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Two ex-managers of Vatican bank ordered to pay damages for mismanagement

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Catholic News Service

VATICAN CITY  — A Vatican court found two former top managers of the Vatican bank liable for mismanagement and ordered an injunction for them to pay damages.

The sentence was announced Feb. 6 by the bank, formally known as the Institute for the Works of Religion, or IOR in Italian. It did not specify the amount it is seeking in damages, but the Italian news agency ANSA said the damages the bank incurred totaled about 47 million euro (about $58 million). Read more »

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Vatican bank reports $40 million profit in 2016

June 13th, 2017 Posted in Vatican News Tags: , , ,

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Catholic News Service

VATICAN CITY — The Institute for the Works of Religion, often referred to as the Vatican bank, made a profit of 36 million euros (about $40 million) in 2016, according to its annual report.

The institute held assets worth 5.7 billion euros at year’s end, which included deposits and investments from close to 15,000 clients, mostly Catholic religious orders around the world, Vatican offices and employees, and Catholic clergy.

The main entrance of the Institute for the Works of Religion, known colloquially as the Vatican bank, is seen at the Vatican May 31. Ernst von Freyburg, president of the bank, said its operations are sound but "our biggest issue is our reputation." (CNS photo/Paul Haring)

The main entrance of the Institute for the Works of Religion, known colloquially as the Vatican bank, is seen at the Vatican May 31. Ernst von Freyburg, president of the bank, said its operations are sound but “our biggest issue is our reputation.” (CNS photo/Paul Haring)

Before the report’s release, the 2016 financial statements were audited by the firm Deloitte & Touche and were reviewed by the Commission of Cardinals overseeing the institute’s work.

According to a statement from the bank June 12, all of the profits will be turned over to the Holy See, with none being placed in the institute’s reserve account.

According to the report, most of the institute’s clients “are active in missions or perform charitable works at institutions such as schools, hospitals or refugee camps.” That work is conducted all over the world, including “in countries with very basic infrastructure and underdeveloped banking and payment systems,” which means they rely on the institute, particularly in transferring donations from wealthier nations to poorer ones.

“Measured by assets entrusted, the most important group of clients was religious orders. They accounted for more than half of our client base in 2016 (54 percent), followed by Roman Curia departments, Holy See Offices and nunciatures (11 percent),” the report said. Cardinals, bishops and other clergy make up about 8 percent of the client base, and another 8 percent is comprised of bishops’ conferences, dioceses and parishes.

In addition to deposits in money, the institute also holds “gold, silver, medals and precious coins” valued at close to 33 million euros. “Gold is mainly deposited with the U.S. Federal Reserve, while medals and precious coins are kept in the IOR vaults,” it said. IOR is the Italian acronym for the Institute for the Works of Religion.

 

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Vatican, Italy tax agreement goes into effect

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Catholic News Service
VATICAN CITY (CNS) — Individuals and entities that have accounts at the Vatican bank and are subject to taxation in Italy will have until mid-April to report to Italian authorities the income earned by their Vatican accounts.
As part of ongoing efforts by the Vatican to increase financial transparency and accountability, an agreement between the Holy See and Italy concerning taxes went into effect Oct. 15. Read more »

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Oversight agency for Vatican bank finds ‘no fundamental shortcomings’

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Catholic News Service

VATICAN CITY — The Vatican’s financial watchdog agency conducted its first routine on-site inspection of the Vatican bank to verify its compliance with regulations to prevent money laundering and the financing of terrorism.

While the inspection, conducted in early 2014, showed “no fundamental shortcomings,” the oversight agency gave the bank “an action plan” to help it fall in line more fully with required international standards, said Rene Brulhart, president of the Financial Intelligence Authority.

The action plan represented “a strategy” for ways the bank can improve its procedures in preventing and countering financial transgressions and crime, Brulhart told reporters at a Vatican news conference May 29.

Bruhlhart and Tommaso Di Ruzza, director of the intelligence authority, presented the agency’s third annual report since the agency was established by Pope Benedict XVI in 2010 to monitor Vatican financial operations and ensure they meet international norms against money laundering and the financing of terrorism.

The new report covers the “facts and figures of what happened in 2014,” Brulhart said, including the implementation, strengthening and expansion of recent regulations and international agreements.

