Issue link: https://maltatoday.uberflip.com/i/1547510
6 maltatoday | SUNDAY • 8 NOVEMBER 2026 NEWS Vatican bank wins Malta case, but faces Nine years after the Vatican bank took a Malta- based fund to court, a judge has found that it was short-changed. Here is how a deal over one of Budapest's grandest buildings came to unravel in a Maltese courtroom ĦALEY XUEREB hxuereb@mediatoday.com.mt IT began with a crumbling pal- ace in Budapest, its owners crip- pled by a debt they could never repay. Fund managers in Luxem- bourg saw a bargain in that debt, and pitched it to the Vat- ican bank. But the bank, by its own account, was squeamish about making money from an- other's misfortune, and would not touch it. Its money ended up in the pal- ace anyway. On Friday, nine years after MaltaToday first reported the story, Judge Mark Simiana or- dered four investment compa- nies, two in Malta and two in Luxembourg, to pay the Vatican bank €24.1 million for breaking the duties of loyalty they owed it. "Christian principles, unlike legal principles, do not allow exceptions depending on the use of different legal structures or mechanisms," he wrote, dis- missing the funds' argument that routing the deal through another company answered the bank's ethical qualms. "What is immoral remains immoral whether it is done one way or another." Yet the win does not settle the bank's accounts. Just over two weeks ago, a Budapest court ordered the bank to pay €21.5 million and costs to the com- pany that owned the same pal- ace. It ruled by default, without examining the claim, after the bank missed its deadline to file a defence. The funds, for their part, have always insisted they did nothing wrong. In their telling, the bank got the deal it asked for, then stopped paying. What were 'God's bankers' doing in Malta? The Vatican bank is no or- dinary bank you can stroll in and open an account. Formally the Istituto per le Opere di Re- ligione, it exists to safeguard property entrusted to it "for re- ligious works or charity". In court, its opponents paint- ed a less saintly picture. Futura's lawyers branded it a non-profit "only in words" and, "in truth, a sophisticated bank" minding more than €6 billion. Its past is murky. It was em- broiled in the collapse of Italy's Banco Ambrosiano in 1982, a scandal that ended with Am- brosiano's chairman, Rober- to Calvi, found hanging from Blackfriars Bridge in London. In 2012, the bank parked mon- ey in Ad Maiora, a Luxembourg fund built for its sole use and run by Optimum Asset Manage- ment. Ad Maiora, in turn, fed cash into Kappa, one of the pots under Futura Funds, a Maltese umbrella fund managed by Fu- tura Investment Management. Kappa had one job: buying into a palace in Budapest. Italian pension funds put €16 million into Kappa for a fixed 7% a year. The Vatican bank's shares carried the risk, and the reward. In 2013, the bank held its Kap- pa shares directly, which is why it sued in Malta. The Maltese and Luxembourg firms were joined at the hip. Italian banker Alberto Mat- ta sat on boards on both sides and owned Futura's manager through a holding company. A Budapest palace built in 1905 The prize was Budapest's old Stock Exchange Palace, a Beaux- Arts colossus on Liberty Square. By 2012, its owner, Tőzsde- palota Kft, was foundering in insolvency, hobbled by a loan it could not repay to MKB Bank. Tőzsdepalota Kft belonged to Canadian businessman Michael Tippin. Optimum's pitch to the bank was simple. Buy the bad loan, swap it for shares in the com- pany that owned the palace, and that would allow it to take con- trol of the building at a knock- down price. The Vatican side demurred. The bank's director-general, Paolo Cipriani, and his deputy, Massimo Tulli, who sat on Ad Maiora's investment commit- tee, said feeding off a strick- en debtor sat ill with Church teaching. Yet the minutes of their De- cember 2012 meeting record no rebuke. Instead, the committee "reserves the right to look into it further". "In the best-case scenario for the committee, this shows no- table negligence," the judge ob- served. The committee, the funds argued, was stacked with the bank's most senior people and was "all-powerful". But the judge was unmoved. The fund's own rules gave the managers "the ultimate deci- sion-making power". What the committee was never told The committee had been told the loan could be bought for about €20 million. What it was not told, the judge found, was what happened next. On 17 December 2012, New- ton, another of Futura's pots, bought the loan from MKB Bank for €20 million. A month later, Futura agreed to sell it to itself: Newton would pass it to Kappa for €20.4 million. None of this reached the com- mittee. Instead, in February 2013, it was shown a presenta- tion pricing the deal at €32 mil- lion. The court was "perplexed" that such developments "appear al- most hidden", the judge wrote. Cipriani thought the bank was getting a bargain: some- thing worth €35 million for €32 million, "with a €3 million dis- count". A pope departs, a company appears On 11 February 2013, Pope Benedict XVI stunned the Catholic world by announcing his resignation. Eight days later, the commit- tee approved putting €21 mil- lion into Kappa's palace shares, "plus future capital calls" to pay for the works. Matta and fel- low director Girolamo Stabile signed the bank's fund up for €41 million. The first €17 mil- lion landed on 22 March. On 28 February, the day Ben- edict stepped down, a new company sprang into being in Luxembourg, according to the Vatican bank. It was called Cou- gar Real Estate, and it would soon stand between the bank's money and the palace. St. Peter's Basilica in Vatican City