|
| The Vatican Bank (again, Sigh)
Peter Borre
September 30, 2013
http://peterborre.com/2013/09/30/the-vatican-bank-again-sigh/
Foreword
Remember when your mom took you to the dentist who said, this is not going to hurt?
And then it hurt a lot, but when you squawked the dentist said, it’s necessary!
This blogpost is about the Vatican’s financial institutions, and ‘it’s not going to hurt’. But it’s essential for an understanding of what will be happening this week in Rome when recommendations come to Papa Francesco from the Gang of Eight Cardinals; and later this fall from two ad hoc commissions tasked to review the bank (IOR) and the Vatican’s accounting practices – bringing onto center stage the financial institutions of the Vatican.
Overview
“If you cannot be trusted in handling worldly wealth, who will trust you with true riches?” (Luke, Chapter 16 Verse 11)
Today’s Italian media report that the financial results of the Istituto per le Opere di Religione (IOR) will be released for the first time ever, tomorrow. As a teaser, it is mentioned that a profit of ˆ87 million (almost $120 million) will have been realized for the 12 months ending on July 31, 2013.
That is warp speed for reporting financial results, two months after the books closed. For context, the Archdiocese of Boston releases its audited financials 7-9 months after the fact, usually on a quiet Friday afternoon.
This noteworthy development is a first-ever, not only for the fact of reporting and the detail expected from an audited set of statements, but also because:
It comes literally on the day before the Pope is to meet with the Gang of Eight Cardinals who are to deliver their recommendations for reform of the Curia (of which the IOR, technically, is not a part);
It was acknowledged by the Pope during his summer Brazil trip that he had not planned to concentrate on the IOR at the outset, “I thought I would first first deal with other questions, but one cannot postpone this [the IOR];
A senior Vatican finance official Monsignor Nunzio Scarano, has spent the summer in Rome’s prison, Regina Coeli, where he remains to this day; when arrested he was carrying the ˆ23 million (about $30 million) in cash; tic toc.
It is also reported that the papal commission looking into the IOR is reviewing every one of the thousands of banking accounts held at the IOR. Again, the context matters:
It is at least possible that the ˆ23 million carried in the suitcase of Monsignor Scarano involved IOR accounts; and
Very shortly after the Monsignor’s arrest, the IOR’s general manager and his deputy resigned.
Since the mantras of Vatican spokespersons on financial issues are transparency and bureaucratic reform, it is probable that the restructuring to place in the months to come will involve rearranging the architecture of the financial institutions discussed below, notably:
Strengthening of the regulatory arm of the Vatican, the Financial Intelligence Authority, to bring the Holy See into compliance with European Union directives;
Merging the separate real estate empires now held by two separate entities (APSA and the Congregation for the Evangelization of Peoples – aka Propaganda Fide);
Clamping down on IOR’s deposit-taking and funds transfers, probably limiting these activities to bona fide customers (Vatican employees, religious orders, charitable enterprises); and maybe
Reducing the IOR to its role as a credit union, leaving the more speculative investments to APSA and perhaps to a network of international money managers.
The discussion below of Vatican financial institutions is to give readers a map for the organizational recommendations likely to be rolled out in the near future. The focus is on the following:
The Vatican Bank, aka IOR;
APSA, the holding entity for most of the Vatican’s real estate and securities;
The Financial Intelligence Authority, regulator of the Vatican Bank;
The Prefecture for Economic Affairs, a central financial and budgetary control agency.
The essential point regarding money laundering through the IOR is that only “clergy, religious institutions and Vatican citizens” may open an account with the IOR; but these persons (actual or legal) may give a delega [power of attorney with rights to transact] to anyone “to operate the accounts as they wish, without limit on the number of deleghe and without there being a register [list] of who has the deleghe.” Which means that any one of 25,000 eligible Vatican individuals may give account-signing authority to an unlimited number of delegati.
One of the prelates now under investigation by the Italian regulators is Don Evaldo Biasini known as ‘Don ATM’ through whose IOR account some ˆ30 million (about $40 million) moved over a 12-month period. On the salary of a monsignore.
Proceed at your own risk.
Financial Institutions of the Holy See
The IOR
The Istituto per le Opere di Religione is a teenager in the context of the centuries-old history of many Vatican institutions. It was established in June of 1942, via a papal ‘chirografo’ (a sort of personal decree, not a canonical one) of Pope Pius XII, (a) giving the IOR legal expression; (b) establishing it separately from the traditional Vatican bureaucracy (Curia Romana); and (c) giving it the mandate to manage assets, whether securities or liquid funds, “destined for the works of religion and Christian piety.”
