The trial of Angelo Caloia the former president of the Vatican’s Institute for the Works of Religion (IOR) – the so-called “Vatican bank” – ended in conviction and a nearly 12-year prison sentence. The Vatican court also convicted Gabriele Liuzzo, an Italian lawyer who counseled the bank, on the same charges. Gabriele Liuzzo’s son Lamberto was convicted for helping launder money.
The Vatican Court sentenced Caloia and Gabriele Liuzzo to 8 years and 11 months of imprisonment for money-laundering and aggravated embezzlement. The two will also have to pay a € 12,500 fine. Lamberto Liuzzo was instead sentenced to 5 years and two months imprisonment and ordered to pay an € 8,000 fine.
The three were charged for allegedly embezzling Vatican money while managing the sale in Italy of 29 real estate properties owned by the IOR, which manages its real estate via a society called SGIR.
The verdict came out Thursday, after 23 court sessions that stretched over roughly a year and a half. Caloia’s lawyer has already announced his client’s intention to appeal the verdict.
The sale of the buildings took place between 2002 and 2007. The three allegedly declared a book value of the sale far less than the actual amount, thus taking for themselves a share of the money – some €57 million.
The Vatican court also ruled that the money frozen in the defendants’ accounts in the Vatican bank will be confiscated. The defendants must compensate the IOR and the SGIR with about 23 million euros for economic, moral, and reputational damage. There will be a civil trial in the Vatican to finally assess the exact amount of money the three will have to return to the IOR.
Some of the charges, however, were dismissed for lack of evidence.
The verdict makes Caloia the highest-ranking official so far convicted for financial crimes. However, the ruling shows that Caloia and the Liuzzos were convicted of minor crimes. The general framework of corruption outlined by the Vatican prosecutor suggests an appeal will be argued on grounds the sentences were not consistent with the evidence. This means that the verdict’s motivations – the judges’ full, detailed explanation of the verdict – must be read carefully to understand the details better in a couple of months.
The Holy See Press Office statement about the verdict offers sheds light on some noteworthy details.
First of all, the release says that the charges are “mainly based on the investigation conducted in 2014 by Promontory Group.”
The IOR hired the Promontory Group to audit the IOR and screen its accounts in 2014. Promontory Group took over what the IOR was already doing, as a 2012 report by the Council of Europe’s Moneyval stressed.
The release does not mention whether there was a Financial Intelligence Authority report on the issue to the prosecutor or not. This piece of information is not a secondary one. If there was a report, why was it not mentioned? If there was not, why was there not?
It is then striking that the court ruled the immediate confiscation of the goods of the defendants. The defendants already appealed, and this is just a first-grade sentence – “phase 1” of trials in the Vatican judicial system. What would happen if the next trial the court should reverse the verdict?
The hearing was opened by an intervention of the Vatican prosecutor, Gian Piero Milano, who apologized for missing sessions but offered no explanation. He then underscored that he was informed that the investigation and the verdict were conducted with “great care,” though it took place in the Vatican “micro-system” and “micro-state.” For this reason, he said, “this trial will be history.”
Milano’s words seem to be a sort of excusatio non petita (an unsolicited excuse). The Vatican court has drawn some sharp criticism from the Council of Europe fire for not prosecuting financial crimes.
The 2017 Moneyval progress report stated, “the overall effectiveness of the Holy See’s engagement with combatting money laundering depends on the results that are achieved by the prosecution and the courts.”
The 2017 progress report also stressed that “the results on law enforcement / prosecutorial / judicial side two years after the last review remain modest.”
Milano’s declarations came as MONEYVAL is drafting a new progress report on the Holy See, to be released next April. The report will be about the effectiveness of the Vatican judicial system.
Was this trial, among other things, in view of the upcoming MONEYVAL report?
Caloia’s lawyers already announced the appeal. They also said that the verdict “is very articulate and will be hardly decryptable until the motivations of the verdict are deposited,” usually within 60 days, though they are generally not made public.
That document, however, will be the key to understanding more fully the reasons for the verdict. That document might also show some of the companies involved in the purchase of real estate. That will be very interesting.
Meanwhile, only Caloia and friends – all laymen – have been tried and convicted.