“The papacy was now finan­cially secure. It would never be poor again.”:

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, Mon­day 21 Jan­u­ary 2013 15.23 EST

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.

...

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.

...

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.

@Pterrafractyl–

Good find! There is a good account of the gen­e­sis of the Vat­i­can finan­cial engine in AFA #17.

This story, like R. Wilson’s find about the Quandt com­pany and the Goebbels fam­ily, has pro­found links with the Bor­mann milieu.

Best,

Dave Emory

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