Stakes high as verdict looms in Vatican’s ‘good faith’ London trial

A verdict is due any day on the lawsuit brought by Raffaele Mincione in the High Court of England and Wales

While all eyes in the Vatican financial world remain fixed on appeals underway in the city state’s courts, the High Court of England and Wales in London is due to issue a verdict that could seriously tip the scales of international opinion, if not justice, in the Church’s financial scandal.

Raffaele Mincione. Pillar file photo.

Lawyers for Raffaele Mincione — the investment manager who in 2018 sold the Vatican Secretariat of State a London property as the closing deal of a multi-year business relationship — expect a verdict any day in his lawsuit against the secretariat.

A victory for Mincione in London would be a much needed boost for the businessman, who has seen millions of euros of his assets frozen as a result of the Vatican City legal process against him.

And a favorable verdict for Mincione could cost the Holy See millions, and pile enormous pressure on the appeal court in the Vatican as it considers his bid to overturn his conviction for financial crimes.

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Even before charges were formally filed in Vatican City against the defendants, the sprawling financial scandal surrounding the Secretariat of State’s investment in a London property had already made it to court.

Raffaele Mincione, the secretariat’s former investment manager, filed suit against the Vatican state department in June 2020, petitioning the High Court of England and Wales for declaratory relief against the Secretariat of State, and asking judges to rule he “acted in good faith” in his dealings with the Vatican, managing hundreds of millions of euros in investments for the secretariat over a period of years and selling them a London building at 60 Sloane Ave. in 2018.

That suit followed Mincione receiving word he was under criminal investigation in Vatican City, and after Vatican media accused him of using the Secretariat of State’s money for “speculative and self interested” investments.

Procedural motions in the London case continued in the background as the sprawling financial crimes trial opened in Vatican City the following year, before closing in 2023, convicting Mincione alongside 8 others.

Mincione was eventually cleared by the Vatican court of embezzlement and fraud, but he was convicted on the grounds that the money he invested for the Secretariat of State could not be used for that purpose under Vatican law. He was handed a sentence of five years in prison and made part of a group liability among the defendants for hundreds of millions of euros in damages.

He was specifically convicted of participating in the illegal misappropriation of Vatican funds in the deal which placed some 200 million euros under the investment manager’s control on the Secretariat of State’s behalf.

According to Vatican judges, Mincione was legally culpable as the beneficiary of the misused Vatican money — and should have, as a matter of professional due diligence, sufficiently familiarized himself with Vatican City law and realized he was participating in an illegal operation.

Mincione, for his part, has insisted that he signed contracts which were legal under the jurisdictions under which he was operating and produced in court letters signed by successive Secretaries of State asserting the investment with him was legal under Vatican law.

Vatican lawyers argue that those assertions were the result of deliberately misleading advice from secretariat officials, including Cardinal Angelo Becciu, and that Mincione should have known that.

In both the Vatican City and the UK trials, Mincione has argued he acted in good faith in his dealings with the Vatican — including a 2018 separation agreement which transferred ownership of the London building at 60 Sloane Avenue to the Secretariat of State’s designated proxy, Gianluigi Torzi, who was also convicted in Vatican City of financial crimes in the case.

The businessman has faced questions over his own business dealings with Torzi, and the sequence of events which led him to invest Vatican money in debt products sold by Torzi — deals which Mincione has said led him to lodge criminal complaints against him.

Torzi, in turn, used his companies to lend Mincione tens of millions of euros during the same period.

In an extended interview with The Pillar last year, Mincione recounted his version of his dealing with the Vatican, saying the Secretariat of State had approached him via intermediaries to manage a proposed investment in Angola, favored by then-sostituto Cardinal Angelo Becciu.

When Mincione found that investment unworkable, he said, he offered to walk away from the deal but was asked by the Vatican to propose other investment opportunities for its money — according to Mincione, he acted in good faith and abided by all the contracts he signed, and said that the Vatican’s representatives and officials instead acted in increasingly bizarre ways, leading to losses.

Earlier this year, the London court heard from Archbishop Edgar Peña Parra, Cardinal Angelo Becciu’s successor as sosituto, who ordered the separation from Mincione in 2018. Peña Parra told the court that the secretariat had been the “victim of serious fraud.”

However, the sostituto — whose own conduct has come under repeated scrutiny during the various trials — also conceded that in executing the separation and dealing with attempts by Torzi to extort the Vatican as part of the process, he had knowingly authorized the payment of “completely fictitious” invoices.

“I was not honest,” the archbishop said in the London court. “I accept that.”

The UK judges will also likely consider that archbishop has previously been scathing about the way in which his own department was run, while himself admitting in Vatican court to have ordered extra-legal retaliation against banking officials who refused to lend the secretariat large sums of money at favorable rates.

Peña Parra’s decision to terminate the secretariat’s investment with Minicone early resulted in massive contractual penalties for the Vatican, costing it millions, and his own narrative of events given during the London trial also significantly diverges from previous public statements from Vatican officials about their dealings with Mincione.

The Vatican parted ways with Mincione in 2018, with the secretariat forfeiting the balance of its investment with the businessman, while paying millions in penalties for early withdrawal of their investment, in exchange for ownership of a London property development.

Arguing that Mincione pulled a “bait and switch” on the Vatican, the Secretariat of State’s UK lawyers told the court that the Vatican had to go along with his investment proposals because the money they had out for investment “had been secured through lines of credit which needed to be serviced.”

According to their argument, Mincione exploited the fact that the Secretariat of State was looking to invest 200 million euros of borrowed money on which they needed to generate a return quickly. of someone else’s money and the meter was running, so they had to act fast.

The Vatican’s lawyers said the Secretariat of State “borrowed the money by taking credit lines from two banks (Credit Suisse and Banca Svizzera Italiana), with securities deposited as collateral.”

The origin of the money, coming in the form of credit lines borrowed against assets on deposit with Credit Suisse and BSI and illegally obscured on departmental ledgers, was first reported in 2019.

However, those reports were previously repeatedly denied by senior Vatican officials, including Cardinal Angelo Becciu, who called them “false,” “misleading,” and “shameful.”

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While there is no way of predicting how the UK judges will find in the case, a decision in Mincione’s favor would likely have significant repercussions internationally.

In addition to his appeal in Vatican City, Mincione and his companies have also launched suits in other jurisdictions seeking similar declarations and fighting to unfreeze his international assets, frozen on request of Vatican prosecutors.

The High Court of England and Wales is well used to handling complex financial cases, more so than the Vatican City tribunal which convicted Mincione, and may come to a different conclusion in the case.

If they do, the English court could consider awarding Mincione substantial damages against the Vatican, a judgement enforceable against the Holy See’s considerable asset portfolio in the United Kingdom. Should that happen, it could render his conviction in Vatican City a pyrrhic victory, and a costly result for the Secretariat of State.

Also of likely concern to the Vatican, a contrary decision in London could find respected foreign judges pour scorn on the city state’s judicial process — as has happened in the past — calling into question not just Mincione’s conviction but casting doubt over other seemingly more clear-cut cases of corruption in the case, like that of Cardinal Becciu.

Earlier this year, Mincione’s legal team filed a complaint with the office of the Special Rapporteur on independence of judges and lawyers at the United Nations, alleging violations of due process in the more than three years-long investigation and trial.

As the Vatican City court of appeals considers appeal claims filed by Mincione and the other defendants in the financial crimes trial, the imminent verdict in London could weigh heavy on the judges’ eventual deliberations — but even more so on the Secretariat of State.