Secret Vatican property deals revealed

Pope Benedict XVIA Guardian report tells how the Vatican built a secret property empire using Mussolini’s millions.

Controversially, it includes a pact made with Mussolini to recognise his dictatorship in the years before the outbreak of WW2, when Mussolini sided with Hitler in an era which included an attempt to conquer and rule Europe.

The Pope also made agreements with Hitler’s Nazi government in 1933. Did they foresee a coming European conflict? Did they back the wrong side, morally and militarily? Whatever the answer is to this, they still managed to come out on top financially, it seems.

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

by David Leigh, Jean François Tanda and Jessica Benhamou

Behind Pope Benedict XVI is a porfolio of property that includes commercial premises on London’s New Bond Street.

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.


20 thoughts on “Secret Vatican property deals revealed

  1. How did that ever happen?

    It wouldnt surprise me if they have been secretly tithing to Pentecostal ministries, and receiving a tax-free 1000-fold increase on their money. The bastards.

  2. Did you read the important part?

    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.

    Of course, Bones thinks Hitler’s murder of Jews and ethnics was admirable, so the pope’s signing up with Italian fascism must have been OK.

    What was that about not being unequally yoked with Bellial?

    probably too deep for the three mouseketeers!

  3. You’re disgusting.

    The only one who would show any admiration would be your admiration of Hitler re the Pink Triangle and his treatment of gays.

  4. “Of course, Bones thinks Hitler’s murder of Jews and ethnics was admirable,”

    Haven’t seen that until now. That’s a truly disappointing comment Steve.

    Followed up in perfect tit for tat fashion though.

    We all need to get better at talking to each other.

  5. Of course if this was a Pentecostal Church, Steve would be whinging that it should be at Groupsects and that we’re all a bunch of moaners.

    I think you’ll find that many churches tied to state governments were the beneficiaries of shady deals in the past.

    Btw The Pope doesn’t receive a salary. John Paul II died with pretty much nothing to his name besides his favourite pair of shoes.

    Oh and how’s the Kong Hee trial going?

  6. If its true that the Catholic church accepted millions from Mussolini in return for recognising and giving legitimacy to his dictatorship, I would be the first to criticise.

    The wikipedia entry on Pope Pius XI gives a different slant on it however. Although Mussolini was eager for the legitimacy, the payment (~$100 million) was compensation for seizure of church property since 1860. Whether this was appropriate or excessive compensation I cannot say, but the church invested it extremely wisely. Later as Mussolini’s ambitions impinged on the church, the Pope denounced the persecutions and the pagan worship of the State.

    The Pope did make an agreement with the Nazis, I understand it was to ensure independence of the church and teaching of religion in schools. He also later denounced what was happening in Germany.

    The Pope being a head of state had to make judgments on who to make agreements with. Sometimes it is better to keep people inside the tent – where you might be able to influence them – than to throw them out of the tent and have no influence at all.

  7. Well I stand corrected, Q.

    I based my comment on a remark I seemed to recall, and was pretty mad about, by Bones on another thread where he said something about Hitler doing the Jews a favour by exterminating them. Maybe I got it wrong or out of context.

    However, in view of Bone’s abject apology a few weeks ago for his harsh behaviour, I’ll rescind my remark.

    Bones’ apology:
    I know I’ve behaved like a bull in a china shop at times, even being a satan (accuser) and I’ve wounded those around me, including you, Roundhouse. I’ve said some vicious and mean things to you on this site, and for that I am deeply sorry. Please forgive me for that.

    The same goes with Margot, Zorro, Zeibart and Steve who’s as tough as tough as nails. God is proud of you.

    Although I don’t agree with everything you believe, I still count you as my brothers and sister in Christ, even though I haven’t behaved like one.

    https://signposts02.wordpress.com/2012/09/21/what-christians-can-learn-from-muslims/#comment-38622

  8. Well I stand corrected, Q.

    No you don’t Steve…you don’t accept correction…you’ve proved that by adding the rest of the comment past what I excerpted…you’re too full of yourself to just acknowledge you were wrong and leave it at that…you have to justify yourself and then make another attack.

  9. Thanks, Greg, for pointing that out! I’m so glad that you’ve pulled me up on the one harsh remark I have made, which was a few days ago after some exchange on another thread, yet you have said not a dicky bird about the countless inflammatory remarks both you and Bones have made, without response from me.

    This is even since Bones made his apology, which is why I reprinted it.

    And you not only made a similar apology recently, but removed a number of heated posts and threads which featured your own bad temper, which you seem to revive recently with a flurry of blue language.

    I’m glad to see that you’ve got your priorities together.

  10. I couldn’t better it, Bones, so I reproduced it. That’s what Greg couldn’t grasp, of course! Was it copyrighted?

  11. My comments re nazis was to compare a relatively quick death by gassing compared to eternal suffering and torment and hellfire. It was also a response to what you consider justice ie it is just for your god to condemn most of humanity to the fires of hell forever.

    Personally i’d prefer a bullet in the back of the head.

  12. Steve I’m sorry if I upset you at times.

    My mum used to say I’d argue with the Lord.

    Only if He was wrong I used zo tell her.

    Peace to you.

  13. Show me this do called “flurry of blue language”…as I recall I have posted one ‘blue’ word of late…wanker! One word does not a flurry make Steve.

    And once again you demonstrate your inability to focus on your own issues bub having to drag up the past.

  14. I dont have an issue, Greg!i said my piece and moved on. You restated it and regurgitated it. It was for Bones to comment if he had an issue with it, but he didn’t. Why would he? I’m about four hundred heavy hits behind him!

  15. By the way, Greg, your ‘blue’ might not equate to my ‘blue’.

    Blues are relative.

    I’m pretty sensitive about light blue, but you seem to be OK with navy blue.

    I seem to remember one passage with at least three consecutive blues, not unlike a winter evening sky over a stormy sea.

  16. Bones,
    My comments re nazis was to compare a relatively quick death by gassing compared to eternal suffering and torment and hellfire. It was also a response to what you consider justice ie it is just for your god to condemn most of humanity to the fires of hell forever.

    Fair enough, so my remark was in context with a general site flow, but I may have misread it. Heat of the moment. Apology given, apology accepted. Both ways. Move on. Let battle continue!

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