VATICAN CITY • The former monastery on a quiet residential street in Rome once sheltered Jews fearing deportation during World War II. Purchased by the Vatican in 2021 as a dormitory for foreign nuns studying at Rome’s pontifical universities, the building now stands empty, a collateral victim of the latest financial scandal to hit the Holy See.

Pope Francis has asked aides to get to the bottom of how at least $17 million, including money to refurbish the dorm, was transferred from the Vatican’s U.S.-based missionary fundraising coffers into an impact investing vehicle run by a priest, The Associated Press has learned. Two years later, the U.S. fundraiser says the money is gone, and the monastery is shuttered. Its renovation is tied up in bureaucratic red tape, while the nuns studying in Rome are still housed at a convent a 90-minute commute away.

The story of what happened to the money is one that has vexed Vatican officials on both sides of the Atlantic, all the more because the transfers appear entirely legal. But they have nevertheless prompted the new leadership of the Vatican’s missionary fundraising operation in the U.S., The Pontifical Mission Societies, to replace the staff and board of directors who approved them, and overhaul its bylaws and statutes, to make sure nothing like this ever happens again.

And for now, the organization known as TPMS-US has written off $10.2 million of the total transferred as a loss since “there is no timeline and no guarantee of investment return,” according to its latest audited financial statement.

The money was transferred from TPMS-US into a New York-based non-profit, Missio Corp., and its private equity fund, MISIF LLC, both of which were created by the Rev. Andrew Small while he was the national director of TPMS-US. Both financial vehicles aim to raise capital to provide low-interest loans and investments to church-run farming initiatives in Africa. MISIF LLC is known as an impact investing fund because it seeks to do social good as well as provide a financial return.

The bulk of the money was transferred to Small’s new initiatives in 2021, right before Small ended his 10-year tenure at TPMS-US. Small, a British-born Oblate of the Mary Immaculate priest, remains CEO of Missio Corp., while now serving on a temporary basis as the No. 2 at the Vatican’s child protection advisory board.

In a series of emailed responses to AP questions, Small strongly defended the money transfers as fully approved and in the best interest of the church and TPMS-US. He provided letters from grateful bishops and nuns in Africa who have benefited from Missio Corp.’s low-interest loans, as well as letters from two Vatican cardinals expressing interest in his impact investing initiatives.

But the transfers have, at least temporarily, reduced the endowment fund of TPMS-US by a quarter and seemingly diverted money raised in the pope’s name away from Vatican-approved charities and works in Africa, Asia and Latin America. The loss is thus the latest financial headache for the Holy See, which for decades has been beset by episodes of loss-making investments, opaque accounting methods, porous budgets and conflicts of interest that have undermined its financial reputation.

“The Holy See is aware of the situation and is currently looking into the details of the events,” Vatican spokesman Matteo Bruni said in a statement to AP.

According to publicly available tax returns and financial statements, the moneys transferred included $7 million in expense “reimbursements,” undefined “contributions” and “support,” from TPMS-US to Missio Corp. from 2019-2021. The bulk of the transfers is a $10.2 million investment in MISIF LLC, $7.5 million of which came from a TPMS-US endowment fund.

That investment served as the sponsoring seed investment that persuaded the U.S. federal government’s International Development Finance Corp., in 2021 to loan MISIF LLC $20 million to provide microloans to church-run agribusinesses and educational programs.

Because the TPMS-US board approved the transfers, any litigation to get it back is implausible.

But according to officials at TPMSUS, it remains unclear if the board was fully informed about the transfers and the Vatican’s view of them, especially concerns expressed by the then-prefect of the Vatican’s missionary office, Cardinal Fernando Filoni.