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Following the threads

Service Area: Criminal and Regulatory

Member: Roger Isaacs

Recently leaked documents suggest that the Vatican’s finances are in deficit and that the blame lies largely with the management of its property portfolio.

The accusation is that the properties are not rented out at market values and that the portfolio made a loss of €22.6 million in 2018.

The leaks are the latest embarrassment to the Holy See and Italy itself, as a Vatican-backed investment fund at the centre of a financial corruption investigation has links to Italy’s Prime Minister, Giuseppe Conte.

According to some sources, several Vatican cardinals are linked to missing millions from the financial collapse of the Istituto Dermopatico dell’Immacolata (IDI), an Italian hospital.

However, the current financial investigations centre on allegations that Vatican money financed the development of luxury properties in London, with investigators looking into the possibility of improprieties in a 2014 $200 million investment made through Athena Capital, a Luxembourg investment fund, which financed a stake in the development of a luxury apartment project in London.

That investment, along with a nearly $50 million 2018 investment in the same property, has raised questions about the internal control of Vatican money held in international banks and investment vehicles.

Once an investigation starts, it unearths snippets of information and these threads are examined in minute detail by forensic investigators so that they can build up a picture of what happened at any given time.

Because these experts are impartial, they follow the thread, using evidence from financial documents, phone transcripts, emails and interviews to find evidence of wrongdoing.

Roger Isaacs, Forensic Partner at Milsted Langdon, said: “The Vatican, like any large multi-national organisation, must deal with the risk of financial impropriety.

“This is where forensic accountants can play a key role in creating and applying checks to ensure that matters are handled within the current regulatory framework.

“This case also brings to the fore the role of forensic investigators in uncovering evidence that can be used to expose fraud or illegality.”

Author: Roger Isaacs
Date: 7 November 2019