Friday, January 25, 2013

Revealed: The Vatican’s secret London property portfolio bought with Mussolini’s millions

Riches: The Vatican, headed by Pope Benedict XVI, controls a property portfolio worth £570 million, including several expensive properties in London The Catholic Church owns a number of luxurious London properties as part of a property empire originally funded by fascist dictator Mussolini, it has been claimed.

The Vatican has used an offshore company structure to build up its portfolio of expensive properties now worth around £560 million. 

Investment in international property was initiated by the church when Mussolini afforded it a huge windfall in 1929 in return for papal recognition of his fascist regime. 

Included in the Church's London-based portfolio is 30 St. James's Square, which was purchased for £15 million in 2006 and houses investment bank Altium Capitol. 

The portfolio also includes the premises of upmarket jewellers Bulgari in New Bond Street. 

Also included in the valuable collection are properties in Coventry, Paris and Switzerland. 

 The St. James's Square block was bought by the company British Grolux Investments Ltd, according to a report in the Guardian. The company's true ownership is not disclosed in records at Company's House, but Reading-based accountant John Jenkins, who is the company's secretary, said that it was owned by a trust. 

Mr Jenkins however said that he was not 'authorised' by his client to provide further information. 

 British Grolux Investments Ltd's two nominee shareholders are listed as John Varley, former chief executive of Barclays Bank and Robin Herbert, another prominent Catholic banker. 

According to the report, British Grolux Investments inherited the property portfolio from two corporate predecessors, British Grolux Ltd and Cheylesmore Estates, after a company reorganisation in 1999. 

Shares in these companies were traced to a Swiss company known as Profima SA, the Vatican's own holding company. 

Historic files form Britain's Ministry of Economic Warfare confirmed the company's attachment to the Vatican, accusing it of 'engaging in activities contrary to Allied interests' during the Second World War. 

The British previously considered blacklisting the company at the end of World War II and described Bernardino Nogaro, the Pope's financier, as engaging in 'shady activities'. 

Nogaro was accused by officials of trying to transfer shares from two Vatican-owned properties in France to the Swiss company, as well as earlier trying to move Italian bank shares to Profima SA. 

Records from 1932 reportedly show that Nogaro founded an offshore company to hold assets that he was buying. 

According to one expert, the Mussolini investment was crucial to the Church. Cambridge historian John Pollard said: 'The papacy was now financially secure. It would never be poor again.' 

A Council of Europe report analysing the Vatican's financial controls last year found that Paolo Mennini, a papal official, controls a special unit, the APSA, which oversees assets exceeding £570 million. 

The Vatican's London representative, archbishop Antonio Mennini, refused to comment. 

The Catholic Church owns approximately 1,100 properties in total, including shopping centres and residential properties, worth around nine billion Euros. 

Italian Prime Minister Mario Monti is planning to demand that the Vatican pays taxes on non-religious properties this year, saying the rules will comply with European law. 

Currently, church-owned properties are exempt from tax if any part of the building is used for non-commercial purposes, such as the inclusion of a small chapel. Some 130,000 people signed an online petition for the church's exemption status to be overturned. 

The annual cost could of the additional tax could be to 720 million euros (£598m), according to municipal government bodies. 

In 2010 the EU opened an investigation into whether tax breaks enjoyed by some Church properties in Italy could be classed as illegal state aid. 

Moneyval, the Council of Europe’s monitoring body for money laundering and terrorism financing, said last year that the Vatican is making progress in complying with international standards on financial transparency. 

But the body, whose recommendations are used to decide whether a nation should be included on the white list of countries complying with international standards on financial transparency, said the Vatican needs to do so. The report recommended that the Vatican bank IOR should be independently supervised. The IOR has been at the center of several financial scandals in recent years. 

Paolo Cipriani, director general of the bank, and its former head, Ettore Gotti Tedeschi, were placed under investigation by Italian prosecutors in 2010 for allegedly omitting data in wire transfers from an Italian account. Prosecutors seized 23 million euros from a Rome bank account registered to the IOR amid suspicion of money-laundering violations, as part of the probe. 

The Italian investigation triggered calls to bring the city-state in line with European Union financial rules and become more transparent.