VATICAN SPENT 100 MILLION ON LONDON PROPERTY!

Questions Persist About Vatican Finances, Real Estate
Many of the issues identified as problematic are still in play, according to informed sources who spoke with the Register.
Edward Pentin National Catholic Register / Catholic Herald
VATICAN CITY — By October 2016, two years into his term as prefect of the Vatican’s Secretariat for the Economy, Cardinal George Pell had become aware of a Vatican dicastery handling large amounts of unregistered cash in offshore accounts.
But nearly three years later the questions raised by Cardinal Pell about the management of Administration of the Patrimony of the Holy See (APSA), the dicastery which handles the Vatican’s real estate and financial assets, have seemingly gone unanswered. Pell had identified money laundering and fraud risks related to the APSA’s use of foreign bank accounts and had questioned particular asset and real estate transactions.
Keen to move swiftly ahead with Pope Francis’ mandate to root out mismanagement and possible corruption in Vatican financial operations, the cardinal prefect contacted Australian banking friends in London in 2016 to find out more. They estimated that possibly as much as €100 million could be held in these accounts, primarily in the branches of two private banks located in Lugano, Switzerland.
Cardinal Pell responded by saying he would ask a Swiss law firm to first collect bank statements going back 10 years of one of these accounts, and to have the Vatican’s auditor general, Libero Milone, a former partner with Deloitte, a multinational financial auditing and consultancy firm, inspect them. To do this, Pell had to ask in writing for Pope Francis’ permission, which the Holy Father duly gave him with a simple signature.
Yet the bank statements never made it to Cardinal Pell or Milone — both of whom subsequently departed from their Vatican positions. An alleged sexual abuse scandal overshadowed the cardinal, and a barrage of accusations besieged Milone, but a year later Vatican officials exonerated the auditor following an internal investigation that failed to produce evidence to support the accusations.
Sources say the initiative to obtain the bank statements was most likely sabotaged after certain individuals became aware of the inquiry. Officials at APSA often used the excuse that they were having difficulty obtaining the data when asked for information pertaining to these accounts.
“They were delaying it, having ‘problems,’” said one of two informed sources in comments to the Register. “Effectively they were shielding the accounts.”
A major part of the resistance, the Register has learned, is that much of the money was kept in “ciphered accounts” which the Promontory Financial Group — one of several outside contractors brought in to help clean up Vatican finances — warned in 2014 were a money laundering and fraud risk that needed to be addressed.
While many of the accounts are now thought to be closed, it remains unclear exactly how many there were or if any are still operating. (Promontory believed there were at least six accounts generating potentially problematic activity).
Although Cardinal Pell’s former dicastery, now headed by former APSA deputy Msgr. Luigi Mistò, is in charge of vigilance and control over APSA, sources say it appears unlikely that the dicastery will ever know the precise amounts that were held in these accounts, or to whom they belonged.

‘Highly Irregular Transactions’
The accounts in question had irregular international banking numbers, making them difficult to track.
The money that was thought to have been in these accounts, in the Lugano branches of two private banks, Banca della Svizzera Italiana and Julius Bär, could have been be as much as €7 billion, according to some estimates. Both banks refused to confirm or deny the existence of the accounts: a Julius Bär spokeswoman told the Register July 11 that as a “matter of policy” they “do not comment on alleged or existing client relationship.”
The existence of the offshore accounts and the difficulty in accounting for them was confirmed to the Register by a second source familiar with the situation.
“It became clear as the months went by that there was a hub of corruption within APSA, and related to this were these two banks in Lugano,” said the source on condition of anonymity. “Highly irregular transactions were transiting through these banks.”
Neither Claudia Ciocca, a director in the Secretariat for the Economy charged with investigating these accounts, nor Archbishop Nunzio Galantino, the current APSA president, responded to the Register’s request for comment.
Tommaso Di Ruzza, the director of the Vatican’s Financial Information Authority which monitored APSA until 2016, told the Register that as far as he was concerned, it was “not correct” to describe these as “illicit accounts.” He said he “cannot disclose if we found anomaly indicators.”
Di Ruzza said that “as a general rule,” if the Authority does find anomalies, it “spontaneously provides” and requests information from “its foreign counterparts” including Italian ones if “the interested subject is an Italian citizen or the transaction is connected with the Italian territory.” He declined to answer whether it made this verification when the Authority had oversight for APSA.

