison in Australia, convicted on controversial sex abuse charges, which he is appealing.

Luciano Capaldo – An architect charged with leading the development project at 60 Sloane Ave and one of the registered directors of London 60 SA Ltd. Capaldo was initially identified in filings with UK authorities, approved by the Vatican Secretariat of State, as a Vatican citizen, a designation that could confer benefits of accessing banking privileges at the Holy See's financial institutions. The forms were later changed to designate Capaldo as having citizenship in England and Italy. Questions on why the Secretariat of State might have conferred Vatican citizenship on a layman living in London have so far gone unanswered. Capaldo has close business links with companies and individuals that are being investigated for money laundering and market manipulation or are being sued for fraud.

René Brüelhart - Former president of the Vatican's Financial Information Authority (AIF), tasked with monitoring for suspicious financial transactions and ensuring that Vatican banking policies meet international standards. Earlier this year, the AIF released a report saying it continued to catch cases of fraud involving the Vatican's financial institutions. On Nov. 18, the Vatican press office announced that Brüelhart had concluded a five-year term in the position. Brüelhart, however, maintains that he resigned from the position, which has no official term limits.

Marc Odendall – Board member for the Vatican's Financial Information Authority (AIF), tasked with monitoring for suspicious financial transactions and ensuring that Vatican banking policies meet international standards. Odendall resigned shortly after the resignation of AIF president Rene Brüelhart. He said the AIF had become "an empty shell" that could not properly do its job because it had been suspended by the Egmont Group, a cooperative forum of 164 financial intelligence authorities that share information. The AIF was dropped from the group after Vatican gendarmes raided the AIF in October.