The Vatican’s securities, commercial real estate and bank accounts are estimated at $16-18 billion, its bureaucrats are still engaged in financial fraud, corruption and possible money laundering and most of the donations to the pope for charity are withheld from the poor.
On Nov. 20, Pope Francis created an annual observance for a “Day of the Poor.” In an interview broadcast that same evening, he declared, “One must always struggle for a poor Church for the poor, according to the Gospel.”
An April 2015 article in the Italian financial news, Il Sole 24 Ore, stated the assets – securities, commercial real estate and bank accounts – of all the Vatican departments and offices combined “by a conservative estimate” would be around 15-17 billion euro (approx. $16-18 billion). No outsider can be sure because Pope Francis hides almost all his fortune from any independent audits or disclosures.
The Vatican’s September 2016 ratification of the United Nations Convention against Corruption (UNCAC) was dismissed as mere “window dressing” because the Holy See asserted it did not have to participate in any “mechanism or body to assist in the effective implementation of the Convention.” The UNCAC “covers a wide-range of corruption offences, including domestic and foreign bribery, embezzlement, trading in influence and money laundering.”
“As far as the Italian government is concerned, there is still a money laundering risk in the Vatican City State,” according to a May 2016 article. “Operations between the Vatican Bank (officially known as the Institute for Religious Works or IOR) and Italy’s banks have still not resumed fully,” referring to Vatican accounts frozen in Roman banks by the Italian government in 2010 for suspected money laundering.
Via letters dated April 12, 2016, to the Vatican’s 120 departments handling funds, the pope’s “right hand man,” Secretary of State Cardinal Pietro Parolin, halted auditing being done by the international firm, Pricewaterhouse Cooper (PwC). “It seems evident that the pope is informed about the correspondence.” PwC was hired in December 2015 by the Secretariat for the Economy to audit the books and check if they were being kept according to international accounting standards. Only the IOR had previously begun using these standards and issuing public, audited financial reports during the previous pontificate in order to maintain “access to foreign financial markets.”
The office of the Secretary for the Economy, Cardinal George Pell, issued a statement that “the so-called ‘concerns’ about the PwC audit and contract were only raised when auditors began asking for certain financial information and were finding it difficult to get answers.”
Then the Vatican announced that financial inspections would now be the responsibility of the pope’s own auditor general.
On July 9, Pope Francis issued a decree giving most of the powers of financial administration that he had previously vested in Pell to Cardinal Domenico Calgano. As of the date of the decree, “Calcagno is currently facing a criminal probe in his former diocese of Savona on suspicions of embezzlement.”
In a December 2015 report,“An independent group of European financial experts wants to see ‘some real results’ in terms of indictments and prosecutions at the Vatican Bank.” The Vatican’s own financial “watchdog,” the Financial Information Authority (FIA), had issued a report that 29 money laundering investigations were begun, 11 million euros ($12.1 million) in customer accounts had been frozen and 329 suspicious transactions were uncovered between January and September 2015. “The alleged offenses include fraud, tax evasion, corruption, bankruptcy, insider trading, and market manipulation” but not one financial “prosecution, conviction or confiscation” has taken place.
The Italian newspaper, Il Corriere della Sera, reported in November 2015 “the existence of at least a hundred IOR accounts, mostly encrypted in order to conceal the names of the people who opened and used them.” IOR management confirmed this was true and said the accounts would be frozen and closed. “That’s not how things went, however. Various deposit accounts, including those used for the transit of illicit proceeds, as documented by Italian judicial inquiries, are still operational …. Despite commitments to cooperate fully, widespread reticence has marked relations with [Italian] prosecutors in charge of investigations into accounts held with the IOR or links with other banks.”
The previous April, Italian magistrates were “expressing their dissatisfaction” that no work was being done by the IOR to counter money laundering.
A still unanswered petition by Serbian Orthodox Christian, Jewish, and Roma Holocaust survivors and their families was sent to the Vatican in February 2015 “imploring Pope Francis to settle the long standing dispute about gold looted during the Second World War and deposited at the Vatican Bank.” Evidence provided was from the US government’s WWII archives released in 1998. “The Vatican Financial Authority and the Vatican Secretariat for the Economy are accused of shirking their duties to investigate money laundering and in the case of the Vatican Financial Authority, misleading the European Commission which made inquiries on the Holocaust survivors’ behalf. The Vatican Financial Authority falsely claimed the Vatican Bank was not part of Vatican City and therefore did not fall under European Union anti money laundering rules.” An absurd claim. Pope Benedict XVI was forced, in part, to require the IOR to produce audited financial statements “as part of a push by the European Union to apply common rules to all the countries and micro-states like Vatican City and Monaco that use the euro [or] risk the Vatican’s access to the global banking system.”