The timing of the IOR’s creation should be kept in mind, because this was the high-water mark of Nazi ascendancy in Continental Europe. The Turn of the Tide (in Churchill’s resonant phrase) came later, towards the end of 1942.
In mid-1942 the European war had been going on for almost three years, and conventional wisdom considered the Nazis to be invincible as the Wehrmacht raced towards the Volga and beyond it, to the strategic oilfields of the Caucasus.
The creation of the IOR also occurred as European financial institutions in neutral countries (Switzerland, Sweden and Spain, to name a few) were doing a land-office business in foreign exchange operations, asset custody, and fund transfers, involving:
Jews from many Nazi-occupied countries who were being dispossessed;
‘Aryans’ who grabbed Jewish property for a few pfennigs on the Reichsmark;
Industrialists from neutral countries trading lucratively with belligerent nations on both sides; and
Wealthy families in occupied Europe worried about the dominant German influence over their own countries’ banks.
The timing of the IOR’s origins and its autonomy from traditional Curia Romana oversight go a long way in explaining the bank’s propensity to erupt periodically into scandal over its seven decades, as outlined in more detail in the “Past Eff-ups” section below.
APSA
This is the Vatican’s ‘Administration for the Patrimony of the Holy See’. It is the holding entity for Vatican assets, organized into two sections: one for fixed assets (real estate), and one for liquid assets (negotiable instruments). It was established by Pope Paul VI in 1967. (The Congregation for the Evangelization of Peoples, formerly Propaganda Fide, also has a very sizable real estate portfolio.)
APSA is often confused with the IOR, but think of APSA as the custodian of the papal family’s real estate and financial investments, while the IOR functions as a credit union (not really a ‘bank’) for financial operations involving deposit-taking, and for direct investments in complex financial instruments (derivates, anyone?).
Financial Intelligence Authority
This regulatory entity was established in 2010 by Pope Benedict XVI “for the prevention and the countering of illegal activities in the monetary and financial fields;” and “to supervise obligations undertaken to prevent and to counter recycling and the financing of terrorism” [Annuario Pontificio, 2012].
The initiative was in response to post 9/11 pressure from U.S. and European Union regulatory authorities. And it brings us back to the IOR, which until 2010 was the only bank of any size completely beyond the jurisdiction of the regulators. Most of the ‘safe banking havens’ beyond the reach of the U.S. and the EU, notably Switzerland, had reached bilateral agreements with the U.S. and the EU to clamp down on money laundering transactions. But the IOR was completely ‘extra-territorial’.
With the creation of the Vatican’s Financial Intelligence Authority, a regulatory entity something like Washington’s SEC and Comptroller of the Currency, one might have thought that the Vatican State had met the requirements of Good Conduct set out in the EU’s White List of virtuous cooperating banks. Not so, the issue of compliance with the EU is still under negotiation between the EU and the Holy See.
Prefecture of Economic Affairs
This is the entity that exercises administration oversight and budgetary control over the Curia Romana; by definition this authority does not reach the IOR. Think of the prefecture as Washington’s Office of Management and Budget, sort of. So the Vatican has its’ own OMB…OMG!
The IOR’s Past Eff-ups
The IOR has been beyond adult supervision for most of its 71-year history. Past scandals tend to be quickly forgotten, but the recurrence of spectacular eff-ups shows clearly that something is systemically flawed:
Let’s leave aside the bank’s role as a conduit for U.S. funds pouring into postwar Italy to keep the most geo-strategic country in the Mediterranean out of the reach of Italy’s communist party, the largest one in Western Europe, by nurturing instead Italy’s postwar Christian Democratic Party;
And let’s not niggle over the funds that moved during the 1980s from Langley, VA through the IOR into Poland, and then distributed via the widespread networks of Catholic dioceses and parishes, and Solidarnosc.
Not a coincidence that the Reagan Administration in its early days included some fiercely anti-Soviet Catholics, at ease with the complicated ways of the Holy See:
Secretary of State Al Haig; National-security Advisers Dick Allen and Bill Clark; Director of Central Intelligence Bill Casey; ‘Silent Missions’ specialist Lt. Gen. Dick Walters.
Also not a coincidence that the U.S. established full diplomatic relations with the Holy See during President Reagan’s first term in 1984, for the first time in the history of the Republic:
Something that JFK could not have done, given the widespread anti-Catholic feeling that was very much a political factor in the very tight 1960 election (JFK’s popular vote count exceeded Nixon’s by a fraction of one percent).