Part of the new transparency measures has meant any suspicious or dubious financial activity must be reported to the Financial Intelligence Authority.

While only six suspicious transactions were reported in 2012 after the requirement went into effect, 202 reports were filed in 2013 and 147 more in 2014.

The high number of reports shows “we have a reporting system that works” and people are monitoring and flagging potential risks or infractions, Brulhart said.

The reporting system does not require evidence of wrongdoing or a court order; “a suspicion is sufficient,” he said.

The independent agency analyzes the reports it receives and forwards cases to the office of the promoter of justice at the Vatican City State’s tribunal if it finds reasonable grounds to suspect money laundering or the financing of terrorism.

Bruhlhart said seven reports were forwarded to the promoter of justice last year in cases that mostly dealt with potential fraud, tax fraud or tax evasion.

As a “preventative measure,” the Financial Intelligence Authority suspended three financial transactions and operations in 2014 in connection with reports of suspicious activities.

While Bruhlhart said he would not give any details about those cases, the annual report said the amount of money involved totaled more than 561,000 euros (US$617,100).

The agency continued to sign agreements with other foreign financial intelligence authorities to exchange information and cooperate in the global fight against money laundering and financing terrorism. With agreements in place with 20 countries, including Australia, the United Kingdom and the United States, he said the agency had 113 exchanges of information, the majority of which were foreign authorities requesting information from the Vatican watchdog.

The number of requests for information may continue to rise in coming years, he said, as they sign more memoranda of understanding with more nations.

When asked to measure what milestone the Vatican was at if one could imagine the road to complete reform were a 10-kilometer-long path, Bruhlhart said, “it depends on how fast you run” and if one is headed in the right direction; otherwise, “you never arrive.”

He said the regulations, oversight and prevention were all part of a continual process that required “different steps to be taken.”

“The biggest step was implementation” of the various frameworks, laws and procedures, he said.

“Now is everything great and perfect? No. It most probably will never be because it is really a kind of ongoing process. But it is very good and it’s a very transparent process,” he said.

When it comes to heading in the right direction, he said, “we are very, very much on track. Now if we are on kilometer five or six or seven or eight, we’ll keep walking and keep on walking.”

 

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Vatican bank posts increased profits, continues review of accounts

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Catholic News Service

VATICAN CITY — The Institute for the Works of Religion, commonly known as the Vatican bank, showed a large jump in profits in 2014 as it continued to winnow its accounts.

The institute reported a net profit of 69.3 million euros ($75.5 million) in 2014 compared to a 2013 net profit of 2.9 million euros.

The bulk of the profit, 55 million euros, was given to the Holy See for its operating costs.

Releasing its annual report 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, including those that aim to prevent money laundering and the financing of terrorism.

Msgr. Battista Ricca, the institute’s prelate, wrote in an introduction to the report that the ban’s purpose “is not to pursue the accumulation of wealth. Rather, it is to honestly and faithfully serve the universal mission of the church by supporting those who work in the vineyards of the Lord, often thanklessly and under dangerous circumstances, to feed, to educate, to heal and to permit the Gospel to be known.”

The annual report said just over half of its account holders are religious orders working around the world. Fourteen percent of the accounts belong to Vatican nunciatures across the globe; 9 percent are held by cardinals, bishops and priests; dioceses account for 8 percent of the clients; and the rest of the account holders are Vatican employees and religious education institutes.

In 2013, the institute tightened its guidelines for who can have or open an account. To comply with those guidelines and with international regulations, the bank undertook a thorough review of all account holders.

Since May 2013, the report said, the institute has ended 4,614 “customer relationships” and was in the process of closing nearly 300 more.

 

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Vatican condemns leak of documents on economic reform

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Catholic News Service

VATICAN CITY — As Pope Francis and Vatican officials try to completely revamp the Vatican’s economic policies and the procedures at what is commonly called the Vatican bank, differences of opinion are normal, but leaking documents about those discussions is illegal, said the Vatican spokesman.

“The fact that complex economic or legal issues are the subject of discussion and diverse points of view should be considered normal,” said Jesuit Father Federico Lombardi, the spokesman, in a note published late Feb. 27.

The spokesman’s comments came after the Italian magazine L’Espresso published three articles allegedly illustrating how “power struggles between the most important prelates are placing the reforms of Pope Francis at risk.”

