Torzi’s Vatican extortion charges linked to missing government bonds

News: Vatican Finances

A businessman embroiled in the Vatican financial scandal pressured Vatican investment managers to help him cover a legal settlement to repay an insurance firm, after his companies were accused of misappropriating tens of millions of euros in Italian government bonds. 

Businessman Gianluigi Torzi solicited 10 million euros at a 2018 meeting with Vatican investment managers. Legal documents obtained by The Pillar indicate that he needed the money to repay an Italian insurance company after a Torzi company illicitly sold more than 25 million euros in government bonds belonging to the insurance company, a move lawyers for the insurance company characterized as a “sophisticated fraud.”  

In June 2020, Torzi was arrested by Vatican authorities and charged with extortion, embezzlement, and a range of other crimes in relation to his dealings with the Secretariat of State.

Italian newspaper Corriere della Sera reported last year on a recording of a private meeting between Torzi and Fabrizio Tirabassi, a lay official at the Secretariat of State charged with managing investments for the Vatican department. Also present at the meeting, which reportedly took place at the Bulgari Hotel in Milan on December 19, 2018, was Enrico Crasso, a former executive at Credit Suisse, who manages hundreds of millions of euros in investment for the Secretariat.

As has been previously reported, during the meeting, Torzi told Tirabassi that he needed to realize 10 million euros for his role in brokering the final sale of the London building to the Secretariat from Italian businessman Raffaele Mincione. He specifically pressed for Vatican funds to purchase the Augusto real estate bond. 

“Tomorrow if you don’t buy Augusto I’m in the shit,” he told Tirabassi and Crasso, according to the recording. He later offered to drop the amount he demanded to 8 million euros.

While it had not previously been known why Torzi wanted the Vatican to buy the real estate bond, documents obtained by The Pillar indicate that Torzi urgently needed a Vatican investment to repay the insurance company from which Torzi’s companies were accused of expropriating millions.

According to legal documents obtained by The Pillar, the Augusto bond was held by the Italian company Net Insurance as part of a legal settlement between Net and Torzi’s company Sunset Financials Ltd. in Malta. 

According to a legal memo circulated to Net board members in 2019, which was obtained by The Pillar, three of Torzi’s companies in succession, first FEG International Assets, and then Beaumont Investment Services, then BIS Prime Partner Ltd., entered prime broker contracts with Net Insurance and Net Life (affiliated insurance companies in Italy) between 2016 and 2017. 

As part of the contracts, according to the memo, Italian government bonds totalling more than 25 million euros were required to be transferred to FEG and then Beaumont, to be held on deposit with a reputable London based bank, and remain available to Net. According to the legal memo, that never happened, the accounts never existed, and where the bonds went is unclear.

When the contract was moved to BIS, the memo states, custody of the bonds ended up at Torzi’s Malta based company, Sunset, and appear to have been subsequently sold.

The legal advice was circulated to Net board members in 2019, by which time the company was under new ownership, and investigating the accuracy of Net’s 2017 annual accounts.

As part of a legal settlement between Torzi and Net to repay the value of the missing bonds, the businessman agreed to arrange the sale of the 10 million euro Augusto bond for Net, or to buy them himself. When he failed to do so, Net sued Torzi in the UK High Court in London in 2020.

The timing of Torzi’s attempt to secure Vatican funds to meet his obligations to Net is crucial. In November and December of 2018, Torzi had control of the London building at 60 Sloane Avenue, after the Vatican arranged its final purchase from Raphaele Mincione for more than 350 million pounds.

Torzi was supposed to take control of the building through his Luxembourg holding company, Gutt SA, and then turn over all shares of Gutt to the Secretariat of State. Instead, Torzi reorganized the company, giving the Vatican the 3,000 ordinary shares of the company but created an additional class of 1,000 “voting shares” which he retained, allegedly demanding further payment in exchange for control of the company.

According to Corriere, during the recorded meeting in Dec. 2018, Crasso, Tiribassi, and Torzi can be heard discussing Torzi’s control of Gutt, with Crasso suggesting that a payoff of 6-10 million euros could be possible, and Tirabassi warning that future financial reforms at the Vatican could centralize oversight and control of the secretariat’s finances. 

“This is not good for you,” Tirabassi warned Torzi. At the time of the meeting, Tirabassi was also a registered director of Gutt.

In June last year, Torzi was arrested by Vatican authorities and charged with extortion, embezzlement, aggravated fraud, and money laundering over his role in the London property deal.

Tirabassi was one of several officials and former officials at the Secretariat of State to have been raided by Vatican financial investigators, and had his computers and files seized. 

He has been accused of receiving payments for directing Vatican funds into different investments, including via Crasso.   

Tirabassi was suspended from his job in 2019, and the Vatican has not confirmed his current status. In November last year, it was reported that during a search of two of his homes, Italian financial police and Vatican gendarmes found hundreds of thousands of euros in cash, stored in shoe boxes, as well as coins, gold, jewelry, and other valuables worth more than 2 million euros hidden in a wardrobe.