However, with a bow to The Godfather: Part III, The Sopranos and history, a brief mention of one of the IOR’s most spectacular past eff-ups is in order.
Blackfriar’s Bridge in London
The Blackfriar’s Bridge scandal involves a prominent Italian banker, Roberto Calvi, found hanging from London’s Blackfriar’s Bridge in June, 1982. This story is generally known, but the key points are now fading from public awareness.
Calvi through his Milan bank, Banco Ambrosiano, had entered into a network of transactions with the IOR then in the firm grip of Archbishop Paul Marcinkus (“you can’t run the Church on Hail Marys”).
Monies flowed through the IOR into various schemes promoted by Calvi with the promise of great returns; but in the way of all Ponzi schemes (btw, Charles Ponzi was a Boston homey) inflows eventually dried up and investors scrambled to cash out.
Calvi had secured so-called comfort letters from the IOR, indicating in carefully crafted legal language that the IOR supported the investments of Calvi’s Banco Ambrosiano. Initially, this appears to have reassured many of Calvi’s investors.
After Calvi’s death and the almost-simultaneous apparent suicide of his personal assistant, the Banco Ambrosiano collapsed, and the investors lined up at the IOR to recoup their capital, based on the IOR comfort letters. Keep in mind that virtually all of these investors had probably moved their funds into and through the IOR to avoid annoying details such as taxes and disclosure of the origins of their funds. And some of these investors probably had extra-large neck sizes, and sported pinkie rings. But for a few years after Calvi’s death, the IOR did not feel obliged to oblige the Ambrosiano investors.
Following some years of wrangling (including tens of thousands of attorneys’ billable hours), in May of 1984 “in recognition of moral involvement” the IOR settled with Banco Ambrosiano creditors with a “voluntary contribution” of approximately $240 million.
Sound familiar? An American bishop blasting lawyers for claimants, and then after a few years of wrangling, settling for a very tidy sum without admitting culpability:
In 2003 the Archdiocese of Boston settled 500+ claims of clergy sexual abuse for $85 million;
In 2007 the Archdiocese of Los Angeles settled almost the same number of claims for $660 million. (Who says that Franciscans are no good with money?)
In early June of 1984, the Vatican’s official daily, L’Osservatore Romano, wrote that the IOR agreement was intended to “[translated from the Italian] facilitate a global solution for the consolidation of relationships of an international character.” Hmmm, a quarter of a billion dollars. Financial press commentary at the time indicated that, against outstanding claims of around $1 billion, claimants recovered about one-fourth of their invested capital.
At the time of his demise in 1982, Calvi’s death it was ruled a suicide by the British authorities. But a forensic analysis commissioned by Italian media almost two decades after the fact concluded that the cause of Calvi’s death was strangulation in a nearby dump-site, with the body then moved to BlackfriarsBridge which spans the Thames.
Why the move? Perhaps a subtle message by choreographing Calvi’s death scene just a short distance from Blackfriars Monastery, which is run by the ultra-loyal Dominican Order, at the edge of London’s financial district.
Another lethal message was probably delivered to the Vatican almost exactly one year after Calvi’s death, on June 22, 1983 when a 15-year old girl, Emanuela Orlandi, disappeared in broad daylight from a busy Rome street on her way to a music school located in an ‘extra-territorial’ Vatican building, i.e. beyond the Vatican City but technically within the Holy See. Over the intervening 30 years she has never been found.
The link of this tragedy to the Vatican is two-fold:
Emanuela was a Vatican State citizen by virtue of her father’s employment inside the Vatican, a tradition in the Orlandi family’s history of service to the Vatican going back one century;
On July 3, less than two weeks after her disappearance, Pope John Paul the Great in his Sunday Angelus homily said,
“[translated from the Italian]…I am close to the Orlandi family, which is saddened for their daughter Emanuela who since June 22 has not returned home, without losing the hope in the sense of humanity of whoever has responsibility in this case…”
There are other IOR dramas, going back a few decades and involving spectacular Act Four death finales:
The Michele Sindona affair, involving the collapse of a prominent U.S. bank, Franklin National of Long Island; Sindona, an adviser to the IOR, was in a maximum-security Italian prison, sipped his morning espresso, and then keeled over, morto;
The so-called ‘maxi-bribe’ affair of the mid-1990s where the IOR was the transfer mechanism for at least $1 billion in bribes involving Italy’s biggest political parties; and – yes – a couple of suicides, one of them in a maximum-security Italian prison.
What Lies Ahead for Papa Francesco
(intentional double entendre for the word ‘lies’)
The principal financial entities, IOR and APSA, are like a couple of cluster bombs: this ordnance sprays its target area with several lethal bomblets, timed to detonate at unpredictable intervals.