The articles particularly target Australian Cardinal George Pell, head of the Secretariat for the Economy. The leaked minutes of a meeting of cardinals, the magazine said, show top Vatican officials are concerned about a lack of checks and balances as the cardinal gains more power over Vatican spending, hiring, income and revenues.

“Passing confidential documents to the press for polemical ends or to foster conflict is not new, but is always to be strongly condemned, and is illegal,” Father Lombardi said.

One of the articles focused specifically on what it described as lavish spending by Cardinal Pell’s Secretariat for the Economy during its first year of existence even though the office was formed to monitor and rein in spending.

L’Espresso said it had seen receipts and they included a 2,508 euro ($2,813) bill from Gammarelli, a Rome clerical tailor shop, and surmised that it was for a “cappa magna” or great cape with a long train sometimes worn in processions.

In a statement released Feb. 28, the Secretariat for the Economy said the article’s report of a conversation between Pope Francis and Cardinal Pell about his office’s spending, a conversation the magazine presented in direct quotes, is “complete fiction.”

The money spent by the secretariat in its first year was “in fact, below the budget set when the office was established” in February 2014, it said. An audited financial statement will be presented to the Council for the Economy, which oversees the secretariat’s work.

“Finally and for the record,” the statement said, “Cardinal Pell does not have a cappa magna.”

 

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Italy to return 23 million euros to Vatican bank

November 19th, 2014 Posted in International News Tags: , ,

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Catholic News Service

VATICAN CITY — In what the Vatican bank described as recognition that it has established serious measures to prevent money laundering, it announced the Italian government has promised to return 23 million euros ($29 million) that had been blocked for more than three years.

Even though the Italian government in 2011 said it was releasing the funds, the Italians believed “issues regarding customer due diligence remained unsolved” and so held on to the funds, said a statement Nov. 18 from the Institute for the Works of Religion, the formal name of what is commonly called the Vatican bank.

The Italian treasury police seized the funds, which the institute had deposited in a Rome bank, during a money-laundering investigation. The Vatican repeatedly insisted the deposit was legitimate and that the Vatican bank was committed to “full transparency” in its operations.

“The repatriation” of the funds was possible thanks to “the introduction of a fully fledged anti-money laundering and supervisory system in the Holy See in 2013,” the Nov. 18 statement said.

The morning after the announcement of the money’s return, the Vatican announced that Pope Francis had named the Swiss lawyer Rene Brulhart to be president of the Vatican’s Financial Intelligence Agency. Brulhart had served as director of the agency since November 2012.

He succeeds Bishop Giorgio Corbellini, a canon lawyer and head of the Vatican human resources office; Pope Francis had named the bishop interim president of the agency in January.

The Financial Intelligence Authority monitors the financial and commercial activity of all Vatican entities, including the so-called Vatican bank, to ensure transactions cannot be used for money laundering or the financing of terrorism.

 

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Pope’s finance chief talks Vatican reform

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Catholic News Service

VATICAN CITY (CNS) — Pope Francis wants a “poor church for the poor,” but that “doesn’t necessarily mean a church with empty coffers,” said Cardinal George Pell, “and it certainly doesn’t mean a church that is sloppy or inefficient or open to being robbed.”

A month after unveiling a “new economic framework for the Holy See,” including a host of changes to the Vatican’s financial structures, the cardinal discussed the meaning of those reforms and the challenges to their implementation in an interview with Catholic News Service.

Cardinal Pell, a former archbishop of Sydney whom the pope named in February to the new office of prefect of the Secretariat for the Economy, spoke to CNS about a range of issues, including Vatican financial scandals; the need for more transparency, “checks and balances” and oversight by laypeople; efforts to internationalize the Vatican bureaucracy while reducing its overall size; and the relative importance of his own role in the church’s central administration, the Roman Curia. Read more »

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Vatican bank issues detailed financial report

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Catholic News Service

VATICAN CITY — One week after publishing highlights of its 2013 financial statement, the Institute for the Works of Religion, commonly called the Vatican bank, released a 107-page, detailed financial report for the year.

The first statement, released July 8, said the institute’s net profit for 2013 was only 2.9 million euros ($3.9 million) compared to 2012 net profits of 86.6 million euros ($117.7 million).

