The Secretariat of State is the most powerful department in the Vatican bureaucracy. The Financial Information Authority, or AIF, was created in 2010 by then-Pope Benedict XVI to combat money laundering after the Vatileaks banking scandal.

The communique stated that Vatican police "acquired documents and electronic devices" in the raid, presumably having to do with the secretariat's financial dealings, in the wake of charges presented last summer by the Institute for Religious Works, commonly known as the Vatican bank, and the office of the Revisor General, which is responsible for investigating corruption.

The Vatican has never publicly mentioned the charges, however, and last week's brief statement didn't explain the reason for the raid. Requests for clarification to the Vatican Press Office went unanswered.

The raid seems to be the latest shoe to drop in the Catholic Church's ongoing attempt to reform the Vatican's financial arm, an effort that has suffered setbacks of late. The three departments Pope Francis created to champion the reform, the Secretariat for the Economy, the office of the Auditor General and the Council for the Economy, have been decapitated or have shown themselves to be ineffective.

In 2014, Francis named Australian Cardinal George Pell prefect of the Secretariat for the Economy, who set about cleaning up the Administration of the Patrimony of the Apostolic See, the financial center at the Vatican. But a year later, Pell became embroiled in charges of sexual abuse of two choristers in Australia; he is currently serving a six-year prison sentence. No substitute has been appointed by Francis to take his place.

Libero Milone, selected by Francis to be the first auditor general, was unceremoniously kicked out of the Vatican in 2017 by the gendarmerie before he was able to finish his work for alleged double-dipping on expenses amounting to $33,000. All charges against him have since been dropped, and Milone, who had accused a former papal chief of staff, now Cardinal Giovanni Angelo Becciu, of financial malfeasance, has said his ouster was politically motivated.

Meanwhile, little has been heard from the Council for the Economy, as its head, Cardinal Reinhard Marx, grapples with tensions with the bishops in his native Germany. On Sept. 20, the council had an extraordinary meeting with representatives from various Vatican departments, allegedly for the purpose of reining in the Vatican budget deficit of over $76 million, The Wall Street Journal reported.

Francis hasn't given up. Last week, two days after the raid, he named a former lawyer for the city of Rome, Giuseppe Pignatone, as president of the Vatican tribunal.

Pignatone is well known for his commitment to fighting syndicated crime in the Italian capital, a choice that has led some local media to suspect that the financial scandal has taken a complex turn.

If last week's one-paragraph explanation of the raid only seemed to invite speculation, the Roman media's rumor machine was happy to oblige. Journalists clamored to reach their sources and paced the halls seeking clerics and laypeople to explain this new Vatican riddle.

Italian daily "L'Espresso" got there first. On Wednesday, the paper published an image of a document issued by the head of the Vatican police, Domenico Giani, showing pictures of five people, four lay and one religious, all of whom were said to be "cautiously suspended from service." It is unclear why the Vatican did not share the document with the press, as it was handed out widely to Vatican employees.

In the Oct. 3 article, L'Espresso's Vatican reporter, Emiliano Fittipaldi, explained that the current scandal revolves around investments made by Becciu and Monsignor Alberto Perlasca, who oversaw the secretariat's financial investments until he was abruptly removed by Francis this summer.

Starting in 2011, according to Fittipaldi, the two prelates made investments with two Luxembourg-based companies using money that may have been derived from donations by the faithful. The investments are said to concern a real estate property in London.

Perlasca's name appears in the document published in L'Espresso, as does that of Monsignor Mauro Carlino, who oversees the Office of Information and Documentation of the Vatican Secretariat of State. His position was previously held by Carlo Maria Polvani, nephew of the papal accuser and former Vatican representative to the United States, Carlo Maria Viganò.

Also named were Tommaso Di Ruzza, second in command to Financial Information Authority President René Brülhart, Vincenzo Mauriello, of the Secretariat of State's protocol department, and Fabrizio Tirabassi, who oversaw the Secretariat of State's financial investments after Perlasca's departure.

Finally, there was Caterina Sansone, an administrative assistant at the Secretariat of State who answered to Tirabassi.
All of them are barred from entering the Vatican, with the exception of Carlino, who resides in the Domus Sanctae Martae, a hotel that is also the pope's current residence.

But what these people are accused of — if anything — is still unknown, and speculation in the Italian press has shed no light on how any alleged misdeeds are related to their higher ups, if at all. One story this week had Becciu being told by Francis that he is no longer allowed to leave the Vatican.

"How funny!" the veteran cardinal tweeted in answer. "Just yesterday the pope wished me safe travels for the flight that tomorrow will take me to Brazil!"

• Claire Giangravé in RNS

Maltese judge, Mr Justice Wenzu Mintoff, will preside over the case. His role will include deciding the bank's total losses.

The Vatican statement says the losses are "significant."

It also said the bank is taking the action against "the persons" in Malta to show its commitment to "any appropriate action to protect its financial and reputational interests".

