The sostituto of the Secretariat of State faced tough questions in a London court last week, testifying in a lawsuit filed by the Vatican department’s former investment manager, Raffaele Mincione, in which attorneys argued that Vatican officials had made ethical breaches as they managed investment projects.
From the witness stand, the papal chief of staff denied being “a liar,” or making his testimony up as he went along.
But Archbishop Edgar Peña Parra admitted to signing off on a five million euro invoice he knew to be “completely fictitious” and told lawyers: “You said that I was not honest. I accept that.”
“You said that was a problem, but for us it was a solution,” the archbishop told High Court of England and Wales July 4, when asked about why he agreed to sign off on millions of euros in alleged extortion payments, as part of the now-infamous London property deal.
—
Archbishop Edgar Peña Parra appeared before the High Court of England and Wales July 4 to answer questions about his role in separating the secretariat’s investment from Mincione, who managed some 200 million euros of borrowed money for the Vatican from 2013 until 2018, when Peña Parra replaced Cardinal Angelo Becciu as sostituto. His predecessor went on to be convicted of financial crimes by a Vatican City court, alongside Mincione.
But Peña Parra repeatedly told the London court last week that the secretariat had been the “victim of serious fraud.”
—
While the substance of the London’s lawsuit concerns Mincione’s dealings with the Secretariat of State, Mincione’s actual involvement in the case was barely mentioned during a hearing Thursday.
Instead, much of the questioning Peña Parra faced concerned the Vatican’s dealings with Gianluigi Torzi, a businessman appointed by Peña Parra to broker the purchase of a London building from Mincione.
Torzi was convicted in Vatican City of extorting the Secretariat of State from millions for control of the building. But before being appointed to represent the Vatican in dealing with Mincione, the two men worked together on several unprofitable ventures, including using Vatican money, leading Mincione to file a criminal complaint against Torzi in Roman court.
Peña Parra was also questioned at length over a long memo he prepared in 2020 on the state of the secretariat’s administrative section, responsible for departmental financial affairs and overseen by him.
The archbishop said the memo was drafted in the first months of 2020, and indicated it was completed by February and given to Pope Francis, but the final version was signed by him in June when a “declassified” version was handed over to Vatican City prosecutors.
Peña Parra was also quizzed about the maneuver by Torzi to restructure the shares of a Luxembourg holding company through which ownership of the London building was meant to pass from Mincione to the Vatican via Torzi.
Instead of conveying full ownership, Torzi passed the Secretariat of State 30,000 ordinary shares but retained the 1,000 voting shares which controlled the company and therefore the building — he then demanded millions in exchange for control of the company and the building.
According to the archbishop, Torzi took control of the building after his plan was approved “without authorization” by his then deputy, Msgr. Alberto Perlasca, and then approved after the fact by Peña Parra on the basis of legal advice the archbishop called “a monument of lies.”
The sostituto said Torzi then threatened to sell the building out from under the Vatican unless he was paid.
“Mr. Torzi wanted to do only what he wanted,” Peña Parra told the court, and said there were only two possible ways of resolving what he termed the “unfortunate situation” with Torzi, but which Vatican City prosecutors called fraud and extortion.
The first option, the sostituto said, was to pursue legal action against Torzi, and the second was to, in effect, pay him off with the sum of 15 million euros.
The archbishop told the court he opted for the second choice on the advice of a group of “real estate experts” including Luciano Capaldo, a former business associate of Torzi’s, whom Peña Parra also used as a go-between with an external contractor to conduct electronic surveillance.
Mincione’s lawyers also scrutinized the way in which payments to Torzi were agreed and made, as they argued that Peña Parra’s department was not a reliable narrator of its own business dealings.
Peña Parra told the court that a summary of transactions with Torzi was included in his 2020 memo, prepared for the pope and then passed to Vatican prosecutors, and that it explained that Torzi initially demanded 10 million euros for control of the building, but eventually settled for the sum of 5 million.
That report was, he said, drafted in a spirit of “full cooperation and transparency.” But the archbishop then struggled to respond coherently when asked why his version of events, as presented to the pope, did not mention an additional 10 million paid by the secretariat to another of Torzi’s companies.
Peña Parra accepted the additional payment had been made on his instructions as part of the decision to pay Torzi off and gain full control of the building. The archbishop then told the court that his account of events in the memo to the pope and the Vatican City prosecutors was “incomplete, it is not precise,” but that he “tried tried to do my best in these things.”
Of the apparent extortion payments to Torzi, Peña Parra told the court that “You said that [this] was a problem, but for us it was a solution.”
Lawyers for Mincione tried to illustrate the extent to which the sostituto was prepared to pursue potentially problematic “solutions” to his department’s business dealings, in an effort to persuade the court that it was the Secretariat of State, rather than Mincione and his companies, which lacked “good faith.”