The detailed report released July 15 and published on the institute’s website, www.ior.va, is packed with charts, tables and explanations of the institute’s focus, its investment policies, the division of its assets and detailed information about its expenses, including contributions to employee pensions.

It also contains some curiosities:

• The main depository for the Vatican’s gold is the U.S. Federal Reserve, while medals and precious coins (valued at close to 9.9 million euros) are kept in IOR vaults. A “significant decline” in the price of gold meant that the value of the Vatican’s gold fell to 20 million euros in 2013 from almost 28.3 million euros in 2012.

• The bank’s officers have almost 3.2 million euros in four funds set up for charitable purposes, including one to support religious orders in missionary work. Only the “Fund for Holy Masses” reported distributing money in 2013; it gave out 59,000 euros.

• The institute is the sole owner of an Italian-registered company, SGIR, which has 21.7 million euros in equity. The report describes SGIR as a real estate company.

• Speaking of real estate, the report said the institute’s operating expenses included a “provision of 1 million euros payable to the owner of the building in which the IOR conducts business.” The bank is based in the 15th-century Tower of Nicholas V on the eastern edge of the Apostolic Palace.

• The bank has 250.7 million invested in external funds; 99 percent of the money is invested in funds that have their legal headquarters in Europe, while the remaining 1 percent are based in the United States.

 

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Pope decides Vatican bank will stay in business

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Catholic News Service

VATICAN CITY — Pope Francis, accepting the recommendations of his international Council of Cardinals and other advisory groups, has decided the Vatican bank will continue to exist and has approved a plan to increase its transparency and accountability.

The Vatican press office issued a statement April 7 saying the pope “has approved a proposal on the future” of the Institute for the Words of Religion (IOR), the formal title of the bank. The Vatican, however, did not release details of the proposal.

In June 2013, Pope Francis established a commission to review the activities of the Vatican bank, asking the five commission members to study whether the bank was in harmony with the mission of the universal church.

During a news conference in July on his flight back from Rio de Janeiro, Pope Francis said some people had suggested the institute should be transformed into a “charitable fund, others say it should be closed. I don’t know. I have confidence in the work of the people at IOR, who are working a lot, and in the commission” studying the bank.

“Whatever it ends up being, whether a bank or a charitable fund, transparency and honesty are essential,” he said.

The pope spoke only a few weeks after the bank’s director and deputy director both resigned, following the previous month’s arrest of an account holder, Msgr. Nunzio Scarano, on charges of fraud, corruption and slander. In 2010, Italian treasury police seized 23 million euros that the Vatican bank had deposited in a Rome bank account, but later released the funds when new financial laws, promulgated by Pope Benedict XVI, went into effect.

While not providing details on proposed changes for the bank, the Vatican’s April 7 statement seemed intended to reassure the bank’s employees and clients that the institute would have a future.

“The IOR will continue to serve with prudence and provide specialized financial services to the Catholic Church worldwide,” the statement said. “The valuable services that can be offered by the institute assist the Holy Father in his mission as universal pastor and also aid those institutions and individuals who collaborate with him in his ministry.”

The Vatican statement said Australian Cardinal George Pell, head of the Vatican’s new Secretariat for the Economy, has asked the bank’s president and management to finalize plans and procedures “to ensure that the IOR can fulfill its mission as part of the new financial structures of the Holy See-Vatican City State.”

The plan, it said, will be given to Pope Francis’ Council of Cardinals, which is scheduled to meet in late April and again in July, and to the Council for the Economy, an international group of cardinals and lay experts appointed to set economic and financial policies for the Vatican and all its offices.

The Vatican statement also confirmed the continuing role of the Vatican Financial Intelligence Authority to ensure the Vatican bank cannot be used for money laundering or the financing of terrorism.

The “strict regulatory supervision and improvements in compliance, transparency and operations initiated in 2012 and substantially accelerated in 2013 are critical” for the bank’s future, the Vatican statement said.

At the end of 2012, the IOR had approximately 18,900 customers, about half of whom were religious orders. Vatican offices and nunciatures (Vatican embassies around the world) accounted for about 15 percent of the clientele, while about 13 percent of the accounts belonged to cardinals, bishops and priests, and 9 percent belonged to dioceses. Most of the remaining accounts were held by Vatican employees and religious education institutes, according to a report released by the bank in October.

 

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