APSA’s Real Estate Holdings
Another challenge Cardinal Pell faced in trying to bring transparency, control and vigilance to Vatican finances was the inadequate management of foreign real estate holdings.
Sources say only few officials within APSA know the true extent of the Vatican’s foreign real estate portfolio, which is held largely “off the books” and handled confidentially.
Much of the foreign real estate APSA administers derives from funds the Italian government provided to the Vatican after the Lateran Pacts of 1929. This was paid in compensation for Church property that had been confiscation by the Italian state during the Risorgimento, the period in the 19th century during which the modern state of Italy was consolidated.
By 2016, the value of APSA’s real estate holdings was estimated to be worth at least €800 million with a portfolio including property in London’s prestigious Mayfair, as well as in Paris and Switzerland. The management of the UK portfolio is apparently carried out by APSA through a managing company called British Grolux Investments Ltd, which does not identify the Vatican’s ownership in its records although its board of directors contains various members linked directly to APSA.
In 2015, for reasons unknown, APSA spent €100 million to purchase a prestigious London property containing 108 apartments and 57,000 square feet of shops. Cardinal Domenico Calcagno, who served as APSA’s president from July 2011 until June of 2018, reportedly asked Cardinal Pell to effectively rubber-stamp the transaction only at the eleventh hour, but the cardinal advised against it due to serious questions he felt were unanswered.
The deal nevertheless went ahead after the Pope overruled Cardinal Pell’s concerns because Cardinal Calcagno had told Francis that APSA would lose its down payment of £3.5 million ($4.9 million) if the deal did not go ahead right away.
Cardinal Pell had also firmly opposed a proposal to use the Vatican’s pension fund for half the purchase, and specifically asked to know how this investment figured into the pension fund’s strategy.
But the fund’s president was also Cardinal Calcagno who wrote a letter to himself, from APSA to the fund, to approve the transaction. At the time the cardinal was also being investigated for embezzlement allegations relating to his time as bishop of Savona (that investigation has not resulted in any criminal proceedings against the cardinal, who had reached the mandatory retirement age of 75 for bishops at the time his resignation as president of APSA was accepted last year by Pope Francis).
The purchase of the London property in 2015, located at 176-206 High Street Kensington, is now viewed by officials as a mistake, having been made at the top of the London property market which experts were referring to as a “speculative bubble,” and with a relatively strong pound that lost significant value after the Brexit referendum a year later.
“What needs to be stressed is that the real estate APSA manages is not its own to manage, but belongs to the Church,” said the second Register source. “Instead, they deal with it like it’s theirs only, and if anyone tries to look in and see how they’re managing it, the person is seen as an intruder, even if that person happens to be from the Secretariat of State or from the Secretariat for the Economy.”

Lack of Transparency
APSA is not the only Vatican body with an apparent aversion to scrutiny. In 2017, the first ever external audit of the Vatican by Price Waterhouse Coopers (PwC) was abruptly cancelled by the Secretariat of State just months after it had started, and having been agreed upon by the Council of the Economy – a group of cardinals that oversees the Secretariat for the Economy.
Cardinal Pell’s dicastery had already uncovered vast amounts of money that had not been recorded in financial statements (94 million euros in the Secretariat for State, later followed by nearly 1 billion euros in various other dicasteries).
In comments to the Register, Cardinal Angelo Becciu, who was sostituto (second in charge) at the Secretariat of State at the time and is now prefect of the Congregation for the Causes of Saints, said he was unaware of the bank accounts or foreign real estate handled by APSA. He said APSA had its own “autonomy” and that not all of its operations were known to the Secretariat of State.
The Sardinian-born cardinal also said the Secretariat of State “never opposed, in principle, the audit by the PwC” but wanted to establish “temporal and thematic” limits to their “intervention.”
“They showed up and said they had to see everything,” he said, adding: “It is perfectly clear that this could not have been followed, also because of the very high costs of the operation, which had been agreed by the Secretariat for the Economy without consulting anyone.” The cardinal also maintained that because termination of the PwC contract was “consensual” and without any financial penalties, it showed that PwC auditors also “realized the operation had been poorly planned and that, for the good of all, had to be stopped.”
However, we understand from reliable sources that PwC was given alternative work to make up for the loss in fees.
Those same sources have told the Register that the events discussed in this article comprise just a “small sample” of the misconduct in play, but that Archbishop Galantino, and the new sostituto, Archbishop Edgar Peña Parra, are making some progress in addressing financial mismanagement and possible corruption in the Vatican and abroad.
What many evaluators, inspectors, and consultants would prefer to see is a radical change of personnel.
“It would be so simple to eliminate the corruption: change the people and obey the rules,” said the second Register source. “Changing the structures helps as that creates control and vigilance, checks and balances, but it’s senseless to do that if people who control the assets, human resources, employee contracts and so on, are the same corrupt people as before, the so-called ‘old guard.’”
In addition to Archbishop Galantino and Claudia Ciocca, the Register contacted Archbishop Peña Parra and the Holy See Press office asking if they could confirm the existence of the Swiss accounts, APSA’s foreign real estate portfolio, and the full reasons for the PwC audit cancellation. None of these parties replied to the Register’s queries for clarification regarding these matters.

ARMAGH CLERICAL CHANGED

Rev Vincent Darragh, PE, AP, Ardboe has retired

V Rev Thomas Daly, PP, Togher, to be PE, AP, Togher

V Rev Sean Larkin, PP, Lower Killeavy, to be PE, AP, Lower Killeavy

V Rev Brian Mac Raois, PP, VF, Carlingford & Omeath, to be PE, AP, Kilkerley

Rt Rev Mgr James Carroll, PE, Adm, EV, Monasterboice, to be PP, EV, Togher

V Rev Aidan Murphy, PE, AP, VF, Coalisland (Ballyclog and Donaghenry), to be PP, VF, Mullaghbawn (Forkhill)

V Rev John Heagney, PP, VF, Mullaghbawn (Forkhill), to be PE, AP, Eglish

V Rev John Connolly, PP, Clonfeacle, to continue as Adm, Eglish

Rev Aidan Dunne, CC, Lower Killeavy, to be PP, Lower Killeavy

Rev Patrick Rushe, CC, Kilkerley, to be PP, Monasterboice

Rev Uduak Abara, MSP, CC, Middle Killeavy, to return to the Missionary Society of St Paul for a new assignment

Rev Brian White, CC, Haggardstown & Blackrock, to be PP, Carlingford & Omeath

Rev Paul Murphy, while continuing as CC, St Peter’s, Drogheda, to pursue part-time a licentiate in Canon Law in Louvain, Belgium

Rev Aidan McCann, CC, Dungannon, to be CC, Haggardstown & Blackrock

Rev Milan Tomaga, on loan from Diocese of Banská Bystrica, Slovakia, to be CC, Dungannon