While the Vatican statement is guarded with names and details, various wildly different figures have emerged in the media.

The Daily Mail UK says according to a source close to the matter, the bank invested tens of millions of euros in funds in Malta and other countries in 2012 and 2013 when the bank was without a president.

(In May, 2012, the board of the bank ousted Italian Ettore Gotti Tedeschi by a no-confidence vote. It was not until February 2013 that German Ernst von Freyberg was appointed.)

A Vatican spokesman told the Times of Malta the issue dates back to the beginning of 2013 for investments initially worth €17 million.

The Malta Independent newspaper says Italian news reports state that the total losses suffered by the bank came to upwards of 230 million euros.

The Malta Independent also cites Italian news reports as identifying the investment vehicles as the "Ad Maiora" fund, where money was reportedly invested through Malta-based Futura Funds as well as two companies registered in Luxembourg and two "foreigners".

Magistrates had already found the bank had been embroiled in many Italian financial and international scandals in previous decades, as it was used by outsiders in both Italy and the Vatican either to launder money or evade taxes.

The court case does not yet have a sitting date assigned to it.

Pope Francis, who has said he wants the Roman Catholic Church to be a model of austerity and honesty, has made financial reform a central plank of his papacy.

Source

• The Malta Independent
• Daily Mail
• Times of Malta
• Image: The Malta Independent

Two experienced bankers, Italian Carlo Salvatori and German Clemens Boersig, resigned from the board of the Institute for the Works of Religion.

Vatican spokesman Fr Federico Lombardi said this followed a "divergence of opinion over the management of the institute".

Fr Lombardi said this was "normal" and "it is an unusual place".

However, a source with knowledge of the workings of IOR, who declined to be named, told Reuters there was frustration at the slow pace of change within the organisation over the past two years.

Continue reading

The Institute for the Works of Religion earned NZ$106 million in 2014, compared to NZ$4.4 million in 2013.

The bulk of the profit - NZ$84.4 million - was given to the Holy See for its operating costs.

Releasing its annual report on May 25, the institute said the increase "was mainly due to an increase in the net trading income from securities and to a decline in extraordinary operating expenses", which included the costs of outside consultants.

The consultants were hired to help the institute reform practices and procedures in line with new Vatican regulations and international standards.

The IOR's prelate said the institute's goal was not to "pursue the accumulation of wealth", but to serve the mission of the Church.

Continue reading

And the strongest notes in this hymn of praise come from the basso profondo of the Australian cardinal himself.

The 73-year-old Pell, who is officially the prefect of the Vatican's recently created Secretariat for the Economy, gave a glowing progress report of his financial reform efforts in an 1,800-word article published last week in Britain's Catholic Herald.

Modern and transparent with checks and balances

He made it clear that Pope Francis was mandated by "an almost unanimous consensus among the cardinals" to carry out financial reform.

He said they were "well under way and already past the point where it would be possible to return to the 'bad old days,' " even though much remained to be done.

He added that the basic program for reform was drawn up by an "international body of lay experts" that the pope appointed and was based on the following three principles: first, the adoption of "contemporary international financial standards" and "accounting procedures"; second, transparency in producing annual financial balance sheets; and third, "something akin to a separation of powers" with "multiple sources of authority."

Yet Pell made it clear that his secretariat, above all others, possessed "authority over all economic and administrative activities" in the Vatican, even though its policies would be "determined by the Council for the Economy."

That body is headed by Cardinal Reinhard Marx of Munich and includes eight other cardinals and seven laymen. "Having decision-making lay members at this level is an innovation in the Vatican," Pell wrote.

His article highlighted several other positive developments in the way the Vatican will manage its financial resources in the future.

Indeed, there is much to be praised.

But the article has also set off alarm bells and raised concerns over a reform that is deeply unpopular among Vatican employees fearful of ending up on the wrong end of the stick.

It also never mentioned why the Congregation for the Evangelization of Peoples (Propaganda Fide), a virtual empire that has a vast patrimony of investments and prime properties in central Rome and elsewhere, is apparently not subject to the reforms. Continue reading

• Robert Mickens in National Catholic Reporter

Robert Mickens is editor-in-chief of Global Pulse.

After blocking the funds in a 2010 money laundering investigation, an Italian bank returned the money last week.

The Vatican Bank, whose official name is "Institute for Works of Religion" (IOR), said in a statement, the return of the money was "a consequence of the introduction of a fully-fledged anti-money laundering and supervisory system".

As part of the 2010 global effort to halt illicit financing, the Bank of Italy ordered Italian banks to improve their anti-money laundering efforts.

In response Italian financial institutions curtailed, in part, their dealings with the IOR, waiting for it to improve standards and the Public Prosecutor of Rome made a preventive seizure of €23m transferred by the Vatican Bank from an account it held in the Italian bank Credito Artigiano, (now Credito Valtellinese).

