How the Vatican built a secret property empire using Mussolini’s millions

The Guardian

Papacy used offshore tax havens to create £500m international portfolio, featuring real estate in UK, France and Switzerland

Behind Pope Benedict XVI is a porfolio of property that includes commercial premises on London’s New Bond Street. Photograph: Alessandra Benedetti/Corbis

Few passing London tourists would ever guess that the premises of Bulgari, the upmarket jewellers in New Bond Street, had anything to do with the pope. Nor indeed the nearby headquarters of the wealthy investment bank Altium Capital, on the corner of St James’s Square and Pall Mall.

But these office blocks in one of London’s most expensive districts are part of a surprising secret commercial property empire owned by the Vatican.

Behind a disguised offshore company structure, the church’s international portfolio has been built up over the years, using cash originally handed over by Mussolini in return for papal recognition of the Italian fascist regime in 1929.

Since then the international value of Mussolini’s nest-egg has mounted until it now exceeds £500m. In 2006, at the height of the recent property bubble, the Vatican spent £15m of those funds to buy 30 St James’s Square. Other UK properties are at 168 New Bond Street and in the city of Coventry. It also owns blocks of flats in Paris and Switzerland.

The surprising aspect for some will be the lengths to which the Vatican has gone to preserve secrecy about the Mussolini millions. The St James’s Square office block was bought by a company called British Grolux Investments Ltd, which also holds the other UK properties. Published registers at Companies House do not disclose the company’s true ownership, nor make any mention of the Vatican.

Instead, they list two nominee shareholders, both prominent Catholic bankers: John Varley, recently chief executive of Barclays Bank, and Robin Herbert, formerly of the Leopold Joseph merchant bank. Letters were sent from the Guardian to each of them asking whom they act for. They went unanswered. British company law allows the true beneficial ownership of companies to be concealed behind nominees in this way.

The company secretary, John Jenkins, a Reading accountant, was equally uninformative. He told us the firm was owned by a trust but refused to identify it on grounds of confidentiality. He told us after taking instructions: “I confirm that I am not authorised by my client to provide any information.”

Research in old archives, however, reveals more of the truth. Companies House files disclose that British Grolux Investments inherited its entire property portfolio after a reorganisation in 1999 from two predecessor companies called British Grolux Ltd and Cheylesmore Estates. The shares of those firms were in turn held by a company based at the address of the JP Morgan bank in New York. Ultimate control is recorded as being exercised by a Swiss company, Profima SA.

British wartime records from the National Archives in Kew complete the picture. They confirm Profima SA as the Vatican’s own holding company, accused at the time of “engaging in activities contrary to Allied interests”. Files from officials at Britain’s Ministry of Economic Warfare at the end of the war criticised the pope’s financier, Bernardino Nogara, who controlled the investment of more than £50m cash from the Mussolini windfall.

Nogara’s “shady activities” were detailed in intercepted 1945 cable traffic from the Vatican to a contact in Geneva, according to the British, who discussed whether to blacklist Profima as a result. “Nogara, a Roman lawyer, is the Vatican financial agent and Profima SA in Lausanne is the Swiss holding company for certain Vatican interests.” They believed Nogara was trying to transfer shares of two Vatican-owned French property firms to the Swiss company, to prevent the French government blacklisting them as enemy assets.

Earlier in the war, in 1943, the British accused Nogara of similar “dirty work”, by shifting Italian bank shares into Profima’s hands in order to “whitewash” them and present the bank as being controlled by Swiss neutrals. This was described as “manipulation” of Vatican finances to serve “extraneous political ends”.

The Mussolini money was dramatically important to the Vatican’s finances. John Pollard, a Cambridge historian, says in Money and the Rise of the Modern Papacy: “The papacy was now financially secure. It would never be poor again.”

From the outset, Nogara was innovative in investing the cash. In 1931 records show he founded an offshore company in Luxembourg to hold the continental European property assets he was buying. It was called Groupement Financier Luxembourgeois, hence Grolux. Luxembourg was one of the first countries to set up tax-haven company structures in 1929. The UK end, called British Grolux, was incorporated the following year.

When war broke out, with the prospect of a German invasion, the Luxembourg operation and ostensible control of the British Grolux operation were moved to the US and to neutral Switzerland.

The Mussolini investments in Britain are currently controlled, along with its other European holdings and a currency trading arm, by a papal official in Rome, Paolo Mennini, who is in effect the pope’s merchant banker. Mennini heads a special unit inside the Vatican called the extraordinary division of APSA – Amministrazione del Patrimonio della Sede Apostolica – which handles the so-called “patrimony of the Holy See”.

