UK judge lifts restraining order on arrested Vatican businessman

News: Vatican finances

What’s new: A UK judge has lifted a court order placed against the businessman at the center of the Vatican financial scandal.

Why it matters: While details of the order and the decision to remove it remain sealed by the court, the order - which could have limited Gianluigi Torizi’s access to bank accounts and assets - was given by UK prosecutors at the request of Vatican authorities. 

What it might mean: The decision by the UK judge is the latest reversal for Vatican City prosecutors trying to work with other jurisdictions to bring charges against individuals linked to the Vatican financial scandal.

Lawyers acting for Gianluigi Torzi announced Thursday that a UK judge has removed a restraint order placed against him on behalf of the Vatican. The Italian businessman was arrested in Vatican City last year as part of an ongoing investigation into the London property deal and the finances of the Secretariat of State.

The restraint order was placed against Torzi by the Director of Public Prosecutions for England and Wales at the request of Vatican City authorities. While the details of the order have not been released, such orders are typically imposed at the beginning of criminal investigations and can limit a suspect’s access to assets and bank accounts, if prosecutors believe that assets may be moved ahead of a later judgment.

“His Honour Judge Baumgartner - sitting at Southwark Crown Court, has ruled that a Restraint Order obtained by the DPP on behalf of the Vatican City State against Gian Luigi Torzi be discharged and awarded him costs,” said a statement from Torzi’s law firm, Janes Solicitors.

An injunction prevents the details of the judgment from being released, but the court could permit the transcript of the case and full decision to be published after hearing arguments from both parties, Torzi’s attorneys said. 

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Torzi was arrested in June 2020 in Vatican City, on charges of extortion, embezzlement, aggravated fraud, and money laundering over his role in the London property deal, which saw the Secretariat of State acquire the building at 60 Sloane Avenue for a reported 200 million; it also took on a 150 million euro mortgage on the building.

Torzi was hired by the Secretariat of State to broker the final stage of the purchase from Raffaele Mincione, who had acted as an investment manager for the secretariat, managing hundreds of millions of euros in Church funds. 

Accusations of extortion against Torzi are reportedly linked to a wrinkle in the plan through which he planned to transfer ownership of the London building to the Vatican.

The plan by which the Vatican would take control of the building was complicated: The Vatican would pay Torzi, who would pay Mincione. Ownership of the building would then transfer to Torzi’s Luxembourg holding company, Gutt SA. 

Once Gutt SA controlled the building, Torzi was supposed to hand over all shares of the company to the Vatican, and with the shares, ownership of the building. 

Instead, corporate documents show that after Gutt took ownership of the building, Torzi restructured Gutt’s share structure. He created a small class of voting shares that controlled the company. 

Allegedly, Torzi kept those voting shares while giving the Vatican all the general shares in the company. Allegedly, he then extorted the secretariat for control of the company, and the building they had already paid to buy, by making them pay millions more for those voting shares.

Torzi has said the charges against him are the result of a “gross misunderstanding.”

Since Torzi’s arrest, reporting has also shown that, shortly before Torzi brokered the final stage of the building’s acquisition on the Vatican’s behalf, Mincione invested Vatican money in debt products marketed by Torzi, including some with links to mafia-affiliated companies.

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

Reporting has suggested that both Torzi’s alleged efforts to extort the Vatican and his alleged conflict of interest in brokering the deal with Mincione on the Vatican’s behalf could be linked to Torzi’s involvement with NET Insurance, an Italian company. 

In a separate judgment by a UK court in January, Torzi was order to pay NET 10 million British pounds for defaulting on a legal settlement made after Net accused Torzi of misappropriating more than 26 million euros in government bonds from the company in what lawyers have called a “sophisticated fraud.”

As previously reported by The Pillar, a recorded conversation between Torzi and investment managers for the Secretariat of State in December 2018 appears to show Torzi attempting to compel an investment from the Vatican to cover the sum, which he owed to Net as part of a legal settlement to repay the missing millions.

Company records examined by The Pillar show that shortly after the time lawyers for Net argued that custody of the bonds was transferred to Torzi’s company Sunset Financial, it extended a 26 million euro line of credit to Mincione’s company Pop 12 Sarl. in Luxembourg.

Torzi’s lawyers said Thursday that “Mr Torzi has always maintained that he was only ever involved in a genuine commercial transaction with the Vatican and he is therefore extremely pleased the Court has discharged the Restraint Order.”

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The UK court decision is the latest reversal for Vatican prosecutors in their dealings with forgiegn jurisdictions. 

In January, a Vatican City court announced it had dropped an extradition request made to Italy for Cecilia Marogna, who has been accused of embezzling hundreds of thousands of euros from the Vatican while working as a “security consultant” for the Secretariat of State.

Although prosecutors have said that a trial for Marogna in Vatican City is imminent, the decision to drop the extradition request in January has been widely seen as an acknowledgement that the request would be denied by a Milan court of appeal.

Also in January, an Italian court ordered the return of hundreds of thousands of euros in cash, as well as other valuables, seized from Fabrizio Tirabassi in raids conducted on his homes at the request of Vatican authorities. 

The court ordered the return of the money, ruling that it was illegitimately seized during a raid authorized to focus on computers and documents in Tirabassi’s possession. 

Tirabassi worked for years at the Secretariat of State supervising its financial investments. He was suspended following a raid on the secretariat’s offices conducted by Vatican police in October 2019. 

Tiribassi was one of the two investment managers present at the 2018 meeting with Torzi, in which the businessman can be heard soliciting further Vatican investment at the time he controlled the London building. 

At the time Torzi was allegedly extorting the Vatican, he appointed Tiribassi as a director of Gutt, the company through which he controlled the building, and then removed him again before control finally passed to the Vatican.