Millions in damage due to the Vatican Bank’s refusal to grant credit

According to a witness, the so-called Vatican Bank IOR alone caused damage of 24 million euros by refusing the State Secretariat an urgently needed loan.

This became known on the 52nd day of the trial on Friday. Since the loan failed to materialize, the authority had to pay one million euros a month in loan installments and interest for almost two years in connection with a real estate transaction.

Vatican police investigating

The bank’s refusal was so incomprehensible and damaging that the Vatican police were commissioned to investigate their own bank to find out what the real reason for this behavior was. After 18 months, the State Secretariat finally received another, cheap loan with the help of the Vatican goods administration Apsa.

Substitute on the witness stand

The most important witness on the 52nd day of the trial was number three in the Vatican, the so-called substitute, Archbishop Edgar Pena Parra. His predecessor Cardinal Angelo Becciu is the most prominent defendant in the criminal case. Becciu is the first cardinal in church history to stand accused before a Vatican court.

Vatican was deceived

The day before, on the 51st day of the trial, Pena Parra had made it clear that the Vatican was apparently taken in by fraudsters in the loss-making real estate deal. Pena Parra spoke of a “deception”. The Vatican had acquired shares in an investment company for millions, which in reality only consisted of “empty boxes”.

Ultimately, the process is about the financing of a London commercial property, which was acquired by the Vatican State Secretariat from 2014 as an investment property for a three-digit million amount. It was later sold again at a heavy loss.

Pena Parra, who has worked in the State Secretariat since October 2018, was commissioned by the Pope to handle and exit the business after his predecessor Becciu was dismissed.

Signatures without authorization

The Curial Archbishop now explained in the process that the former head of administration, Archbishop Alberto Perlasca, had signed crucial documents without authorization and power of attorney. When he took over the management of the State Secretariat, he himself received no information from his predecessor. Such handovers when there is a change in office are not usual in the Vatican.

External help

In December 2018 there was a meeting with Pope Francis and external financial experts, Pena Parra continued. The Pope gave the instruction: “Start from scratch and lose as little money as possible.” In the end, the Vatican had to pay 15 million euros to get out of the deal.

In the criminal trial, which began in July 2021, nine other people have been charged in addition to Becciu. The proceedings deal with embezzlement, corruption, extortion, money laundering, fraud, abuse of office and forgery.

The “Institute for Religious Works” (Istituto per le Opere di Religione, IOR) is commonly referred to as the “Vatican Bank”. However, the IOR is only a bank in a limited sense. It does not offer some typical bank services such as the granting of loans. According to the statutes, the main purpose of the institute, which was founded in 1942, is the administration of capital, the proceeds of which are “intended for the works of the church and for Christian charity in all parts of the world”.