According to a report last year from the Council of Europe, which surveyed the Vatican’s financial controls, the assets of Mennini’s special unit now exceed €680m (£570m).

While secrecy about the Fascist origins of the papacy’s wealth might have been understandable in wartime, what is less clear is why the Vatican subsequently continued to maintain secrecy about its holdings in Britain, even after its financial structure was reorganised in 1999.

The Guardian asked the Vatican’s representative in London, the papal nuncio, archbishop Antonio Mennini, why the papacy continued with such secrecy over the identity of its property investments in London. We also asked what the pope spent the income on. True to its tradition of silence on the subject, the Roman Catholic church’s spokesman said that the nuncio had no comment.


2 misli o “How the Vatican built a secret property empire using Mussolini’s millions

  1. The Vatican stirred a dotmilapic maelstrom yesterday when it announced that it had lifted the excommunication of four rebel bishops, including the British Holocaust-denier Richard Williamson.The decree repealing the 20-year-old Vatican punishment, imposed after the traditionalist French Archbishop Marcel Lefebvre consecrated the four as bishops in defiance of the Pope’s authority, was signed on Wednesday by Cardinal Giovanni Battista Re, the Prefect for the Congregation of Bishops. This coincided with the broadcast on Swedish state television of an interview with Mr Williamson in which the breakaway bishop denied the Holocaust.”I believe there were no gas chambers… I think that 200,000 to 300,000 Jews perished in Nazi concentration camps but none of them by gas chambers,” he told SVT television in an interview that was recorded in Germany last November. “There was not one Jew killed by the gas chambers. It was all lies, lies, lies!”Mr Williamson, 68, who is the rector of the Seminary of Our Lady Co-Redemptrix in La Reja, Argentina, is no stranger to controversy. He has endorsed “The Protocols of the Elders of Zion”, a notorious anti-Semitic forgery, and claimed that Jews are bent on world domination. He supports conspiracy theories on the assassination of President Kennedy and the attacks on the Twin Towers in New York, and has accused the Vatican of being under the power of Satan.

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  2. As more details of the Vatileaks’ imlirgboo emerge, I am struck by the phrase (albeit grammatically incorrect) coined by former Speaker of the US House of Representatives Tip O’Neill some years ago: All politics is local . Others have stated that the current issue roiling the Vatican and Italy in general is a uniquely Italian Story’ with overtones of power broking, covert operations, intrigue in high places, spying and backroom deals. Even the Holy Father is reported to have made some comments about this being an affair for Italians Vatican intrigue has been a fruitful subject for writers of fiction for a long time (think: Morris West’s The Shoes of the Fisherman inter alia ), born out of events of the past and the less than stellar in religious terms performance of various incumbents of the Throne of Peter in times past. One has only to mention the Borgias or a Machiavelli to set the scene and conjure up images of nepotism, worldly power, conspiracy, greed and ambition.While the Vatican States are long gone and Vatican City remains one of the smallest – if not the smallest – sovereign independent states in the world, in Italy the Church and local politics are inextricably bound. The practice of the Faith may have declined and churches may be almost empty on Sundays, but the ordinary Italian still has pride in Rome being the center of Catholicism and a force to be reckoned with in political terms – if not in the conduct of daily life.While the Holy Father, with a Teutonic bent towards orderliness and precision, might have looked askance at the muddle that is often Italian life, he has lived the Italian and Roman scene for many years and has regard for some of its aspects. When asked if he would have preferred a center of Catholicism, based in the orderliness of his native Germany, to the Roman model, he expressed horror. It would be a disaster! he replied.He went on to praise the Italian bent of letting things develop, of not acting hastily (or at all ) the lascia fare! one often encounters in Italy – which can be so frustrating to foreigners. That Mussolini’s most-remembered accomplishment is that he made the trains run on time… is an indication of what one should expect in Italy.The corvi’ (usually translated as crows’ but a more apt translation would be ravens’ – which are known for appropriating what does not belong to them ) aver that they want to protect the Pope from the faithless servants’ surrounding him. The Holy Father would disagree that his closest collaborators are agin him’ and has stated as much.So, what does that leave? As typical of Italian life, politics and religion intertwine. The me9nage includes names like: Sodano, Don Verze9, Bagnasco, Il Toniolo, Boffo, IOR (the Vatican Bank’), Gotto Tedeschi, Vian, Viganf3, Scola and – last but not least – il Cavaliere himself: Silvio Berlusconi. The Dan Browns of the future should have a field day with this Regardless, the Holy Father is still in charge, has the Holy Spirit to guide him and yes, we should keep him in our prayers. Upon election he worried about having the strength to see off the wolves attacking the Church. Now it is the corvi’ the ravens. Maybe he needs a good cat in the Apostolic Palace!

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