London to Malta via Rome: Following the money in Vatican financial scandals

Vatican City, Feb 19, 2020 / 14:30 pm

The Vatican raid conducted on the chief prosecutor of the Church's Apostolic Signatura sheds light on a network of companies and businessmen at the center of interrelated Vatican financial scandals. 

On Feb. 18, Vatican officials raided the home and office of Msgr. Alberto Perlasca, the chief prosecutor at the Church's highest ecclesiastical court and a former senior official at the Secretariat of State. Vatican police seized documents and computers for an ongoing investigation into financial misconduct at the Secretariat, the curia's most influential department.

The raid on Perlasca's home is the most recent in a steady flow of stories about questionable Vatican finances, involving a London property development, shell companies, tax havens, opaque investment funds, and shuttered banks in Italy and Switzerland.

Each new scandal appears uniquely complicated, but, a recurring pattern of institutions and individuals suggests that a series of apparently independent financial scandals might, in fact, be linked to each other.

Perlasca is now the fifth official or former official at the Secretariat of State to be targeted by Vatican investigators.

Four staff members were suspended in October, along with the director of the Vatican Financial Authority amid an investigation into the secretariat's investment of hundreds of millions of euros into a building development at 60 Sloane Ave. in London. 

As it happens, this month's raid on Perlasca was prompted by information obtained from the officials suspended in October.

London

Two officials suspended in October, Dr. Caterina Sansone and Msgr. Mauro Carlino, served as directors of London 60 SA Ltd., a UK-based holding company through which the Secretariat of State controls the London property. Between 2014 and 2018, that building was bought in stages by the secretariat from Italian businessman Raffaele Mincione.

In 2014 Mincione was managing $200 million for the Secretariat of State through his company, Athena Capital, with 55% allocated to "speculative investments." Through these, Mincione used Vatican funds to purchase unrated bonds in another of his holding companies, Time and Life SA, which financed his personal investments, while at the same time charging the Vatican millions of euros in performance and management fees.

Also in 2014, Mincione used Athena Capital to channel Vatican funds into 60 Sloane Avenue, which Minicione owned, through another of his companies. The Vatican paid 180 million euros for a 45% share of the building: More than Mincione paid for his original investment in the whole building -even though Mincione had yet to secure the planning permission upon which property development hinged. 

CNA has reported that the Vatican's funds for the purchase of its share in the building came from loans from two Swiss banks, and were concealed on Vatican balance sheets, in breach of Vatican financial regulations.

In 2016 the Secretariat of State, under the authority of then sostituto Cardinal Angelo Becciu, decided to purchase the remaining 55% of the building from Mincione. The Vatican paid Mincione's company to manage that sale. Mincione cleared hundreds of millions of euros in profit on the sale of the second set of shares in the project.

Even after it had sold to the Secretariat of State 30,000 of 31,000 shares in the project, Minicone's holding company retained the 1,000 voting shares needed to control the holding company which owned the building. Mincione eventually offered to part with those, at greatly inflated prices. To broker the sale, in 2018 the Secretariat of State enlisted the help of another businessman, Gianluigi Torzi, who acted as a middleman for the purchase of the remaining shares.

Mincione's estimated profit from managing the deal, excluding profit from selling the building itself, is 60 million euros; Torzi pocketed 10 million from his participation. When the Secretariat finally got complete ownership of the building, the property came saddled with a high-interest mortgage taken out by Mincione; that mortgage might exceed the actual equity value of the property.

Torzi and his family were reportedly granted a private audience with Pope Francis in the Domus Santa Marta the day after Christmas, Dec. 26, 2018. CNA made numerous requests to the Vatican press office in the last several weeks to clarify why Torzi was afforded this honor, and who arranged the audience; those requests have not been answered.

But Torzi's connections to Mincione, and to the London property deal, are much deeper than acting as a broker for the final part of the sale.

A Complicated Network

The manager of the Secretariat of State's London property is Luciano Capaldo, an architect who is a registered director of the secretariat's holding company, London 60 SA Ltd.

Calpaldo is also a part owner and former chairman of Imvest, a property development company listed in Rome. The architect has also served as a director of several other companies, including Odikon Services, which is the subject of a lawsuit for fraud in the UK, and currently suspended by the UK's Financial Conduct Authority.

Torzi has also served as a director of Odikon. 

In addition to the UK lawsuit, Torzi is also currently being investigated by Italian authorities for another alleged multi-million euro fraud involving Odikon and the securitization of receivables owed to a Catholic hospital in Rome, Fatebenefratelli.   

A company set up by Torzi in Luxembourg, FEG International Assets SA, is a major investor in Imvest. FEG and Torzi were both also named in a recent commercial fraud suit in London's High Court.

