The Fake Cleanup of the IOR: No one touches the ‘dirty thirty’

Original Article

By Andrew Parrish

February 2nd, 2017

(Serena Sartini / Infovaticana) ROME – The Institute for the Works of Religion (IOR): a name synonymous with intrigues, cardinals’ power games, and shady business deals. From the era of Cardinal Marcinkus, the “banker of God”, to this day, the so-called “Vatican Bank” has been awash in scandal, financial and otherwise. To name only a few: the collapse of the Banco Ambrosiano, the ongoing Italian investigation into Benedict-era senior officials and the sentencing of Monsignor Nunzio Scarano for money laundering. With Pope Francis, have things changed? Have the long-awaited cleanup operation and transparency arrived? The auditing of accounts? Has the alignment with international accounting standards been completed?

The Errors of Francis

With the election of Francis, many expected a revolution in Vatican finances to arrive at last. But the real turning point for the IOR came in the final years of Benedict XVI’s pontificate. Some say, rightly, that the resignation of the Pope Emeritus was decided in part because so many things, too many perhaps, were not so clear and clean within the Institute, despite his efforts. And the revolution of Bergoglio has, in its turn, not arrived.

Things remained murky and turbulent, even after the new Pope transferred the Vatican finances dossier to the Australian Cardinal George Pell. This move would soon prove to be a misstep; Pell wanted to concentrate control of all Vatican finances in his own hands, supporting not only the so-called “Maltese lobby” but also the lobby of the Knights of Columbus, two powerful and wealthy financial entities.

Another move considered a mistake by most observers was to appoint the lawyer Rene Brulhart to the presidency of the Financial Intelligence Authority (AIF), the Vatican’s corruption and laundering watchdog. The Swiss lawyer came to the position despite accusations of malfeasance by the Governing Council of the very organization he was nevertheless made president of. Replacing Brulhart as director was Tommaso Di Ruzza, son of the former governor of the Bank of Italy. Both were soon strongly criticized, with exorbitant salaries out of line with the austerity directives being promoted by Francis. Brulhart made 420,000 euro per year, and his subordinate Di Ruzza a figure around 240,000.

Luxury and Child Abuse

Within a year Bergoglio would reconsider his decision, and move to sharply scale back the power of Cardinal Pell. In July of 2016, he promulgated a Motu Proprio which closed the controversy over the management and administration of the Holy See’s property, establishing a clear separation of powers: the Secretary of Economy, and then Cd. Pell, would oversee but not directly manage the Vatican’s assets. There were many reasons for this halt to the original expansion of Cd. Pell’s powers: the child abuse charges which followed the Cardinal from Australia, though they have now been settled, cast a dim light on an organization desperately trying to shed scandal. More pertinently, muckraker Antonio Fittipaldi revealed dismaying details of Cardinal Pell’s financial habits in the “Avarice” volume of his “Vatileaks II” releases: abnormal business travel charges, 47,000 euro on furniture, 4,600 euro on a sink. These revelations were too much for Pope Francis.

The (Gentle) Cleanup by Auditors

One of the most critical details in the IOR cleanup project is the control of accounts. In the last five years, the Institute has closed 4,935 of them. At this time, there are still 14,801 accounts open. The policy sorting through these accounts was instituted by Benedict and continued by Francis: no anonymous accounts, no accounts made payable to fake names, no preferential treatment of the children and grandchildren of cardinals, strict records of transactions, strict procedures for suspicious transactions, and narrower provisions for the use of cash.

“But,” as Vatican sources have revealed to InfoVaticana, “there are thirty accounts that really matter – and until they are touched, there is no cleanup.” The sources have also mentioned “black money”, tax havens, and accounts linked to American intelligence agencies. Obviously Francis is not able to rearrange a complicated dossier when the “cleaners” themselves are the beneficiaries of vague bookkeeping.

The Real Turning Point Was Ratzinger

Many attribute the beginning of the cleanliness and transparency operation in the IOR to Francis. However, the real turning point was Joseph Ratzinger, thanks to the Dec. 30th, 2010 Motu Proprio which established the AIF and instituted the registration of suspicious transactions and customers in the IOR. This work is begun in April of 2011, but for the Secretary of State, headed by Cardinal Tarcisio Bertone, it went too fast: they risked losing control of the situation. The sacred rooms trembled, Bertone hit the brakes, the AIF did not work in the way he wanted. The clash between IOR leaders and Cd. Bertone culminated in May 2012 with the expulsion of the IOR’s president, Ettore Gotti Tedeschi. Afterwards, the AIF lost its independence, and was taken under the supervision of the State Secretariat, losing the autonomy which was the sole purpose of its creation. Benedict XVI announced his resignation on the 11th of February, 2013; four days later, the Commission of Cardinals of the IOR appointed the German banker Ernst von Freyburg (Ed. note – member of the Order of Malta’s German wing) as IOR president. A few months after taking office, the new pope entrusts the management of finances to Cardinal Pell. Before the natural expiration of his term, von Freyburg is shown the door, and replaced with Jean-Baptiste de Franssu. This was the first victory of the Australian cardinal; soon after, however, his descent begins.

There are so many questions that are still unanswered about this period. Why was Gotti Tedeschi driven out by Bertone? Was it perhaps because he had repeatedly stopped the Cardinal from investing in the San Raffaele hospital project (Ed. note – tied to Qatar, a major terrorist financier), or because Bertone wanted the OK of the IOR for other strange banking? Why was von Freyburg shown the door before the end of his term? But above all, why was the AIF – created to oversee the operations of the IOR and to clean up its accounts – put under the umbra of the Vatican Secretary of State?

Dark Spots

The Moneyval inspectors arrived for the first time in the Vatican in 2011, and underlined the “important steps achieved in a short time” by the hard work of the AIF. With regards to Bertone’s foot on the brake, the experts from the Council of Europe speak of “backtracking” – but say it very diplomatically, trying to keep open the collaboration with Vatican bank officials. The first official act of Moneyval is the July 4th, 2012 Assessment Report, consisting of forty recommendations on money laundering and nine on anti-terrorism made by the Financial Action Task Force (FATF). Of the sixteen key recommendations, nine were positive and seven negative. Among the critical points were those related to international cooperation and an inadequate communications system; one point on the identification of customers, and the lack of procedures for reporting suspicious transactions; a note on the lack of adequate rules for the seizure of suspect goods and for cross-border transfers. These are important areas in the fight against money laundering and financial support of terrorism, still unexplored and unreformed.

This is still, therefore, the path that the Vatican Bank must take to align with international standards. It remains to be seen in 2018, when the Moneyval inspectors will be called upon to evaluate the concrete facts of the Vatican legal system’s efficiency, whether they will settle for the pure window dressing currently implemented by AIF president Brulhart and IOR president De Franssu.

A rough translation from the original Italian with the aid of Google Translate.

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