Vatican built up property empire using Mussolini's millions

Church built up a property empire using cash originally provided by the Italian dictator

PUBLISHED : Wednesday, 23 January, 2013, 12:00am
UPDATED : Wednesday, 23 January, 2013, 3:48am


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 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 snowballed, using cash originally handed over by Benito 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 £500 million (HK$6.14 billion), including premium London properties.

A surprising aspect is the lengths to which the Vatican has gone to preserve secrecy about the Mussolini millions. Its holdings came to light only after a probe by The Guardian.

The St James's Square office block was bought by a company called British Grolux Investments, which also holds the other UK properties. Published registers 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. The Guardian sent them letters who they acted for. They went unanswered. British company law allows the true beneficial ownership of companies to be concealed behind nominees in this way.

But research reveals the truth. The files disclose that Bitish Grolux Investments inherited its entire property portfolio after a reorganisation in 1999 from two companies called British Grolux and Cheylesmore Estates. The shares of those firms were in turn held by a company based at the address of the JPMorgan bank in New York. Ultimate control is recorded as being exercised by a Swiss company, Profima.

British wartime records from the National Archives complete the picture. They confirm Profima as the Vatican's 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 more than £50 million from the Mussolini windfall.

Professor 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."

The Mussolini investments in Britain are controlled, along with its other European holdings and a currency trading arm, by a papal official in Rome, Paolo Mennini. The assets of Mennini's special unit exceed €680 million (HK$7 billion).