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Vati Leaks March 2013 Newsletter

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

David Leigh, Jean François Tanda and Jessica Benhamou
The Guardian

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.

Vatican property empire in London uncovered

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.

St. James Square, London

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.

Bernardino Nogara

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.

168 New Bond Street, London, owned by the Vatican


According to a poll cited in a ‘Globe and Mail’ report, the attendance at Quebec’s Catholic Church stood at 90 per cent before 1960 and had plummeted to just six per cent by 2008. That is an 84 per cent drop in attendance in 50 years. In the diocese of London, 42 Catholic churches - including half those in Windsor - closed between 2006 and 2008.

The Vatican’s Gay Priests


For residents of Rome, the sight of courting priests is hardly an anomaly. But a recent exposé is rocking the Catholic Church.

In the basement dining room of Le Mani In Pasta, a trattoria in central Rome, a young, glossy-eyed couple stare at each other across a table for two. They smile and blush over a private joke. There is no handholding or kissing, but they are clearly more than friends, even though they are both wearing dark shirts and the telltale white clerical collar.

For residents of Rome, the sight of courting priests is hardly an anomaly. The phenomenon is a well-known secret here, and one that was largely ignored until last weekend, when the Italian weekly magazine Panorama published a shocking exposé called “Le Notti Brave Dei Preti Gay,” or “Good Nights Out for Gay Priests.” Investigative journalist Carmelo Abbate spent 20 days undercover posing as the boyfriend of a man who ran in gay clerical circles, secretly videotaping the sexual escapades of three Rome-based priests. Abbate caught the priests on hidden camera dirty dancing at private parties and engaging in sex acts with male escorts on church property. He also caught them emerging from dark bedrooms in time to celebrate mass. In one post-coital scene, “Father Carlo” parades around semi-naked, wearing only his clerical vestments. Abbate’s “date” even had sex with one of the priests to corroborate the story. “This is not about homosexuality,” Abbate, who is not gay, told NEWSWEEK. “This is about private vices and public virtues. This is about serious hypocrisy in the Catholic Church.”

The exposé has touched a nerve within the Catholic community in Rome, but Abbate doesn’t believe that it will have any effect, especially given the Vatican’s other sex scandal. Yet unlike the pedophile-priest crisis, which has so far reached scores of dioceses in the United States and Europe, the gay-priest problem is—so far—an issue just for the Rome diocese on the Vatican’s home turf. Most priests in Rome have some affiliation with the Vatican, and Abbate says one of the priests caught on tape also gave mass in St. Peter’s Basilica. The Vatican says that the offending priests from Abbate’s story will be sought out and stripped of their collars. Cardinal Agostino Vallini, head of the Rome diocese, is in charge of purging the offending clerics, and he has called on all gay priests who cannot respect the basic tenet of celibacy to get out of the priesthood. “Priests who are living a double life have not understood what the Catholic priesthood is and should not have become priests,” he said in a statement responding to the Panorama expose. “Consistency demands that they be discovered. We do not wish them ill, but we cannot accept that because of their behavior the honor of all the other priests is dragged through the mud.” Vallini may have the right idea when it comes to punishing those who break priestly laws, but the church as a whole seems to find it difficult to differentiate its sex scandals—and to determine what role celibacy plays in either situation. In April, Vatican secretary of state Cardinal Tarcisio Bertone famously blamed gay priests for the pedophilia problem during a press conference in Santiago, Chile. “Many psychologists and psychiatrists have demonstrated that there is no relationship between celibacy and pedophilia,” he said. “But many others have demonstrated, I have been told recently, that there is a relation between homosexuality and pedophilia. That is true. That is the problem.”

The Vatican back-pedaled at the time of Bertone’s comments, admitting that 90 percent of sex-abuse cases do involve priests and adolescent boys, but changing the verbiage from “homosexual” to “same-sex attraction” when talking about the cases. But Abbate’s tell-all expose that launched the current scandal has nothing to do with the priest-to-young-parishioner relationship. In fact, the two sex scandals are vastly different. The gay priest problem is about celibacy, church law, and hypocrisy. The pedophile problem is about child abuse, criminal behavior, and abuses of power. Victims’ rights advocates, however, have noticed that the Vatican seems more focused on sexual orientation than sexual deviance, and they are furious. While clergymen spent years covering up rumors of child-sex abuse and protecting each other, they’re calling instantly for the ouster of gay priests. “Priests who are committing sex crimes against children and bishops who enable and conceal the crimes are the ones leading double lives,” says Barbara Blaine, head of Survivors Network for those Abused by Priests. “They are the ones who should resign.”


Priest burns picture of pope in church in protest at resignation

A Catholic priest set fire to a photograph of Benedict XVI in the middle of Sunday mass in northern Italy. The now Pope Emeritus’ first Sunday in retirement was marred by the actions of the clergyman in a petite medieval village on the border to France who accused him of deserting the church.

Father Andrea Maggi, 67, said the former pope was ‘like the Captain Calamity of the Concordia who had abandoned his ship’.

Parishioners in Castel Vittorio, a hilltop village of 350 inhabitants, in Liguria, were shocked when the priest set showed them a picture of the ex-Pope and then set fire to it with a candle. Father Maggi explained his actions by saying: ‘a shepherd shouldn’t abandon his flock’. Castel Vittorio mayor, Gianstefano Orengo, who was summoned to tackle the errant priest said: ‘It was a shocking gesture. I understand that Don Andrea is going through a delicate period from a psychological point of view’.

The local bishop said he was ‘mortified’ by the ‘reprehensible and grave disturbance of ecclesial communion. He said: ‘I am mortified by the actions of Father Andrea, who in other respects has proved a priest who is generous and sensitive in his pastoral conduct. ‘The gesture has caused confusion among the parishioners- many left the church.'

But Don Maggi remained defiant saying he ‘had done the right thing’. He told La Repubblica: ‘I had said to myself the day that he goes I will burn this’.

While other clergy claim to found the Pope’s retirement courageous, Don Maggi insisted: ‘I thought to myself, ‘’Are you the Pope or are you Captain Schettino of the Concordia who abandoned his ship? If eight years was enough of being Pope, he didn’t need to accept it. He created 90 cardinals; he wasn't some novice or ingenue, who didn't know what they were getting into’.

By Hannah Roberts and Sara Malm
Daily Mail

Photo of the Day

Words not in the Bible

These words are not in the world’s oldest Bibles;

Archbishop; beads; Bible; bodily assumption of Mary; cardinals; Catholic; Catholic church; Christmas; clergy-laity; confessional; cross; crucifix; Easter; everlasting fire; everlasting punishment; holy water; infant baptism; intercession of saints; Lent; Mass; pope; religion; rosary; sacraments; shrine; transubstantiation; Trinity.

Both everlasting fire and everlasting punishment appearing in modern Bibles today are 16th Century interpolations.


‘Our church is 200 years out of date and in need of a radical transformation … the church is tired. Our culture has grown old, our churches are big and empty and the church bureaucracy rises up, our religious rites and the vestments we wear are pompous’.

(Cardinal Carlo Maria Martini, August, 2012)

‘The road to hell is paved with the skulls of bishops’.

St. John Chrysostom (c. 390)
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