In 2012, private bankers at Credit Suisse arranged a meeting at their Canary Wharf offices in London that required even more discretion than usual. There a representative of one of their most secretive clients sat down with a man claiming to be able to perform miracles with money.
The client, an ultra-high net worth European account, had been studying an investment into a risky oil project in Africa, and the stylish Italian financier was there to offer his expert advice.
After a year of deliberations the Italian had returned with his opinion. The oil investment would not be profitable, but instead he could put a new, far more lucrative opportunity on the table: selling the client a stake in his own luxury property development in one of London’s most exclusive neighbourhoods.
By 2014 a total of $200m had been wired from accounts at Credit Suisse and Banca della Svizzera Italiana (BSI), a Lugano-based private bank, to the Italian financier’s holding company in Luxembourg.
The ultra-high net worth client was none other than the Secretariat of State for the Vatican — custodian of hundreds of millions of charitable donations from the Catholic faithful around the world for the poor and needy.
As a result of the investment, the Secretariat was now the part owner of a scheme to build 49 luxury apartments in London’s Chelsea — a speculative development plan that was made even riskier after Britain’s vote to leave the EU in 2016 sent shivers through the capital’s prime real estate market.
This month cardinals were left stunned when the Vatican’s own police raided the offices of the Secretariat — the central bureaucracy of the Holy See — to seize financial documents and computers, while five members of staff were suspended.
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That same week Pope Francis drafted in Giuseppe Pignatone, one of Italy’s most feared anti-mafia judges who helped bring down the capo of the Sicilian Cosa Nostra, Bernardo Provenzano, as head of the Vatican’s prosecution service.
The Vatican has declined to comment on why it staged the unprecedented raid on its own offices beyond a statement that it is probing suspicious financial transactions “carried out over time”.
The Financial Times has been able to establish through interviews and financial documents that the investigation is focused on how the Vatican Secretariat entered into a complex London real estate deal that was blown off-course by Brexit.
The deal, which saw the Secretariat buy a minority stake in 60 Sloane Avenue in Chelsea through an offshore structure of funds and companies, realised £138m in profit for Raffaele Mincione, the Italian former banker and family office manager who put the deal together and managed it on the Vatican Secretariat’s behalf.
Last year, with the UK luxury property market shaken by political uncertainty, the development was forced to refinance its debts with a London hedge fund. In November 2018 the Vatican Secretariat issued a demand to Mr Mincione to buy the Chelsea building outright — setting in motion the events that would lead to the police raids at the heart of the Holy See this month.
The Vatican raid, insiders say, is a rare public glimpse of a fierce battle inside the Holy See, with a faction of cardinals resisting attempts by Pope Francis to sort out and centralise its sprawling finances after decades of scandals and embarrassment for the Church.
The Secretariat’s bet on London real estate was made with funds held away from the Vatican bank, the Institute for Religious Works, which since 2013 has published an annual report of its €5.3bn of assets in an effort to show progress after past money laundering cases.
In a statement, Mr Mincione’s investment company WRM said the Vatican Secretariat had been advised in all of its dealings with the fund by Credit Suisse, and all its transactions with the Secretariat were transparent and audited.
“We have no inside knowledge of these investigations or the circumstances that led to them. We are secure and confident in the knowledge that no wrongdoing or improprieties were conducted by the WRM group or any of its companies,” it said. Credit Suisse declined to comment.
Details of the London property deal raise questions over the actions of Giovanni Angelo Becciu, now a cardinal and at the time of the investment the substitute for general affairs of the Secretariat, its second highest ranking official and in effect chief of staff to the pope.
It was in this role, which made him one of the most powerful figures inside the Holy See reporting daily to Pope Benedict and later Pope Francis, that Cardinal Becciu signed off on the investment after meeting Mr Mincione at the Vatican. Cardinal Becciu, through his office, declined to comment.
Mr Mincione was not the typical company that a man of the Church such as Cardinal Becciu might be expected to keep. Born in Pomezia, 30km outside the centre of Rome in 1965, Mr Mincione moved to London in the 1980s, where he worked selling bonds and derivatives in various investment banks and developed a reputation among his colleagues as something of a playboy.
Having briefly attracted British press attention for dating the model Heather Mills in the early 1990s after meeting her in the London nightclub Stringfellows, ex-colleagues said Mr Mincione showed a penchant for taking large, risky bets. “He made a lot of money, and spent a lot of money,” says one.
During the Russian financial crisis of the late 1990s he used his bonus money to buy up Gazprom bonds at distressed prices, making several million pounds in profit when they were eventually paid out at full value.
He hit the British press again after buying a large period house in London’s Knightsbridge for what was reported as a knockdown price of £18m in 2009. He commented to a newspaper that “in a very uncertain time there is no bargain”.