The largest shareholder of Imvest is a firm called Meti Capital, of which Capaldo is also a part owner. Odikon is also a major shareholder of Meti.

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In 2016, Imvest offices were raided by Italian financial police in connection to charges of coordinated fraud, submission of false budgets, and false accounting. Those raids included 13 other businesses and several individuals invested in Imvest, chief among them Alfio Marchini, a wealthy Italian entrepreneur and politician.

Marchini, a twice-failed candidate for mayor of Rome while standing as a candidate for the 5 Star Alliance with the backing of former prime minister Silvio Berlusconi, owned a controlling interest in Imvest in 2015, the year under investigation. He owned the controlling interest through his company Astrim SpA, which was also included in the 2016 raids.

Another company included in the raids and connected to Marchini is Methorios Capital SpA, which is linked to Optimum Asset Management, a company currently in litigation with the Vatican. 

Optimum is both suing and being sued by the Vatican's Institute for Works of Religion (IOR, commonly called the Vatican Bank). The IOR is suing in Malta over millions of euros in investments by the Vatican bank in another Optimum vehicle, Futura Funds Sicav. 

In 2017, the Malta Independent reported Futura Fund's main shareholder is Futura Investment Management Ltd. which is majority owned by Futura Investment Holding Ltd., the main shareholder of which is Alberto Matta, who is the company's only director as well as chairman of Optimum Asset Management.

Futura Fund's website said in 2017 that the company was started in 2011 "by the management team of Optimum Asset Management," and that "Futura Investment Management Ltd." is an "affiliated company" of Optimum Asset Management.

Optimum Asset Management told CNA that Futura was a "simple minority shareholder" of Methorios, and that its interest in the company was eventually sold.

The Methorios 2016 annual report, however, listed Optimum's Futura Funds as a "relative majority shareholder" of Methorios. Futura sold its stake in Methorios in November 2016, following raids conducted by the Guardia di Finanza, which targeted over ten different companies associated with Methorios Capital SpA and investigated possible fraud involving financial statements from 2014 and 2015.

Methorios and Optimum also shared a common executive and director: In October 2013 Methorios SpA appointed Girolamo Stabile as-vice chairman of its board of directors. At the same time, Stabile served as managing director of Optimum Asset Management, and a board member, and chief risk officer of Optimum Evolution Fund SIF. In June 2015 Stabile resigned from his position at Methorios; however, at that time Futura Funds SICAV Plc remained the largest single shareholder of Methorios, owning 32% of the company's shares.

Futura Funds also has had a close relationship with Imvest, and purchased the whole of Imvest's first bond issuance in 2013 - worth 30 million euros. The bonds were unsecured, and Imvest used all the proceeds to finance a loan to its own shareholder: Astrim, Marchini's company, which was the largest shareholder in 2015.  

By March 2016, Methorios was the largest shareholder in Imvest; Futura became the largest shareholder in Methorios in 2015. 

A representative for Optimum told CNA that Futura recouped its investment in Imvest "upon commencement of a lawsuit against Mr Marchini and related entities."

At present, "Futura Funds SICAV has no relationship with Mr Marchini, Imvest or Astrim, whereas Optimum Asset Management is in no way involved in this matter which is now closed," the representative said.

Banco Popolare di Vincenza

In 2015, L'Espresso reported that Optimum had been identified by banking regulators in connection with an investigation of Banca Popolare di Vincenza. That bank was alleged to have fraudulently funneled money meant for outside investments back into investment in the bank itself.

In 2017 European and Italian bank regulators fined Banca Popolare di Vicenza €11.2m for serious breaches of its reporting and disclosure requirements from 2014-2016, in addition to a concentrated investment in two funds-the Optimum Evolution Fund and Athena Capital Balanced Fund-that violated large exposure limits, even as the bank's financial position deteriorated. The fund managers were not charged with any wrongdoing, however, the bank was forced into insolvency proceedings and sold.

Athena Capital Fund group, run by Raffaele Mincione, was also hired by the Vatican Secretariat of State to invest assets from Peter's Pence. By making the concentrated investments in the two funds, the bank was alleged to have obscured the true nature of its risk exposure.

Italian media have estimated that alleged misconduct by Banca Popolare di Vincenza involved hundreds of millions of euros and it was fined, and then closed by a forced sale in 2017.

Correction: 

This article as originally published described Methorios Captial SpA as a "subsidiary" of Optimum Asset Management. After being contacted by representatives of Optimum, the text has been corrected to make explicit the relationship between the two entities.

Optimum also objected to the description of its relationship with Banca Popolare di Vincena, noting that it did not purchase shares of the bank in the investigated 2014 share capital increase and "has never been involved in any fraudulent scheme whatsoever." The text has been updated to reflect the relationship between the companies as described in the bank's 2016 annual report.