In January 2015, “A top Swiss court rejected an appeal by the Vatican’s bank” which invoked sovereign immunity “to keep secret information from one of its Swiss bank accounts suspected of being used for fraud.”
Some actual documents revealed
Two books, Emilio Fittipaldi’s Avarice: Papers that Reveal Wealth, Scandals and Secrets in the Church of Francis.and Gianluigi Nuzzi’s Merchants in the Temple,* were both released on Nov. 5, 2015. “Fraud worth millions, the machinations of the Vatican Bank, the true extent of the pope’s treasury” and “offerings of the faithful withheld from charity, theft and trade scams” during the reign of Pope Francis were disclosed.
“The Vatican Bank hasn’t been cleaned up like we thought,” Fittipaldi said. “There are [bank accounts] of Italian entrepreneurs under investigation by Italian authorities still hiding inside.” Fittipaldi wrote that the IOR had still not turned over to the Bank of Italy (the country’s central bank) the list of Italian citizens who took funds out of the country to avoid paying taxes, despite promises to do so.
According to Fittipaldi, “the Vatican earns 60 million euro a year selling gas, cigarettes and other products at below-Italian-market prices” even to Italians with no Vatican connection, depriving Italy of tax revenue. Then “hundreds of people” resell cheap gasoline and cigarettes at great profit. “The Vatican museums and pharmacy showed serious discrepancies – amounting to hundreds of thousands of dollars – between what appeared on the books and what was actually in storehouses, suggesting either systematic theft or fraud,” the author said.
Both Fittipaldi and Nuzzi wrote about Peter’s Pence. Once a year, bishops worldwide ask their parishioners to contribute money for the pope’s charity, although contributions can now be made online. For decades, the unaudited financial statements of the Vatican City State had shown the specific amount of this donation but that ended when Pope Francis was elected. Now, the statements are “nothing more than a press release.”
“Out of every 10 euro that come into the Vatican for the pope’s charity,” Nuzzi said, “six go to balance the accounts of the curia, two are deposited as reserves in a fund that today is up to almost 400 million euro, and only two end up in the pope’s hand to do charity.” This was confirmed by Parolin’s deputy, Archbishop Angelo Becciu.
The Peter’s Pence collection totaled 378 million euro in 2013, per Fittipaldi. IOR profits are also “offered the Holy Father in support of his apostolic and charitable ministry.” This was 50 million euro in 2013. Additionally, the pope receives “lavish donations” from celebrities like Leonardo DiCaprio and business moguls like Apple’s Tim Cook for his personal income.
Fittipaldi also revealed there are several accounts in the IOR designated for charity which give away nothing or very little. In 2013 and 2014, the fund available to the bank’s Commission of Cardinals headed by Cardinal Abril y Castelló, “a close friend” of Pope Francis, gave nothing to charity despite a net surplus of 425,000 euro.
Also, the Vatican has “invested in shares of Exxon and Dow Chemical,” corporations that pollute and poison. IOR president, Jean-Baptiste de Franssu, confirmed on May 12, 2016, the bank’s continued “investments in fossil fuel companies.”
Pope Francis’ only Vatican trial has been about keeping financial records hidden
On Nov. 30, 2015, Pope Francis said he had given his court the “concrete charges” against Fittipaldi, Nuzzi and other defendants and a Vatican trial ensued. The two authors were indicted for “soliciting and exercising pressure” to obtain financial information from two members of a papal commission. The members, Msgr. Lucio Angel Vallejo Balda and Francesca Chaouqui, after being arrested with the pope’s “personal approval,” were accused of forming an “organized criminal association” with the aim of “committing several illegal acts of divulging documents.”
Cardinal Parolin was approved as a defense witness “as well as Francis confidantes Cardinal Santo Abril y Castello and Archbishop Konrad Krajewski. Krajewski is Francis’s point-man for charitable works while Spanish Cardinal Abril is a long-standing friend of the pontiff’s who last year was appointed as president of the commission overseeing the scandal-hit IOR …. The decision raises the prospect of the Church’s dirty linen being laundered in public.”
The trial was postponed indefinitely three days later.
The trial resumed on March 14, 2016, with Vallejo Balda confessing “to delivering documents” to Nuzzi and Fittipaldi. Chauqui maintained her innocence.
The Vatican announced that Parolin, Abril y Castelló and Krajewski would not be called to testify.
Why the Vatican remains attractive to money launderers
Inside the Vatican City-State, law is enforced only by order of the pope. Outside of the Vatican City-State, the IOR can operate only through foreign banks. It has ties with 40 “correspondent” banks in Europe, the US, Australia and Japan. (A correspondent is “a financial institution that provides services on behalf of another financial institution – facilitate wire transfers, conduct business transactions, accept deposits and gather documents.”) Additionally, “the IOR has financial relations with more than a hundred countries and has links with financial entities across the European Union.”
