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In early October, the Vatican Tribunal will continue the trial on fraud, embezzlement, extortion and abuse of office. In addition to former Cardinal Becciu and other suspects, the former president and director of the Vatican FIU are on trial.
Would you like to financially support the Holy Father and his works of charity for the most needy? Then transfer your contribution to IBAN: IT 52 S 03015 03200 000003501166 for the benefit of Obolo di San Pietro, or: the Petrus Pence Fund. And then pray that the money is well spent, because you never know if it will be invested in real estate and only prelates and their middlemen will profit.
A building in Chelsea, which once housed Harrod’s car showroom, is one of the investments of the substitute secretary of state at the heart of the mega-trial against thirteen suspects. The process started in late July and will continue in early October. The suspects include two financial brokers, a fund manager and Substitute Secretary of State Cardinal Giovanni Angelo Becciu. The prosecutor has also subpoenaed the former top of the Financial Information Authority (AIF). President René Bruelhart, who resigned at the end of 2019, and former AIF-director Tommaso di Ruzza, are accused of abuse of office.
“Approval of extortion”
The 490-page indictment against the former AIF top and others is not public. But Vatican News, the news agency of the Holy See, has published a handy summary. Drawing on public and sources around the Vatican, we highlight some of the facts behind the allegation of “abuse of office.”
Basically the third most powerful man in the Vatican, Cardinal Becciu, takes 200 million euros from the Petrus Pence Fund and invests through Raffaele Mincione’s Athena Capital Global Opportunities Fund in, among other things, a luxury shopping and apartment complex at 60 Sloane Avenue. According to Vatican News, the Vatican would have paid 75 million pounds (87.5 million euros) for it, much more than for which it changed hands two years earlier. In addition, the invested Petrus Pences do not yield a profit, but a loss.
Becciu’s successor Edgar Peña Parra asks financial broker Gianlugi Torzi to help get out of the fund and ensure that the Secretary of State takes full ownership of the property. The Vatican has 30,000 non-voting shares and Mincione is asking 40 million for its shares. Torzi takes advantage of the situation and secretly issues 1000 shares with voting rights. He then asks for 23 million euros for his services. After long negotiations, the Vatican pays 15 million euros. The prosecutor (called “the Promoter of Justice” in the Vatican) calls it extortion, because the payment lacks any economic or legal justification.
Before paying, Edgar Peña Parra turns to AIF director Di Ruzza for advice. Peña Parra does not want to consult the Auditor General or the Gendarmerie because of the risk of negative publicity. According to Di Ruzza, the Subsitute Secretary of State can only pay the amount if there is a legal basis, such as a contractual obligation. In addition, the money must be paid directly to the contracting party and not to some offshore company that keeps the beneficial owner out of sight.
Under these exceptional circumstances, director Di Ruzza believes that with this advice he will act in the best interest of the Holy See. According to our sources, he has reconciled the payment with FIU-UK and some other FIUs in Europe. But the prosecutor sees the advice as approving extortion. In addition to Di Ruzza himself, Swiss René Bruelhart, who had to oversee Di Ruzza as non-executive president, is suspected of abuse of office. Secretary of State Parolin and Edgar Peña Parra, who paid Torzi, are not being prosecuted.
Reorganization
Normally, the judicial police of the Gendarmerie and the Promoter of Justice open an investigation based on a report from the Vatican FIU. In this case, the AIF plays an advisory role. It is complaints from the Istituto per le Opere Religiose (IOR), the Vatican City Bank, and the Office of the Auditor General that initiate the investigation. Until the Subsitute State Secretary comes to ask for advice, the AIF does not know anything about the issue.
Apart from the chance of a conviction, the question is what consequences the trial will have for the fight against money laundering in Vatican City. The resignation of Brülhart and Di Ruzza will not immediately have done the AIF good. Pope Francis had appointed Brülhart in 2012 to set up an anti-money laundering system. The Swiss lawyer had gained experience at FIU-Liechtenstein and as vice president of the Egmont Group, in which all FIUs are united. With his pioneering work, Brülhart has also provoked resistance in the Vatican. If the Gendarmerie invades the office of the AIF and takes all kinds of confidential information from other FIUs, the president and the director of the AIF cannot justify this and they pack their bags.
Pope Francis names Carmelo Barbagallo as successor to both. Barbagallo comes from the Bank of Italy’s Supervision Department and heads both the board and management of the AIF, which have been merged after a recent reorganisation. Since December 5, the AIF has been called the Supervisory and Financial Information Authority (ASIF), a name that better expresses the dual function of FIU and supervisor. A third department has been added to the FIU and the supervisory unit: the unit for regulation and legal affairs. The head of the ASIF now also has an executive function. As a result, operational matters actually fall directly under the responsibility of the Pope. From the standpoint of independence, this construction does not seem optimal. The ASIF is also losing expertise because there is no longer a board of international experts, but only a board of Italian officials.
Europe is positive
Before the reorganization was completed, inspectors from the Council of Europe evaluated the AIF. The evaluation report was published in April this year and, despite the forty recommendations, is largely positive: much progress has been made over the years and the AIF works well with foreign parties. It is noteworthy that the inspectors estimate the risk of abuse of office to be greater than the AIF itself does. This probably refers to abuse of office by others. According to the inspectors, the bottlenecks in the fight against money laundering and terrorist financing mainly lie outside the authority.
For example, detectives have too little specialist knowledge and investigations take far too long. Several investigations are currently underway and have yet to be completed. The inspectors are also critical about the follow-up of investigations that have been completed. The AIF has been operational since 2011 and since then only three people have been convicted (see box below) and only a fraction of the laundered amounts are confiscated: 1,438,074 euros, while 103 billion in assets ans property have been frozen or seized.
Perhaps more will be invested in investigative capacity if the mega-trial against Becciu and his financial aids ends successfully. Should the former AIF top be convicted, optimists may see it as a step forward in the fight against tampering with believers’ money. But pessimists ask themselves which expert still wants to work for the Vatican if she treats her employees that way. In any case, the Pope has been able to tighten his grip on the AIF/ASIF in advance thanks to the trial of the former AIF top. With a loss of independence and international expertise as a result.
Suspicious activity reports (SAR’s)
| Year | Recieved | Reports to Public Prosecutor | Reports to Public Prosecutor | Investigations launched | Investigations launched | Convictions | |
| from other FIU’s | based on SAR’s | based on other info | based on FIU reports | based on complaints authorities | individuals | ||
| 2014 | 468 | 3 | 1 | 4 | 1 | 0 | |
| 2015 | 545 | 7 | 1 | 8 | 0 | 1 | |
| 2016 | 208 | 5 | 1 | 6 | 1 | 0 | |
| 2017 | 150 | 1 | 3 | 4 | 0 | 1 | |
| 2018 | 83 | 5 | 1 | 6 | 1 | 1 | |
| 2019 | 95 | 5 | 0 | 5 | 3 | 0 | |
| 2020 | 68 | 7 | 2 | 9 | 2 | 0 |
(source: Moneyval 2021)
This article appeared on Accountant.nl.