Vatican City
AP
Pope Francis gave clear indications to get out of a disastrous London real estate deal by saying the Vatican must “start over and lose as little money as possible”, an exit strategy that eventually involved paying off a broker €15 million, the Holy See’s number three official told a court Thursday.
Archbishop Edgar Pena Parra, the “substitute” in the secretariat of state, was the highest-ranking witness to be questioned by defence attorneys for 10 people on trial for alleged financial crimes involving the London property and related dealings. His testimony was eagerly sought by the defence, given that he oversaw the final phase of the London deal in 2018-2019 as well as the negotiations with the broker, Gianluigi Torzi.
People crowd St Peter’s Square at the Vatican as Pope Francis delivers his blessing as he recites the Angelus noon prayer from the window of his studio, on Sunday, 26th February, 2023. Pope Francis gave clear indications about the need to get out of a disastrous London real estate deal by saying the Vatican must “start over and lose as little money as possible” in negotiating an exit strategy that eventually involved paying off a London-based Italian broker €15 million, the Holy See’s number three official told a court on Thursday, 16th March, 2023. PICTURE: AP Photo/Andrew Medichini/FIle photo.
Prosecutors have accused Torzi of extorting the Holy See for the €15 million in exchange for ownership of the building, charges he denies. The nine other defendants have similarly denied wrongdoing.
The crux of the London case rests on the passage of ownership of the London property to Torzi’s Gutt SA fund at the end of 2018 after the Vatican decided to prematurely exit another fund that had invested in it.
Pena Parra accused Torzi of deceiving the Vatican but he also identified his onetime deputy, Archbishop Alberto Perlasca, of having entered into the deal with Torzi without any approval or authority to sign contracts.
By the time Pena Parra first learned of the deal on 22nd November, 2018, Perlasca had already signed the contracts giving Torzi effective control of the property in the form of the 1,000 voting shares in Gutt, while the Vatican held 30,000 non-voting shares. The lawyer Perlasca engaged assured the Vatican the deal was in its interests, but the lawyer turned out to have ties to Torzi, Pena Parra said.
At a 22nd December, 2018 meeting with the Pope and two people external to the Vatican who had looked at the contracts, Pena Parra realised the Vatican had been duped and had acquired “empty boxes.”
Francis, he said, gave clear, general instructions how he wanted the disaster resolved: “Start over and lose as little money as possible,” Pena Parra quoted Francis as saying. “I realised that it was all a deception.”
Over the ensuing six months, Pena Parra and a team negotiated an exit strategy with Torzi after ruling out “riskier” legal action against him. After initially hoping to pay a maximum of €3 million, the Vatican received a proposal from Torzi’s lawyers for €25 million, reduced to €15 million, Pena Parra told the court.
“For me it was profoundly painful that we had to pay €15 million for this, but it was the only possibility,” he said. “We were forced into it. Torzi had all the power and we couldn’t do anything about it.”
“It really was a Via Crucis,” he said, referring to Christ’s final moments before his crucifixion.
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Perlasca was initially a prime suspect in the investigation, but flipped in August, 2020, started cooperating with prosecutors and became their star witness. He was never charged and is considered an injured party in the case.
The investigation was triggered after Pena Parra sought a €150 million euro loan from the Vatican bank to extinguish the mortgage on the property, considering the €1 million monthly mortgage payment too onerous. Initially the bank, known as IOR, agreed but by July, 2019, refused and reported the whole deal as suspicious to Vatican prosecutors.
Pena Parra was still bitter with the bank Thursday, claiming the Holy See lost some six months in needless mortgage payments, since he quickly secured the loan from another Vatican office after the IOR delivered its negative verdict.
