Malta firms countersue Vatican Bank for €24m

The Vatican Bank is accused of a contract breach leading to the delay of work on a property in Hungary. Photo: Reuters

The Vatican Bank is accused of a contract breach leading to the delay of work on a property in Hungary. Photo: Reuters

Two Malta-registered investment companies have countersued the Vatican Bank for €24 million, claiming it breached contractual obligations that led to the postponement of work on a property in Hungary.

According to legal documents filed in the First Hall of the Civil Court, Futura Investment Management Ltd and Futura Funds SICAV plc hit back with legal action against the Vatican Bank, formally known as the Istituto per le Opere di Religione (IOR).

The companies are claiming that the bank defaulted on its contractual commitments, which involved investment in the Budapest Exchange Palace, a prestigious property in Hungary. Futura is seeking financial compensation for losses related to delays on the deal and reputational damage from the bank’s original legal claim.

Last month, the bank announced the filing of procedures in the Maltese law courts to seek damages of over €17 million in investments made in 2013. The investment fund is the Optimum Ad Maoira fund in Luxembourg, where money was reportedly invested through the Malta-based fund Futura Funds.

IOR is clearly in default on its commitment to invest €41 million, as well as causing significant damages

But the company hit back, explaining that the Futura-Kappa fund purchased the Hungarian property in 2013 with a plan to refurbish it, reposition it on the market and sell it at a profit.

Futura claimed that this investment had been presented to the bank’s representatives at the time and represented an extremely attractive investment opportunity.

The firm said the property was today valued at €56 million and, once redeveloped, would provide an attractive return for all investors.

It said in 2013, the IOR entered into contractual commitments to invest €41 million. However, it only invested €17 million and was, therefore, “clearly in default on its obligations to meet its outstanding capital commitment of €24 million, as well as causing significant damages estimated at several million euros”.

It said the development of the building fell significantly behind schedule due to a lack of resources, which was a direct result of IOR’s failure to honour its contractual obligations.

In June this year and after months of negotiations, IOR rejected a bona fide offer to purchase its shares in the Futura-Kappa fund for an amount close to its original investment.

Futura strongly denied any allegation that IOR funds were used for anything other than the asset which IOR agreed to acquire and it appeared it had been caught in the crossfire between the current and previous management of IOR. The development of Budapest Exchange Palace recently recommenced, as Futura Investment Management managed to secure additional resources.

The counterclaim was filed by lawyers Frank Testa, Joseph Camilleri, Katya Tua, Michael Psaila and legal procurator Silvana Vella on behalf of Futura directors Frank Chetcuti Dimech and Simon Grima.

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