Vatican bank in rare dealings disclosure

Dogged by decades of scandals and recent money laundering allegations, bank releases first report in 125-year history.

    Vatican bank in rare dealings disclosure
    Ernst von Freyberg was drafted in as president after his predecessor was ousted in a boardroom battle [EPA]

    The Vatican bank, dogged for decades by scandals and opaque dealings, has published the first annual report in its 125-year history.

    The report covered 2012, a tumultuous year that saw the bank's former president ousted in a boardroom battle and leaks of documents on internal disagreements on how it should be run.

    Bank President Ernst Von Freyberg, who started his job this year, said the 100-page report released on Tuesday was an attempt to meet the commitment to transparency that Catholics around the world "rightfully expect".

    A five-member committee appointed by Pope Francis, who has promised to clean up the Vatican's financial image, is also preparing a report on how to reform the bank, officially known as the Institute for Works of Religion (IOR).

    The IOR said that in 2012 it had a net profit of $117m, more than four times greater than the $27m profit in 2011.

    The report, whose figures were audited by KPMG, said the huge increase in net profit was mainly due to favourable trading results and higher bond values.

    It said $74m of the profit was transferred to the budget of the Holy See to help the pope carry out the Church's mission around the world.

    The bank's stated aim is to hold and manage money for Vatican departments, orders of priests and nuns, Catholic institutions and related entities, clergy and Vatican employees.

    Decades of scandals

    The institution, however, has been enmeshed in scandals in the past three decades, most notably in 1982 when it was caught up in the fraudulent bankruptcy of Italy's Banco Ambrosiano, whose president Roberto Calvi was found hanged under a bridge in London.

    More recently, it has been caught up in an investigation by Italian magistrates into money laundering, which the bank denies, and the arrest of a Vatican prelate who has been charged with money smuggling.

    Pope Francis has not excluded the possibility of closing down the IOR but most likely it will soon see extensive reform.

    The numbers aside, the report was dotted with words that made clear 2013 could be a crucial year for the bank, which traces its origins to 1887 and has been in its current form since 1942.

    In his introduction, Cardinal Tarcisio Bertone, the outgoing secretary of state, spoke of "reform" and "a new direction" for the bank. Other officials spoke of "change" and "transformation".

    Freyberg, a German, has hired the US-based Promontory Financial Group to review all accounts held by the bank's about 19,000 customers, help tighten anti-money laundering procedures and carry out special investigations.

    "We have reviewed our procedures for taking on clients and for dealing with clients to make sure that no money laundering can happen at the institute," he told Vatican Radio. "We do have a new handbook, we do have new procedures, and we are also ready for inspection by third parties."

    'Leprosy of the papacy'

    Also on Tuesday, the pope convened the inaugural meeting of his eight cardinal advisers for three days of brainstorming on revamping the antiquated Vatican bureaucracy and other reforms.

    The move fulfills a key mandate of the cardinals who elected him: They wanted a pope who would involve local church leaders in helping make decisions about the 1.2bn-strong church.

    The Rome daily La Repubblica published a lengthy interview with Francis, in which he denounced the "Vatican-centric" nature of the Holy See administration and acknowledged that popes in the past had been infatuated with the pomp of the Vatican.

    "Heads of the church have often been narcissists, flattered and thrilled by their courtiers," Francis said. "The court is the leprosy of the papacy."

    Francis said he wanted a missionary church: "We need to give hope to young people, help the aged and open ourselves toward the future and spread love."

    SOURCE: Agencies


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