Broker blames Vatican’s ‘irrational’ choices for London losses

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VATICAN CITY — One of the leading figures in the Vatican’s failed real estate venture in London testified Monday that the Holy See would have made a profit on his valuable investment had it not withdrawn his money from a fund prematurely.

Raffaele Mincione, a London-based fund manager, said it was an “irrational” move by a client who should have known.

Mincione broke two years of silence by testifying in Vatican criminal court, where he and nine others are charged with a host of financial crimes linked to the Vatican’s 350 million euro project to transform a former Harrod warehouse in luxury apartments.

Prosecutors have accused Vatican brokers and officials of defrauding the Holy See of tens of millions of euros in commissions and then extorting 15 million euros from the Vatican to take control of the London property. Mincione and the others deny wrongdoing.

Mincione had never agreed to be questioned before by Vatican prosecutors, fearing the same fate for another London-based broker who showed up during the investigation phase for questioning and ended up jailed in the Vatican barracks for 10 days without charge.

Mincione’s testimony was therefore new to prosecutors and the court and amounted to a practical lesson in high finance: the commissions, fees and risks that are normal in complex financial instruments, as well as the multi-layered regulatory controls and internal and external controls that are designed to ensure that offers are legitimate.

He told the court that after the Vatican scandal broke in 2020 with prosecutors’ accusations of a vast fraud he allegedly initiated, his firm hired PriceWaterhouseCooper to conduct a thorough forensic audit of the deal. .

“There wasn’t a penny missing,” Mincione said. “There has not been a single action that has not been confirmed. There has not been a single expert report deemed incongruous.

Mincione said he became involved in the deal when Credit Suisse, where the Vatican had invested some 200 million euros, asked him to assess a potential deal in an Angolan offshore oil company. Mincione had worked on deals involving Russia’s Gazprom and Brazil’s Petrobras, among others, and had been sought out because of his expertise in the area.

After extensive due diligence, Mincione’s team advised against the Angola deal. But he said Credit Suisse and the Vatican Secretariat of State then asked him to manage the money that had been set aside for the project. Although he has no obligation to inform the Vatican of his decisions as a fund manager, he said he designed a fund that would invest half in real estate – Harrod’s warehouse – knowing that the Vatican was already comfortable investing in expensive properties in London.

In 2016, with Brexit, the Athena fund took a hit and lost money. But Mincione showed the court on Monday a graph showing that if the Vatican had not pulled out in 2018, before the normal five-year “lockdown” obligation, it would have made a profit of 20 million euros.

“I was puzzled when they asked to leave,” he told the court. If the Vatican had remained in the fund, he said, “there would have been no loss.”

He said that based on Credit Suisse’s profile, the Vatican was considered a “professional” investor: a sovereign state that, unlike an individual investor, “knows what it is doing and could lose money.” money… but has the structure to face any type of situation. »

But he said that in his dealings with the Vatican “everything was the opposite of everything else. It was irrational. »

Eventually, the Vatican paid Mincione 40 million euros to take control of the property, only to hand it over to another broker who is accused of then extorting 15 million from the Vatican to get the property back.

“I didn’t want to sell the palace. I wanted to keep it and grow it,” Mincione said, saying the opportunity he presented to investors was “golden”.

The defendants face jail time and damages if found guilty. As things stand, the Vatican has managed to persuade Switzerland to preemptively seize 50 million euros from Mincione’s assets.

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