The IOR is not a regular bank in the sense that there are no check books nor does it make loans. Money deposited by account holders is invested and earns interest. “Everything is done by transfer, by cash or in gold bullion, so as to be untraceable. This is perfect for money-laundering” which is highly lucrative. (The main depository for the Vatican’s gold is the US Federal Reserve, while medals and precious coins are kept in IOR vaults.)
In an earlier report, the same independent group of European financial experts “pointed to high volumes of cash transactions, global activities and limited information on the many organizations operating in the Vatican.”
The process of screening 19,000 IOR accounts “in order to ensure anti-money laundering regulations are fully respected,” according to the Vatican, began in July 2013. Accountholders would be limited to “Catholic institutions, clergy, employees or former employees of the Vatican …. Relations with clients that do not fit one of these categories will cease.”
Pope Francis hired the Promontory Financial Group, “a Washington-based compliance consulting firm, to help identify suspicious transactions and close accounts that may have been used for money laundering and other illicit activities.” (see “Promontory’s activities focus heavily on the adept circumvention of regulations.”)
The IOR’s 2015 Annual Report stated there are now 14,801 customers – “approximately 75% of IOR customers are based in Italy and the Vatican, 15% in Europe ex Italy and the Vatican and 10% global ex Europe.” The pope’s newly appointed director general, Gian Franco Mammi, explained: “The closure of thousands of accounts happened primarily for other reasons [besides anti-money laundering],” either the account holder did not belong in one of the above categories, the account had been inactive for decades or the account held a “tiny amount.”
Being a “Catholic institution” or “clergy,” however, is no guarantee of honesty. Msgr. Nunzio Scarano, who was arrested by Italy in 2013 for “his role in a $22 million cash-smuggling scheme … used his IOR accounts to conceal the origins of his money.” An Italian magistrate reported that Scarano felt safe “thanks to his relations with the Vatican bank.” Scarano saw the IOR as “the only safe and rapid instrument for financial and banking operations that could evade – if not outright violate – laws against money laundering and tax evasion.”
In 2012, the Vatican removed the bishop of Trapani in Sicily during an investigation into possible shifting of funds through an IOR account opened by a local priest after the alleged illegal sale of church properties. Prosecutors suspected Sicilian Mafia involvement.
“In 2011, magistrates investigating a group of construction entrepreneurs suspected of paying off senior civil servants for contracts stumbled across a Rome priest who they alleged was parking large sums of cash in an IOR account on behalf of one of the contractors.”
Most Vatican funds are not in the IOR
Although the IOR has been more notorious, as Il Sole 24 Ore pointed out, the IOR has a net asset of less than €1 billion. The financial powerhouse is actually the Administration for the Patrimony of the Holy See (APSA), the Vatican’s “treasury,” the department which holds the lion’s share of the Vatican’s investments and commercial real estate.
APSA “has accounts and deposits of its own in central banks all over the world: the Federal Reserve, the Bank of England, the Deutsche Bundesbank, the Banca d’Italia, the Bank for International Settlements, ‘and others.’”
In his testimony before an Italian magistrate, Scarano, an APSA accountant, said the department “should not be a bank, but many times did banking relying on other banks.” APSA had secular “external customers” with “encrypted accounts.” The benefit was that they “paid less taxes and investments were safe, quiet.” Additionally, “APSA had liquid assets of 600-700 million euro, or perhaps even more, according to Scarano. “Money turned and went around the world where our superiors then went to see the management three or four times a year,” he said in court.
Scarano also spoke of APSA’s “speculative investments.” “We were investors of the securities industry, Nestlé or other international companies. We moved between the United States, Paris, London and other states,” he said.
Pope Francis’ “poor Church” also keeps its own banking division on the Cayman Islands.
The “reform” that hasn’t happened
Although duties and lines of responsibility have been shifted, so far Pope Francis’ financial “reform” was appointing men to watch over other men he appointed. Any wrongdoing is investigated by men he appointed but all final decisions rest solely with the pope.
If the pope wanted transparency, all his departments – including those with funds for his personal use – would be making public detailed financial statements audited by independent accountants.
If the pope wanted accountability, he could have hired independent forensic accountants such as those in the FBI or Interpol to root out sources of corruption.
If the pope wanted his Vatican to be more charitable, he could have hired people experienced in the finances of NGOs, non-profits or international charities to help him reform his finances rather than experts in vulture capitalism.
(Betty Clermont is author of The Neo-Catholics: Implementing Christian Nationalism in America.)
*Jn 2:13-16 Jesus went up to Jerusalem. He found in the temple area those who sold oxen, sheep, and doves, as well as the money-changers seated there. He made a whip out of cords and drove them all out of the temple area, with the sheep and oxen, and spilled the coins of the money-changers and overturned their tables, and to those who sold doves he said, “Take these out of here, and stop making my Father’s house a marketplace.”
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