Since then, the Vatican has worked to make its bank compliant with international financing norms.

Meanwhile the funds remained frozen in Italy for almost four years.

Moneyval, the Committee of experts on the evaluation of anti-money laundering measure and the financing of terrorism, acknowledged, December 2013, the Vatican Bank had introduced a solid system of prevention and countering of money laundering.

In January of this year, the IOR said in its financial statement that its reforms merited "a resumption of full interaction with Italian financial institutions".

Despite the return of funds, the prosecution against the IOR's management remains open.

Sources

• Reuters
• CNA
• Image: Reuters

The scene was the Sala Stampa of the Holy See some 10 days ago.

Australian Cardinal George Pell was presenting the New Economic Framework for the Holy See, a document which outlines proposed major reforms not only to IOR (the Vatican bank) and to APSA (the Vatican City treasury), but also to all the various Vatican-run media.

Halfway through the press conference, a reporter from Milan newspaper Corriere Della Sera asked a question.

She wanted to know why, among the six new lay members of the board of IOR, there was no Italian representative.

For a brief moment, almost the entire press room started to laugh.

So, what do you want to do? Put the foxes in charge of the chickens again?

Has not the recent traumatic history of IOR been besmirched by the nonchalant ease with which, thanks to a bit of blind eye and to a bit of maladministration, Italian high finance (Banco Ambrosiano, Enimont) and sometimes even organised crime used IOR for their own money-laundering purposes.

Cardinal Pell, of course, was much too polite to acknowledge any such thoughts but, rather, he assured us that there will soon be Italian bankers on the IOR board.

The point, though, is there for all to see.

One aspect of Pope Francis's reform drive, but by no means the only aspect, involves changes in the all-too Italian ways of much of the Roman curia, which at times can still seem modelled on the court of a 16th-century Tuscan city republic.

Recently, Italian media reported the Pope's alleged annoyance at the fact that the former secretary of state, Cardinal Tarcisio Bertone, was having major reconstruction work done on a 700 sq m flat inside the Vatican.

Francis, of course, continues to live in 70 sq m in the relatively modest surrounds of the Vatican's Santa Marta residence, rather than in the Apostolic Palace.

When questioned about his apartment, Cardinal Bertone pointed out that (a) the Pope was not annoyed about it, (b) it was 300 sq m, not 700, and (c) that all the reconstruction work was being done at his own expense.

Curiously, in the middle of these polemics, the papal Twitter issued a tweet which read: "A sober lifestyle is good for us and enables us to share more fully with those in need." Continue reading

Source

• The Irish Times
• Image: The Catholic World Report

Q: President Ernst von Freyberg, do you like your job, coming from Frankfurt down to Rome, working inside the Vatican?

A: It is a great privilege to work here; it is the most inspiring environment you can imagine: working at the Vatican. And it is a great challenge to serve the pope in re-establishing the reputation of this institute.

Q: What did you imagine your work to be, prior to starting here?

A: Different from what it is. When I came here I thought I would need to focus on what is normally described as cleaning out and dealing with improper deposits. There is - until now - nothing I can detect. That doesn't mean that there isn't anything, but it means that it is not our biggest issue.

Our biggest issue is our reputation. Our work - my work - is much more communication than originally thought. And it is much more communication inside the Church. We haven't done enough of that in the past. It starts a home, with our own employees, with those who work for the Church in Rome, with those in the Church around the world. To them we owe first of all transparency and a good explication of what we do and how we try to serve.

Q: How come someone like yourself with that kind of experience wants to work for the Vatican, after all the stories that the IOR went through?

A: You don't want to. It is not something you sit at home and dream of. Even when you interview you don't say to yourself ‘I really want this job'. When you are called, you are very happy to accept that call, and that is I think also true for the other candidates who were interviewed for this position. Continue reading

Sources

• Vassallomata
• Image: NCR Online

The Vatican announced the Institute for Religious Works (IOR) is "looking ahead to the search for a new and distinguished president who can assist the IOR to regain effective and wider relations between the institute and the financial community, based on the shared respect of accepted international banking standards."

The bank, whose reputation took a blow last year after an investigation into money laundering, fired Tedeschi after a prolonged period stained by financial scandal.

Tedeschi was removed for failing "to carry out various duties of primary importance," according to a statement by Vatican spokesman, Fr Federico Lombardi SJ.

Tedeschi is reported to have told prosecutors that he barely paid attention to the working of the bank, turning up only two days a week, preferring to deal with his primary position as head of Spain's Banco Santander's Italian unit.

There is also the suggestion that Tedeschi may have leaked confidential documents to serve his personal and political interests.

Tedeschi was taken by surprise last year when Italian prosecutors in 2010 seized €23 million from a Rome bank account registered to the IOR amid suspicions of money-laundering violations.

He also teaches ethics in finance at Milan's Catholic University.

Sources

• USA Today
• VIS
• Image: TG3