Galantino said that the Vatican’s London investments had been hit by a drop in the value of the British pound sterling, the uncertainty of Brexit, and the coronavirus crisis.
Asked what the building at 60 Sloane Avenue was currently worth, the bishop said: “It is difficult to define the value of the property. Especially in this moment of the pandemic. And then, it is true that a house or a property has its own objective value. However, in the end, the market price and the buyer’s offer also affect its value.”
“It should be noted that the SdS, between the end of last year and the beginning of this year, obtained a new planning permission which evidently positively affects the value of the property.”
He conceded that APSA had a role in the Secretariat of State’s efforts to repay the loan taken out on the property.
“In truth, the SdS had already obtained from a commercial bank the availability of a loan to pay off the particularly expensive mortgage, burdening the London building,” he said.
“However, before receiving it, it also wanted to ask APSA and the Secretariat for the Economy (Spe) to intervene to pay off the loan. APSA, in close collaboration with the SdS and the Spe, after having made the necessary assessments, coordinated the necessary financing, which thus allowed the SdS to free itself from the exorbitant interests and to bring the debt back to the Holy See.”
“It was an important step to bring order to this investment and to exclude financial structures or people outside the Vatican from ownership of the building. It is also for this reason that the new ‘sostituto’ of the SdS had decided to pay Mr. Gianluigi Torzi.”
The new “sostituto,” or second-ranking official at the Secretariat of State, was Archbishop Edgar Peña Parra, who replaced Cardinal Angelo Becciu in the post in 2018. Becciu resigned his rights as a cardinal last month amid accusations of financial impropriety, which he denies.
Torzi, an Italian businessman, was arrested by Vatican officials in June and released on bail after being questioned about his role in the London deal.
Galantino observed that there was no supervisory body overseeing the Secretariat of State’s choice of consultants. He said he trusted that the investigation would reveal whether consultants were employed in “bad faith.”
“A thief can enter my house because he is ‘good’ at disarming the alarm system or because someone gives him the key or opens it from the inside,” he said.
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The bishop identified what he called a “double error” in the Secretariat of State’s financial practices.
He said: “The first is to entrust, in full confidence, discretionary mandates for investments to administrators, without control by the SdS. The results of this way of doing things clearly constitute an error. And the effects, in addition to any losses, have led to a very high reputational cost.”
“The second error is that up to now the SdS was subjected to few reporting obligations, nor was it required to ask for any authorization for acts of extraordinary administration, as other dicasteries, which must request the ‘nihil obstat’ of Spe, are required to do.”
The bishop suggested that these errors were being corrected.
“In short, now there are more eyes looking at operations and checking procedures,” he said.
Galantino confirmed that the Vatican was taking steps to centralize investments under APSA, in order to ensure “a more prudent, transparent and professional management.”