A lengthy memo authored by the second-most senior official at the Vatican’s Secretariat of State has shed new light on the scandal-plagued department’s financial affairs, and on the role of Pope Francis in the final stages of the Vatican’s controversial London property investment.
It is now clear that Pope Francis directed Vatican officials in 2019 to pay a businessman millions of dollars, to extricate the Vatican from its complicated property transaction, which by that time had gone somewhat sideways.
That businessman, Gianluigi Torzi, is accused of committing fraud and extortion to get the payment.
Some commentators have suggested that the pope’s involvement in the deal changes the narrative — that a papal approval vindicates Torzi and others on trial for financial crimes in Vatican City. But does it?
In April 2021, Archbishop Edgar Peña Parra submitted a lengthy document to Vatican investigators outlining what he found when he arrived in the Secretariat of State as sostituto in October 2018. The archbishop’s memo begins right as the department was finalizing the purchase of the now-infamous London building in a deal which triggered the indictment of ten people last July.
Most notably, Peña Parra’s account confirms Pope Francis was the one who ultimately authorized an extra Vatican payment of millions of euros to Gianluigi Torzi, who acted as a broker when the Vatican bought a London building, and then required a huge payment before he handed over the keys of the building, so to speak.
Torzi has been charged with extortion, fraud, and money laundering over his part in the deal, but he has insisted that everything he did was approved by senior Vatican officials every step of the way.
And he has produced documents appearing to prove officials at the Secretariat of State, including the prosecution’s key witness, Msgr. Alberto Perlasca, Cardinal Pietro Parolin, and Peña Parra himself, signed off on plans which saw him retain control of the building even after the Vatican paid some 350 million euros to buy it.
Confronted with that reality, Pope Francis, it seems, was presented with two options: take legal action against Torzi, or pay him off. The pope chose the payoff, according to Peña Parra.
There’s nothing illegal about the pope’s decision, but the news has caused a stir among those following the details of the scandal and trial.
Some have concluded that, given the pre-trial arguments between prosecutors and defense lawyers about the pope’s involvement in the investigative phase, the prosecution’s case against the Secretariat’s former officials and advisors is on the verge of collapse.
No one thinks the Vatican got a good deal on any of this. And it does look like some naive curial officials got taken for an expensive ride. But if the pope signed off on the payout, everything must be legal, right?
Paying Torzi to get out of a bad deal is not illegal. But how did the Vatican end up in such a bad deal? That story is where the crimes might have happened.
Torzi has long argued that the accusations of fraud made against him can’t stick, because everything he did was approved up and down the chain of command in the Secretariat of State - right up to the pope.
But the charges facing various former curial officials, including Peña Parra’s predecessor Cardinal Becciu, have little to do with Torzi’s endgame — they’re about how the Vatican ended up in a position to be (allegedly) swindled by a businessman with a checkered past in the first place. And they’re about the general way of doing business at the secretariat.
The London deal is what kicked off the investigation and led to the current trial. And its details have got the lion’s share of limited wider media interest in the whole affair. But the transaction Pope Francis apparently greenlit in early 2019 is only a small part of a much bigger train of events, and it is, at most, incidental to the bulk of the criminal allegations being brought to trial.
In his memo, Peña Parra describes the London deal as just one of a series of instances where Perlasca and other secretariat officials made ruinously bad deals “aimed at financial speculation and not at the conservative and safe preservation” of Vatican funds — and then stonewalled or attempted to bamboozle him to cover their tracks.
Several of those transactions feature in the prosecution's 300-page indictment document, including one instance in which the secretariat was duped into investing millions into a South Carolina highway project that didn’t even exist.
The bad deals might have been detected earlier, or even avoided completely, if officials in the Secretariat of State didn’t have suspect arrangements with outside financial institutions, which paid them to steer Vatican business their way. But Fabrizio Tirabassi, a Vatican investment manager charged with corruption, embezzlement, abuse of office, and fraud, had exactly that kind of deal.
The situation might also have been helped had Vatican financial intelligence authorities kept a sharper eye on the secretariat’s affairs. Perhaps officials were distracted by other things — like René Brülhart, the former president of the Vatican’s Financial Information Authority, who had a lucrative side deal advising the Secretariat of State on its investments, despite his day job running an agency meant to inspect them.
Peña Parra’s experience on arriving at the Secretariat of State tallies, almost exactly, with what has been reported about - and denied by - the secretariat for years: accounting distortions, coordinated obstruction of oversight, refusal to cooperate with Vatican financial regulators.
His frustration that a papal-ordered audit was repeatedly spiked by his own staff is just a taste of what officials at the Secretariat for the Economy and the Office of the Auditor General have been facing for years — it was his predecessor Becciu who first moved to block it.
It was also, according to years of reporting, Becciu and his team (including Perlasca) who deployed “creative bookkeeping measures” to disguise 200 million euros worth of loans which staked the secretariat’s initial investment with Raffaele Mincione, who came to eventually sell them the building.
That accounting sleight-of-hand was specifically banned under Vatican regulations approved by Pope Francis, and its use constitutes a possible crime in itself, totally unrelated to events involving Torzi.
Indeed, the pope’s intervention in the Torzi deal touches hardly any of the numerous questions — and criminal charges — facing Cardinal Becciu and stemming from his time in Perlasca’s job.
Apart from the accusations that he funneled Church funds to members of his own family, and lingering questions about “classified” payments to a small Australian company at an oddly significant time, Becciu is also facing charges related to his employment of Cecilia Margona as a kind of private intelligence agent.
Marogna, who is also charged with embezzlement, has said publicly that, in addition to supposedly working to secure the release of kidnapped religious sisters, Becciu tasked her with compiling dossiers on the private moral failing of other curial officials.
Perlasca has told prosecutors, on camera, that the cardinal instructed him to wire hundreds of thousands of euros to accounts belonging to Margona, without any explanation about what the funds were for, or who they were going to. He’s also stated on the record that Becciu lost his temper with him when he failed to delete evidence of the transactions from secretariat records.
Becciu continued to order Perlasca to pay Marogna even after he left the Secretariat of State, and to keep the transfers strictly confidential, including, it seems, from his successor in office, Peña Parra.
The narrative of Peña Parra’s memo to prosecutors certainly appears to lay bare the kind of naive, “just pay the man” attitude by senior Vatican officials, including popes, which enabled a culture of corruption to thrive.
What it doesn’t do is clear the charge sheet against those on trial. If anything, it raises more questions. Some of these might be most usefully addressed to Pope Francis, whose involvement in the denouement of the London deal is, at the very least, embarrassing.
But the most obvious question of all is probably best aimed at the prosecutors themselves:
In acting as their star witness, Perlasca has also emerged as the nexus of many of the crimes outlined in their indictment document. So why isn’t he facing charges himself? The answer, if there is one, may be about to emerge.
If the trial ever gets underway.