ROME – A Vatican court on Thursday found a former senior official at the Vatican Bank and his lawyer guilty of embezzlement and money laundering, which gave a strong signal that the church is determined to get its financial house in order.
The accused – Angelo Caloia, the president of the Vatican for two decades, and his former lawyer Gabriele Liuzzo – were accused between 2002 and 2007 of embezzling millions of euros through shady real estate transactions.
The defendants were sentenced to eight years and 11 months in prison, and were ordered to pay the Vatican’s bank fees of more than € 20 million, or $ 24 million.
The court also seized the accused in the amount of about 38 million euros, the Vatican said in a statement accompanying the verdict, which the Holy See press office announced shortly after the court’s ruling. made. The two were also fined 12,500 euros each.
Mr. Caloia, who served as bank president between 1989 and 2009, is the highest-ranking Vatican official convicted of a financial crime.
The Vatican said the convictions were the result of legislation passed in 2018 to raise it “to international standards to combat money laundering, corruption and other serious crimes.”
The Vatican Bank, whose official name is the Institute for the Works of Religion, wanted to send a message ‘that certain practices are no longer tolerated, and that there is no tolerance’, said Alessandro Benedetti, one of his lawyers .
“For the Vatican, the most important thing was to have justice” and “to bring the truth to the fore”, he added.
Prosecutors of the accused said they had appealed against the ruling, pointing out that the harsh sentences had been handed down at a time when the Vatican wanted to send a public message.
The verdict was rendered ‘in a climate that is not exactly favorable to those who have to defend themselves’, said Mr. Caloia’s lawyer, Domenico Pulitanò, noted in a statement.
“I’m surprised,” said Fabrizio Lemme, who told Mr. Liuzzo defended, said about the verdict. He said it was unlikely that Mr. Caloia (81) or mr. Liuzzo, 97, would ever see the inside of a jail cell because of their age.
A lack of oversight has left corruption unchecked at the Vatican for decades, gaining notoriety as a money laundering center.
Because Pope Benedict XVI jeopardizes the moral authority and financial stability of the Vatican, as well as the unrestricted access to the global financial system, he undertook reforms that accelerated under Pope Francis.
The Vatican’s efforts to improve accountability have included the creation of new oversight structures, the reorganization of financial departments and the closure of hundreds of suspicious accounts at the Vatican Bank over the past few years to comply with money laundering laws and international standards.
But the efforts were not seamless and Francis reversed some decisions, leading to confusion, critics say.
Prosecutors of the Vatican are investigating other dubious real estate transactions at the State Secretariat, the diplomatic and administrative arm of the Holy See, which has already led to the removal of one prominent cardinal.
As part of his financial sector reform, Francis reconfigured the Vatican Bank’s board in 2014 by appointing a fund manager, Jean-Baptiste de Franssu, to be its new president.
In December of this year, following an audit by external financial consultants, the bank marked a series of suspicious property transactions to Vatican prosecutors, leading to the case that culminated Thursday. A third person, a senior manager at the Vatican Bank, was also investigated but died in 2015.
The bank said in 2018 that it had lost more than € 50 million as a result of the “sale of a substantial portion of the Institute’s fixed assets.”
Thursday’s case involved the sale of 29 buildings, mostly in Milan and Rome. Prosecutors said the defendants sold the buildings at a lower price than the market value, and received the difference in cash, which the prosecutors estimated at € 59 million, and the judges later at € 34 million.
Prosecutors allege that part of the money was recovered in Switzerland with the help of Liuzzo’s son, Lamberto, who was sentenced on Thursday to five years and two months in prison and fined 8,000 euros for money laundering.
In its ruling Thursday, the court acquitted the accused on charges which involves the sale of some buildings. The trial, which began in May 2018, was briefly suspended last year due to coronavirus restrictions.
In 2014, Reuters reported that Vatican prosecutors had frozen € 16 million in accounts held by the accused in the Vatican Bank. Other funds were later in mr. Liuzzo’s Swiss bank accounts frozen. The court on Thursday ordered that the money be seized from the Vatican Bank.
This was not the first trial with former Vatican Bank employees.
The bank has already sued two other former executives, who were responsible for mismanagement in 2018. A civil court in the Vatican has ordered them to compensate the bank for the damage.