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Everything listed under: Vatican bank

  • Is the Vatican bank irreformable?


    Paolo Cipriani, who resigned as director of the Vatican bank

    The abrupt resignations of two top officials of the Vatican bank signaled a new chapter – and a new challenge – in Vatican financial reform.

    Late Monday, the Vatican announced that the director, Paolo Cipriani, and the deputy director, Massimo Tulli, were resigning “in the best interest of the institute and the Holy See.”

    The move was remarkable because it showed the Vatican reacting in real time to a breaking scandal. Three days earlier, Italian police arrested Msgr. Nunzio Scarano, an accountant in a Vatican investment office, on suspicion of smuggling tens of millions of euros into Italy from Switzerland.

    Msgr. Scarano didn’t work at the Vatican bank, but he had at least one account there, and investigators believe he may have used the account to illegally move more than $700,000 between the Vatican and Italy. If that is true, it would appear to confirm widespread suspicions that the Vatican bank continues to be used as an offshore haven to circumvent Italian regulations – despite the Vatican’s insistence that strict controls are now in place.

    Moreover, Italian investigators say they have wiretapped recordings of conversations in which Scarano discussed the movement of funds with both Cipriani and Tulli. That doesn’t mean they were in on an illegal scheme, but at the least it raises questions about lack of oversight.

    Faced with a new wave of embarrassing headlines, rather than waiting for the waters to calm, the Vatican acted with unusual speed. That probably reflects the view from the top: Pope Francis has emphasized that there should be no room for personal gain or shady transactions in church finances. But it also may reflect the policies of the new Vatican bank president, Ernst von Freyberg, whose nomination in February was one of Pope Benedict’s last acts as pontiff.

    Von Freyberg must realize that the Vatican bank, known officially as the Institute for the Works of Religion, is fighting for its life. Pope Francis’ recent remark that “St. Paul did not have a bank account” was a signal that radical measures – including suppression of the bank – have not been ruled out.

    Last week the pope named a five-person commission to determine how, and if, the Vatican bank fits in with the church’s overall mission.

    For his part, von Freyberg has announced steps toward greater transparency, including publication of an annual financial report. Many at the Vatican maintain that the church needs an institution like the Vatican bank in order to serve the interests of missionary territories, religious orders and charity projects around the world.

    But there are others who argue that because the Vatican operates as a state surrounded by Italy, the bank and its 33,000 individual accounts will always provide opportunities for abuse – especially when most Vatican bank officials and many account holders come from Italy.

    One year ago, Cipriani hosted a two-hour presentation at the Vatican bank for some 60 journalists, an unprecedented attempt to show how the institute was working toward greater transparency in compliance with international regulations.

    Today, Cipriani’s departure is yet another sign that the Vatican bank may be irreformable.


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  • The pope's financial gospel and the Vatican bank


    Pope Francis prays in the chapel of the Vatican guest house

    UPDATE: Yesterday it was the church and wealth. Today Pope Francis took aim at the shortcomings of the global economic system.

    Addressing several new ambassadors to the Vatican, the pope said:

    "The worship of the golden calf of old has found a new and heartless image in the cult of money and the dictatorship of an economy which is faceless and lacking any truly humane goal.

    The worldwide financial and economic crisis seems to highlight their distortions and above all the gravely deficient human perspective, which reduces man to one of his needs alone, namely, consumption."

    The full test is here, and well worth reading. Yesterday, he spoke about the church and money.

    “When a priest, a bishop goes after money, the people do not love him – and that's a sign…. St. Paul did not have a bank account, he worked, and when a bishop, a priest goes on the road to vanity, he enters into the spirit of careerism – and this hurts the church very much – [and] ends up being ridiculous: he boasts, he is pleased to be seen, all powerful – and the people do not like that!”

    The financial gospel of Pope Francis has become a little clearer every day, and these words from his morning Mass today in the Vatican guest house underline his conviction that the church’s pastors need to be true pastors – not business managers, CEOs or investment strategists.

    The line about St. Paul not having a bank account, of course, brings to mind the Vatican bank and its future under the new pope. The bank has had more than its share of problems and scandals over the years, and there’s been speculation that Pope Francis envisions far-reaching reforms or even its suppression.

    Dismantling the bank is not very likely, I believe, in part because of a last-minute decision made by Pope Benedict. Two weeks before he retired, Benedict appointed a new director of the bank, German financier Ernst von Freyburg; the move was seen as an effort to place the institution firmly on the path of reform.

    This week, von Freyburg announced to his staff that the bank would publish its financial accounts before the end of the year and would launch its own website, in steps toward greater transparency.

    A month ago, at the Vatican’s request, European banking regulators said they would expand their evaluation of the Vatican bank’s efforts to prevent money-laundering and the funding of terrorism – another move toward compliancy with international norms.

    There are many who wonder, “Why does the Vatican need a bank?” and even some cardinals have recently posed that question. Some Vatican officials believe it’s a matter of sovereignty, and say that placing Vatican financial operations under the control of foreign banks is not a good idea.

    Others point out that the Vatican bank, known officially as the Institute for the Works of Religion, has always had a function that makes it unique in banking circles. It was established in the late 1800s (under a different name) as a means to help Catholic groups send funds to needy Catholics in another part of the world.

    Religious orders have used the bank to transfer funds to their houses in various countries, and missionaries rely on the bank’s expertise to help them find secure ways to exchange currencies and move money to particular church communities.

    I remember once seeing an African bishop in line at the Vatican bank, holding some benefactors’ bank account numbers in one hand and building plans for a new diocesan center in the other. When his turn came up, he dumped it all in front of the cashier and asked him how he could make one thing lead to the other.

    The Vatican bank has taken significant steps toward transparency over the last few years. Its director, Paolo Cipriani, in a press briefing last year, disclosed that the bank has about 33,000 accounts with assets of about 6 billion euros ($7.4 billion). He said that contrary to rumors, the bank had no secret accounts and no dealings with off-shore banks.

    It’s still too early to tell exactly where Pope Francis will go with the Vatican bank, but it’s clear he wants to underline the function of service and move away from the kind of deals and practices that have landed the bank in trouble in the past.

    As he said in this morning’s homily: “Pray for us that we might be poor, that we might be humble, meek, in the service of the people.”


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