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

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

David Leigh, Jean François Tanda and Jessica Benhamou
The Guardian Monday 21 January 2013 20.23 GMT



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.






















Source:-
http://www.guardian.co.uk/world/2013/jan/21/vatican-secret-property-empire-mussolini