Radical Reform Looms for Vatican Bank

By Barry Bowen
Corriere della Sera
June 13, 2013

http://www.corriere.it/english/13_giugno_13/vatican-bank_34a023ca-d420-11e2-9edc-429eec6f64c6.shtml

Pope Francis looks set to intervene at the Institute for Works of Religion (IOR) before summer. Action is likely to come before 31 July, when IOR will complete its internal investigation of customers’ accounts. At this stage, the question is not so much “if” as “when”. And as rumours mount of an upcoming court order against the Vatican bank’s executives, the pace could quicken rapidly. Some of the facts are well established. The first is that Californian lawyer Jeff Lena, the man who in the past few years has become a key figure and string-puller for IOR reform, broke off relations a couple of months ago with Ernst Von Freyberg, the IOR chairman and ally of managing director Paolo Cipriani. Rumours say Mr Lena, who in the recent struggle to eject former chair Ettore Gotti Tedeschi worked in harness with the IOR board and Mr Cipriani himself, now misses the clashes he had with the Piacenza-based Gotti Tedeschi, who was unceremoniously turfed out just over a year ago.

At the time, Mr Gotti Tedeschi’s finger-pointing at the Vatican Secretariat of State and IOR management’s attempts to water down money-laundering regulations was dismissed as baseless. Demography expert Gotti Tedeschi was said to have been removed because he did not know IOR and failed to defend it, criticisms that circulated, and were in part subscribed, but were also tendentious. After three months in office, Jorge Mario Bergoglio is said to be firmly convinced that IOR taketh from the Church much more than it giveth in terms of image, international credibility and suspicion over the modus operandi of the only institution that reports directly to the Vatican. For weeks, the issue has been bouncing back and forward from the Secretariat of State to the Vatican City Governorate and APSA (Administration of the Patrimony of the Apostolic See), the nerve ends of the Curia’s economic power.

Proposals to consolidate all the Vatican’s financial assets have been made and rejected more than once. As far as can be understood, the problem is whether it would be expedient to replace IOR’s top management with one of Pope Francis’ most trusted priests or an influential executive from outside without first changing the Vatican’s government, and without knowing whether placing IOR under what is in effect special administration would provoke a new wave of malicious, possibly finance-related, revelations. The feeling is that after barely a hundred days, Von Freyberg’s administration is under close watch, if not actually on the brink. Increasing scepticism also surrounds AIF, the Vatican financial information authority, and its head Rene Bruelhart. By early June, there were no reports of Pope Francis’ receiving visits from the IOR chair, which inevitably signals an unwillingness to confer legitimacy until a decision has been made about the future of the Vatican bank.

“The story is over”, said one source with his finger on the pulse of the Institute for the Works of Religion. “The Pope will step in, and soon. IOR is beginning to look past its sell-by date. And since it is where the Vatican meets the Italian state, and the Church meets the international financial community, IOR is a problem that needs solving. Rapidly”. The Pope’s constant references to a Catholic Church that should be poor, repeated last Tuesday when he mentioned that St Peter “did not have a bank account”, have set alarm bells ringing in IOR’s imposing round tower base. Cynics note that Von Freyberg is rarely seen at lunchtime in the refectory of the convent of Santa Marta. This is not just because, as AIF head Bruelhart tells friends, the food is a bit too plain.

The problem is the gap that separates the strategies of Pope Frances and IOR’s top executives. One not insignificant detail is that Von Freyberg was appointed by Benedict XVI and [Secretary of State Tarcisio – Trans.] Bertone when the Pope had already announced his resignation but without waiting for the conclave. The move was seen as confirmation of a “fait accompli strategy” that was bound to be unacceptable to Jorge Mario Bergoglio and his electors in the world’s episcopates. The appointment was ratified at the end of a nine-month gap during which there appeared to be no urgency about replacing Gotti Tedeschi. Formally, the appointment procedure was impeccable. Forty or so candidates were examined by a Frankfurt-based headhunting agency and a noble, wealthy, Lourdes pilgrimage-organising German banker was selected as the man for the job.

Post-conclave, however, the balance of power has shifted. The papal image is being remoulded every day to sideline the pomp and circumstance of the pontifical court, which makes the latest Vatican manoeuvres look antiquated. Pope Frances seems not to feel the allure of noble dynasties, or be inclined to rubber-stamp appointments made by others, especially if they look like a survival strategy by the “Curia party” that was humiliated in conclave. Moreover, eyebrows were raised when the chair of IOR, and then the head of AIF, said that this year seven cases of suspected money-laundering had been reported by the end of May. An announcement that was supposed to suggest a clean-up was instead perceived as an own goal.

Meanwhile, threats remain on the judicial front. Over the past few months, the Vatican’s contacts with Italy have been intense, many of them made through the discreet diplomacy of Italy’s ambassador to the Holy See, Francesco Greco. Attempts have been made to keep a lid on the situation since a few months ago when a monsignor from the Secretariat of State was detained at Ciampino airport with Michele Briamonte, one of IOR’s most influential lawyers, and Mr Briamonte produced a Vatican diplomatic passport to avoid a search. The incident irritated Italy and the Holy See, which announced through press room head Fr Federico Lombardi that Briamonte, who was subsequently placed under investigation, had no right to the passport. Then there is the 2010 seizure of ˆ23 million involved in a less than crystal-clear payment procedure, an investigation that could lead to surprises in the very short term.

Other unfinished business includes the black hole that is IDI, the Italian dermatological institute, a centre of excellence brought down by alleged embezzlement on the part of members of a religious congregation and now under special administration by the Vatican. Nor has much progress been made regarding the multimillion-euro swindle that involves the Salesians and over which Cardinal Bertone himself was interviewed. While Italian magistrates will probably have to deal with the wall of secrecy erected by the Vatican, a foreign power, attention still focuses on the actions of a number of IOR-related figures. What is new this time is the impression that the man in charge on the far side of the Tiber is determined to have a clear-out. His mind is made up and that was the mandate he received from the conclave. In a restless Curia that awaits his decisions, Pope Frances is said to be eager to act, particularly where he perceives a desire merely to go through the motions and leave the old ways unchanged.

It remains to be seen at what price and with what consequences. Pope Francis, however, does not appear to be afraid of what might happen. To the contrary, he wants it to happen. As soon as possible.