The Guardian: How the Vatican built a secret property empire using Mussolini's millions

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  • AndersonsInfo

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

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

    Pope Benedict XVI 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.

  • Londo111


  • Band on the Run
    Band on the Run

    The Roman Catholic Church has been linked with finances and political government since its founding in the early centuries. I don't believe Peter founded it at all. Regardless, I see nothing wrong with money. They merely use laws and their considerable power for their benefit. I would give millions to see the art conserved.

    Most churches maximize their wealth. The Roman Catholics have never declared that they are transparent. When a church claims to be so open, its books should be open.

    I do know many Catholics who give to Catholic charities rather than to the dicoese or the Vatican.

    My born-in uprbring was that Roman Catholics were evil. I don't have a Catholic or Witness temperament Authority must be earned.

    B/c we were taught to hate Catholcisim, I believe we should respect them.

    In the past, the Vatican Bank was involved in currency fraud that affected millions of people. Many people lost everything they had. If this were a slush fund to protect pedophile priests, I would be upset.

    It seems that I am always referencing the NYT, they had a front page article about Vatican finances. It is almost impossible to understand b/c they don't use generally accepted accounting principles. They were the one of the first to create a double entry bookkeeping system. No other church or business uses the same standards. It is very byzantine. The article concluded that it is virtually impossibe to grasp their accounting systems. Examples were given but I don't recall. Experts believe their public accounting statements do not begin to touch their true wealth. If I heard correctly on TV, only a handful of men have access to the vast part of their portfolio.

    I do know that their bank came close to collapse several times. One would expect that with so many followers there would be some effort to make them transparent. My guess is that the Witnesses and Catholics are generally people who are drawn to authority.

    Did the local KH ever post its accounts? I can't recall. I would demand such statements -- but then I am not a member of these religions. Don't you feel that secrecy and mystery are part of these religons?

  • heathen

    I don't remember the local cong disclosing their bank statement but they seemed to always run in the red when it comes to money as during the MS meeting brother brow beater would remind everyone where the contribution box was and get all pushy about it . Never did like that guy . Now I know they got money from all this fracking going on around here but they claimed it was put in a safe place without showing any proof .

  • Band on the Run
    Band on the Run

    Me, too. In fact, I find that ushers in traditional churches are very tactful about the collection plate. Regular members put their money into envelopes so they have privacy. I decided to do automatic transfers to my church so I had nothing to place in the collection plate. The Witnesses are pretty bad about constantly complaining how there are no funds. A priest in my tradition would merely note that we give to what we value. If we don't church programs, it would be fine with the priest. They might wonder if they effective leaders. I try not to carry cash. No one has ever given me as much as a glance when I simply have no money.

    I always wanted to tie my giving to actual programs where I can see the books. The books are open. A complete stranger can view the posted financial statements. My Roman Catholic sister and many others in her parish are so disgusted by the church's response to pedophiles that they do not place money in the collection plate. They donate directly to charities that they have vetted.

    Also, the stewardship sermons have a collective what do we want quality. No one is the authority. We are not talked down to ever. In fact, we are encouraged to tithe. Encouraged, not ordered. We are told to try to commit a tenth of our incomes to any charity we choose. The church never asks for a 1/10th cut itself.

    I visited a large church here recently. One of those large fundamentalist churches. They made the Witnesses look holy. No one said "hello" to me. All first comers were shephered into a room. The minister and a financial advisor told us we must pledge 1/10th to the church. They actually handed out forms to first time visitors. There was no welcome to the parish. It was we want your checks and online account info. The financial advisor was there to help you starve better if you had no funds. I was shocked. Sometimes I try very hard to fit in and not be so New York. My mind kept screaming, "How much do you give" to the minister?" and "You make Jehovah's Witnesses seem Christian." I wish I had blurted it out. No one else said boo. You can see cults clearly if you are not born-in.

    A priest at a luxury church in Manhattan that had a magnificent building on the landmarks commission list, a real organ, and a professional choir, a club for professions with a sail boat. Regular church trips to the West Indies, Europe and the Holy Land privately remarked how times have changed. I see most people place dollars bills. He asked what we thought people give? I said $1, very confidently. He told me the actual figure was 50 cents.

    Although I value my local church very much, I find it hard to be generous after the Witnesses. I don't trust much. This is good and bad. I want all the expensive items but I don't tithe. I thought one tenth was not much money. When they give out charts for various salaries, I am stunned at how much I under contribute.

    Isn't it strange that we believe all churches were only interested in money. When I was very ill, several church staff gave me hours and hours of their free time. I need not be a church member. I am only alive today b/c of their help. Yet as a Witness I was constantly told how venal these people were. I was able to socialize with priests. They were normal humans. Yet I was absolutely terrified Jehover would stirke me dead when I entered St. Patrick's Cathedral as a tourist. It was a real struggle. Once I entered, though, I saw a wax figure of the WWII bad pope. I jumped and screeched my head off until I realized what it was.

  • heathen

    I pledge to never give a dime to any religion again. The WTBTS has some racket where they lend money rather than just use the money they have in donations to build KHs , why should people pay back money donated for the reason it's being used is why they gave it to begin with? Usually it was the electric bill was keeping them in the red but they would try and guilt you on the ,"mortgage," which was no time limit on it anyway. They get free labor to build the kh and still complain , I couldn't car less about the electric bill , they should have gone off the grid anyway with solar or maybe jehovah was going to charge for that as well

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