The sostituto was specifically asked to explain an exchange between the Secretariat of State and Torzi in which the businessman presented a multi-million euro invoice which Peña Parra’s office rejected, instead asking Torzi to bill them specifically for an "Ex gratia payment for the 'strategic management verbally agreed' from 3rd December 2018 to the 29th April 2019 including a lump sum for early termination of the same as agreed between the parties.”
This invoice was, according to the secretariat’s instructions, to constitute their “Total in full and final settlement: €5 million” with Torzi.
Asked what “strategic management” Torzi had provided to the Vatican, Peña Parrs struggled to answer, suggesting it was a kind of building management fee for the London property.
“That is not right, is it?” lawyers asked the archbishop. “Because what he was trying to do in this period was to extort money from you, wasn't it?”
“Yes,” Peña Parra replied, prompting Mincione’s lawyers to observe that the archbishop was essentially trying to dictate his preferred wording for a spurious invoice from a man attempting to criminally extort the Vatican.
In the end, Torzi did not agree to the Vatican’s proposed invoice wording, leading Peña Parra to approve for payment an itemized invoice from Torzi to the secretariat, billing the Vatican for “analysis” of several specific investment proposals. The projects, Peña Parra affirmed, were “all fictitious.”
The archbishop also acknowledged that he had passed the itemized invoice on to the Secretariat of State’s bank, Credit Suisse, for payment — despite knowing the invoice was for work that was never done on projects that never existed.
“The invoice was false,” the archbishop told the court, “but I insisted, in the object [description] of the transaction... is for final — full and final — settlement of all our contractual obligations [with Torzi].”
“I'm just a priest,” Peña Parra said. “I am not a specialist in banking. The important thing for the bank is the object [of] the one who is ordering — sending the money… And [in] my mind [it] was for full and final settlement [with Torzi]. ”
Asked if he was “not being honest with Credit Suisse” by knowingly presenting to the bank for payment an invoice he knew to be false, Peña Parra responded that “You said that I was not honest. I accept that.”
Peña Parra argued that the fictional contents of the invoice were irrelevant, since the Secretariat of State — through himself — was clear what they were paying Torzi and why. But lawyers for Mincione pressed him on the issue, and suggested he understood the significance of knowingly endorsing a fraudulent invoice.
In heated exchange, lawyers for the plaintiffs produced in court copies of Peña Parra’s instructions to the bank to transfer millions to Torzi, attaching what the sostituto agreed was the “completely fictitious” invoice.
In the instructions to the bank, Peña Parra signed off on the payment under the line “Invoice for the total amount due for the above activities” — endorsing Torzi’s invented itemization.
The sostituto played off the significance of the line, in which he essentially affirmed an invoice he knew to be fake, saying the only thing that mattered was why the Vatican was paying Torzi, not why he said he was being paid.
But Peña Parra was then asked how a copy of the same payment instruction to the bank appeared in the lengthy 2020 memo he gave to Vatican prosecutors, complete with his signature but without the line about the invoice and itemized “activities,”
“I don't have any answer,” the archbishop said. “I suppose that maybe Torzi sent two versions, different versions of the same note, of the same invoice.”
“You are making that up as you go along, aren't you?” lawyers asked the archbishop. “That last answer, I suggest to you, is a lie?”
“I didn't lie,” Peña Parra responded. “I didn't lie. I sent — I mean, the most important things are in the — I didn't notice that [discrepancy]. It is [only] now that I realize that [the line is missing].”
Lawyers then put it to the archbishop “that you obviously thought that it was significant, when communicating with the [Vatican] Promoter of Justice, that those words should be removed from that invoice,” to which Peña Parra replied “Sir, I don't have any answer to this.”
—
The lawsuit, first filed by Mincione in 2020 while he was under criminal investigation in Vatican City, has taken years to come to trial, and follows his conviction for financial crimes by a Vatican court in December last year, in which he was sentenced to more than five years in prison and made party to a group asset forfeiture worth hundreds of millions of euros.
Mincione, who managed hundreds of millions of euros in Vatican funds from 2013 until 2018, is seeking declaratory relief from the court — a judicial ruling that he acted in “good faith” in his dealings with the secretariat.
That building, the acquisition of which triggered a years-long criminal investigation and trial in Vatican City, was subsequently sold by the Secretariat of State for a loss of more than 100 million euros.
The London court’s eventual decision in the case could prove a kind of international vote of confidence in the sprawling Vatican trial, in which appeal hearings are set to begin soon.
Mincione has repeatedly questioned the probity of the Vatican City trial which saw his conviction last December, and has previously told The Pillar that was made a scapegoat for institutional incompetence and corruption within the Secretariat of State.
The trial continues.
