Vatican gets real estate expert as new judge ahead of likely financial trial

News: Vatican finances

Pope Francis has appointed an expert in property transfers as a judge to the criminal tribunal of Vatican City. The appointment is the latest of several changes to Vatican City’s court system, comes ahead of expected trials in the financial scandal centered on a 2018 Vatican investment in a London building.  

Professor Lucia Bozzi, a full professor of private law at the University of Foggia, was named Applied Magistrate of the Vatican City State Tribunal in a statement by the Holy See press office on Wednesday.

Bozzi’s teaching load at Foggia university includes a specialty class on notary activities and property transfers.

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In recent months, Pope Francis has approved several changes to the criminal law of Vatican City, each seeming to address aspects of the ongoing investigation into the Vatican Secretariat of State’s financial affairs, now approaching its third year.

In 2018, the Secretariat of State finalized the purchase of a London investment property, but figures connected to that deal, both inside and outside the Vatican, have been subsequently accused of fraud, embezzlement, administrative negligence, and money laundering.

Francis has already approved trials in absentia for defendants who refuse to present themselves at trial, a move widely interpreted as an accommodation for the “imminent” trial of Cecilia Marogna, the former personal spy for Cardinal Angelo Becciu during his time as sostituto at the secretariat.

The pope also recently approved a change to Vatican City law, allowing cardinals and bishops to face trial at the tribunal. Previously, cardinals and bishops accused of crimes under the Vatican City code had their cases heard by a special court constituted by the Supreme Tribunal of the Apostolic Signatura. 

The prefect of the Signatura, who would have led any trial of a cardinal prior to the change, is Cardinal Dominique Mamberti, appointed by Pope Francis in 2014. Before leading the Vatican’s supreme court, he was a senior official at the Secretariat of State.

Last week, the head of the Vatican City tribunal, Giuseppe Pignatone, confirmed that the court had acquired a hall in the Vatican Museums and was in the process of converting it into a new courtroom, with a much larger seating capacity to accommodate crowds at future trials.

That announcement fueled speculation that a high-profile prosecution is expected in the near future.

The decision to appoint a new magistrate for the court with an expertise in property transfers and private law will be seen by many Vatican watchers as beefing up the court’s ability to consider new lines of prosecution being pursued by investigators.

At the center of the current Vatican financial scandal is the Secretariat of State’s investment of hundreds of millions of euros with businessman Raffaele Mincione in 2014. 

The Pillar has previously reported that the secretariat’s investment of some 200 million euros was made with funds borrowed from two Swiss banks, Credit Suisse and BSI. Those loans were extended against the security of secretariat funds on deposit at the banks, including Vatican charitable funds like Peter’s Pence. 

The secretariat attempted to zero out the loans against the value of the investments with Mincione on its own financial statements to Vatican financial authorities, a move prohibited by financial regulations approved by Pope Francis. 

Cardinal Becciu, who was in charge of overseeing the Secretariat of State’s financial dealings at the time, has described that reporting as “false.” In the second volume of his Prison Journal, Cardinal George Pell, who was head of the Secretariat for the Economy at the time of the events, described the reporting as “accurate.”

BSI was closed in 2017 after Swiss authorities discovered systematic violations of anti money laundering rules.  

In 2018, shortly after Pope Francis promoted Becciu to cardinal and named him head of the Congregation for the Causes of Saints, the Secretariat of State made the decision to withdraw its investments from Mincione. Under the terms of the separation, the secretariat forfeited the balance of its investments with the businessman, and paid a reported additional 40 million euros to him. In return, it was to receive ownership of a London property at 60 Sloane Ave., owned by Mincione, and in which he had invested the Vatican in a 45% stake.

The final transfer of the building’s ownership was brokered by Gianluigi Torzi, who was appointed by the Secretariat of State to act on its behalf, despite Torzi having numerous connections to Mincione and outstanding legal investigations into his business dealings in Italy.

Torzi was subsequently arrested in Vatican City in June, 2020, for his role in the transfer of the building’s ownership. Vatican authorities have charged him with extortion, money laundering, fraud, and other crimes. Torzi was released after ten days in custody and, having failed to post an agreed upon bond of 3 million euros, returned to London.

Vatican prosecutors then sought a UK court ordered asset freeze on Torzi’s London holdings, which was granted and subsequently revoked.

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Last month, an Italian judge issued a warrant for Torzi on charges of tax evasion, fraud, and money laundering. Torzi was arrested in London last week and is awaiting an extradition hearing.

In seeking their warrant from the Roman court, Italian prosecutors offered new details on the Vatican investigation, including that Vatican prosecutors are investigating “crimes committed by various public officials [in the Vatican] who would have diverted sums of money managed by the Secretariat of State, allowing them to be re-used for speculative purposes [in other jurisdictions, including] in Italy by subjects outside the Vatican, including Gianluigi Torzi.”

According to UK court documents, Parolin was specifically informed of and approved, in writing, various stages of the London property deal as structured by Torzi, and which have now collapsed into allegations of extortion, blackmail, and money laundering.

After the final purchase of the London building, in 2019 Parolin personally intervened to pressure the head of the IOR, a bank in Vatican City, to approve and fast-track a loan of 150 million euros to cover the mortgage on the property which the secretariat had agreed to assume along with the building.

Issuing the warrant for Torzi’s arrest last month, the Italian judge noted that Vatican prosecutors now contend that the secretariat’s purchase of the building— an investment of hundreds of millions —  was made outside of the department’s authority.

That argument by prosecutors potentially leaves Parolin responsible for the entire affair, but also offers the possibility that a Vatican court could rule the entire transaction was invalid.

In London, Mincione has contended repeatedly that he has acted appropriately in his dealings with the Vatican and with Torzi as the secretariat’s chosen representative for the building’s final purchase. 

In a suit filed in June 2020, Mincione asked that the High Court of England and Wales grant him declaratory relief against the Secretariat of State and rule he "acted in good faith” in his dealings with the Vatican. Mincione’s lawyers argue that the Holy See may be trying to nullify the sale of the building.

Bozzi’s appointment as a judge for the Vatican City tribunal will increase the court’s ability to parse the complicated legal arrangements of the London building’s purchase by the Secretariat of State, which included multiple layers of holding companies in Luxemburg, the Channel Islands, and the UK.

In addition to teaching a fourth year law course on real estate transfers, last year she published a scholarly article on “the renunciation between deed and agreement.”