A British court has handed the Vatican a major defeat in a case linked to a property transaction in London with Church funds, in a ruling that revealed some of the Holy See's inner workings and found it had made "appalling" misrepresentations.
The Crown Court in Southwark revoked an earlier order that had frozen funds of Gianluigi Torzi, an Italian businessman who the Vatican has charged with extortion, embezzlement, aggravated fraud and money laundering.
Torzi, who denies wrongdoing, was one of the middlemen in a complicated deal by the Vatican's Secretariat of State in the purchase of a building in Chelsea that has since developed into a financial scandal.
He spent 10 days in a Vatican jail last year. Five Vatican employees lost their jobs in 2019 over the deal and are still under investigation.
In the 42-page ruling, issued on March 10 and made public this week after the Vatican tried to keep it private, Judge Tony Baumgartner said he revoked an earlier ruling to freeze some of Torzi's funds in London partly because the Vatican's "non-disclosures and misrepresentations are so appalling".
Vatican spokesman Matteo Bruni said there was no immediate comment on the ruling, adding that the Vatican's investigation was continuing.
Vatican prosecutors have alleged that Torzi was part of a conspiracy to defraud the Secretariat of State, the Vatican's most important department, and extort millions of euros from it, in part through fees the Vatican called exorbitant.
Torzi's lawyers, Stuart Biggs and James Mullion of Janes Solicitors, said his dealings had been directly or indirectly approved by top Vatican officials, including Secretary of State Cardinal Pietro Parolin and his deputy for general affairs, Archbishop Edgar Pena Parra.
The ruling says that during the hearings, Vatican lawyers attempted to show "the astonishment of higher authorities" over some of the financial details of the deal negotiated by two lower-level officials in the Secretariat, including a monsignor.
But the judge ruled that if that was the case, both Parolin and Pena Parra "must have had the wool pulled completely over their eyes."
Torzi has always maintained his dealings with the Vatican were above board," his lawyer, Mullion, told Reuters on Friday.
"The judge rightly found very troubling failures by the Vatican to disclose the full facts of the case," Mullion said. "The people who signed the contracts were signing them with the authority of the Vatican."
He said the Vatican had made a request to keep the details of the ruling private.
The Vatican hired Torzi in 2018 to negotiate the final purchase of the building at 60 Sloane Avenue and end its relationship with Raffaele Mincione, another Italian middleman used previously for the deal.
An internal investigation into the purchase of the building became public in October 2019 following a Vatican police raid. Five Vatican employees were suspended.
The London ruling showed that, during the case, Torzi claimed that one of the Vatican employees who was suspended, a non-cleric, offered him the services of a prostitute but that he refused.
Last November, Pope Francis transferred control of the Secretariat's funds to another department for financial oversight.