As the Vatican's landmark trial over a London property deal and corruption allegations continues, the question of what Pope Francis himself knew has been raised in court by a defendant.
Interviewed Thursday, July 7, 2022, Fabrizio Tirabassi, a former official in the Secretariat of State, said the Pope had given permission to request a loan from the Institute for Works of Religion (IOR), commonly known as the Vatican Bank.
The money was to be used to pay off the mortgage and take over management of the Sloane Avenue property. Italian businessman Tirabassi is one of ten defendants in this trial, which began in July 2021. And he was not the only one to be heard at the last hearing.
The Broker and His Company
The Vatican prosecutor questioned Nicola Squillace on Friday, July 8, 2022, the lawyer for another businessman, Gianluigi Torzi. Both Squillace and Torzi are charged with misappropriation of funds, fraud, embezzlement, money laundering, and self-laundering.
At the 24th and final hearing in the trial on Friday, the court heard counsel for the broker on crucial details of the contract that transferred management of the luxury London building from Torzi's own company, the Gutt SA based in Luxembourg.
This contract plays an important role in the trial as it sheds light on a crucial chapter in the saga of the way in which the Vatican ended up with an investment in London involving a Luxembourg-based company. A saga that began in Angola.
From Angola to London, from Athena to Gutt
In 2013, the Secretary of State decided to invest 200 million euros and explored the possibility of buying shares in an oil extraction company in Angola called Falcon Oil. The case was entrusted to the Italian broker Raffaele Mincione, considered an expert in this type of transaction. Accused at trial, he vigorously protests against any accusation of misconduct.
To carry out the operation, Mincione created his own fund, Athena Capital, to which the Vatican transferred the sum of 200 million euros. The operation in Angola having failed, the Vatican agreed that instead, half of the money would be used to buy shares in a luxury real estate project in London. The other half was earmarked for other investments.
In 2018, the Secretariat of State decided that it no longer wanted the London investment to be managed by Mincione and the Vatican bought back the real estate shares which were given to broker Gianluigi Torzi's company, Gutt SA. Torzi kept a thousand shares, the only ones with voting rights.
It was only after this final episode that the Secretariat of State decided to take direct control of the luxury real estate project: the Vatican bought Torzi's shares, and it was in this context that Tirabassi and de Squillace were questioned at the final hearing of the trial.
In court, Tirabassi claimed that the Secretariat of State, and him in particular, did not realize at first that the shares given to Torzi were the only voting rights, effectively giving Torzi control. of the building.
Torzi's Lawyer Claimed Otherwise
Squillace presented the court with slides of seven draft contracts, saying he worked on them to facilitate the transfer of the investment from Athena to Gutt. He also claimed to have raised the issue of the shares with Tirabassi, who allegedly replied that everything was fine because the Secretary of State had other similar operations.
Tirabassi's questioning also touched on another crucial issue: London-based asset manager Cheyne Capital's mortgage on the luxury property.
When the Secretary of State decided to take control of the building to save the investment, he had to deal with the amount of the mortgage, approximately 147 million dollars. In order to honor this payment, the Secretariat of State approached the IOR to obtain a loan.
For the substitute, Msgr. Edgar Pena Parra, it was an obvious step, according to Tirabassi: “there was nothing more transparent than to contact his internal institute.” It is therefore all the more surprising that this approach did not succeed.
The Failed Loan
In court, Tirabassi said IOR director general Gianfranco Mammì had personally spoken to Pope Francis about the matter. He also claimed that the pope had approved the loan to the Secretariat of State.
Documents show that Cardinal Pietro Parolin, Secretary of State, had made it clear in meetings that he had the Pope's approval for the loan. According to Tirabassi's version of events, a May 24, 2019 letter from IOR President Jean-Baptiste de Franssu approved the loan and gave the green light for the money to go to the Secretariat of State.
But only three days later, the green light turned red: Mr Tirabassi said the Vatican's own watchdog, the Financial Information Authority (ASIF), had blocked the loan, instead authorizing a revised plan from the Secretariat of State to acquire the building.
The Watchdog and the Papal Decision
ASIF exchanged information with its foreign counterparts when it received a suspicious transaction report from the Secretariat of State. Since its role is also to oversee the IOR, it was clear that ASIF would continue to monitor the flow of money.
One would think that the procedure authorized by the pope actually hampered the work of the watchdog. Tirabassi claimed to have been deceived by Squillace and Torzi, and Squillace has always claimed to have provided continuous information.
Tirabassi raised another point regarding the decision-making processes in the Vatican, the issue of the then head of the administration of the Secretariat of State, Msgr. Alberto Perlasca’s signing agreements he was not authorized to sign.
Mr. Tirabassi spoke of the bishop's willingness to take charge of the problems in order to avoid involving the superiors. He also said he distanced himself from Perlasca when he realized the latter's behavior was potentially dangerous.
Squillace stressed that he always thought Perlasca could sign, notably the first agreement, which contained no obligations, but reciprocal commitments, with exclusivity at expiration. “The Holy See could withdraw from this agreement at any time,” he said. During the hearing, Tirabassi said Perlasca “was very determined to give direction to Torzi.”
The Rest of the Trial
The questioning will continue on July 14 and 15. Then the trial will resume in September, with three consecutive hearings scheduled every two weeks – and possibly with the first witnesses. The president of the court, Giuseppe Pignatone, spoke of 200 witnesses, but many of them may not be called due to current developments.
While the current Vatican trial revolves around the investment of the Secretariat of State in London and the ten defendants, there are also at least two other lines of inquiry: the donation by the Secretariat of State to Caritas in the home diocese of Cardinal Angelo Becciu, and the consulting contract awarded to alleged intelligence expert Cecilia Marogna.
 ‘Self-laundering’ is a situation in which the same person perpetrates both the primary offence and the money laundering offence.