One predictable explosion may involve outgoing Secretary of State Cardinal Tarcisio Bertone. During the self-imposed lame-duck period of Pope Benedict’s papacy, from February 11, 2013, when he announced his intention to resign, until February 28 when his resignation become effective, there were some very peculiar maneuvers involving the IOR:
In mid-February, less than a week after Benedict’s bolt-out-of-the-blue announcement, but while he still reigned supreme, several high-level moves were made within the IOR:
A new IOR president was announced after a nine-month vacancy, Herr Ernst Von Freyberg, a German national and head of Hamburg ship-builder Blohm & Voss;
Pope Benedict reconfirmed the five-year mandate of the IOR’s supervisory board of cardinals, including its’ chair, Cardinal Bertone;
One member of the supervisory board of cardinals, Attilio Nicola, was substituted with Cardinal Domenico Calcagno, controversially elevated to cardinal a year ago and a close associate of Cardinal Bertone;
The Vatican official in the Secretariat of State responsible for monitoring the IOR – 46-year old Monsignor Ettore Balestrero – was promoted to archbishop, and sent to Bogota, Colombia as papal nuncio with diplomatic immunity; as ‘under secretary of state’, Monsignor Balestrero had been the eyes and ears of Cardinal Bertone, tasked with monitoring the IOR.
Cardinal Bertone’s five-year term as the IOR’s supervisor means that his mandate runs until 2018, extending well into the pontificate of Benedict’s successor(s); unless this were to be modified. It will be interesting to see what happens during the inevitable reshuffle of the IOR. Any continuing influence of Bertone on the IOR could trigger more Vatileaks.
The road ahead is pretty bumpy for Pope Francis. Those who suffered through a political science course in college may remember some of the wisdom of Alexis de Tocqueville who wrote perceptively about the young American republic in the first half of the 19th century. He also had something to say about authoritarian regimes:
The most dangerous moment for a regime is when it begins to reform itself.
‘Everything’s up to date in Vatican City
they gone about as fer as they can go’
(apologies to Rodgers and Hammerstein)
[9.30.2013]
Foreword
Remember when your mom took you to the dentist who said, this is not going to hurt?
And then it hurt a lot, but when you squawked the dentist said, it’s necessary!
This blogpost is about the Vatican’s financial institutions, and ‘it’s not going to hurt’. But it’s essential for an understanding of what will be happening this week in Rome when recommendations come to Papa Francesco from the Gang of Eight Cardinals; and later this fall from two ad hoc commissions tasked to review the bank (IOR) and the Vatican’s accounting practices – bringing onto center stage the financial institutions of the Vatican.
Overview
“If you cannot be trusted in handling worldly wealth, who will trust you with true riches?” (Luke, Chapter 16 Verse 11)
Today’s Italian media report that the financial results of the Istituto per le Opere di Religione (IOR) will be released for the first time ever, tomorrow. As a teaser, it is mentioned that a profit of ˆ87 million (almost $120 million) will have been realized for the 12 months ending on July 31, 2013.
That is warp speed for reporting financial results, two months after the books closed. For context, the Archdiocese of Boston releases its audited financials 7-9 months after the fact, usually on a quiet Friday afternoon.
This noteworthy development is a first-ever, not only for the fact of reporting and the detail expected from an audited set of statements, but also because:
- It comes literally on the day before the Pope is to meet with the Gang of Eight Cardinals who are to deliver their recommendations for reform of the Curia (of which the IOR, technically, is not a part);
- It was acknowledged by the Pope during his summer Brazil trip that he had not planned to concentrate on the IOR at the outset, “I thought I would first first deal with other questions, but one cannot postpone this [the IOR];
- A senior Vatican finance official Monsignor Nunzio Scarano, has spent the summer in Rome’s prison, Regina Coeli, where he remains to this day; when arrested he was carrying the ˆ23 million (about $30 million) in cash; tic toc.
It is also reported that the papal commission looking into the IOR is reviewing every one of the thousands of banking accounts held at the IOR. Again, the context matters:
- It is at least possible that the ˆ23 million carried in the suitcase of Monsignor Scarano involved IOR accounts; and
- Very shortly after the Monsignor’s arrest, the IOR’s general manager and his deputy resigned.
Since the mantras of Vatican spokespersons on financial issues are transparency and bureaucratic reform, it is probable that the restructuring to place in the months to come will involve rearranging the architecture of the financial institutions discussed below, notably:
- Strengthening of the regulatory arm of the Vatican, the Financial Intelligence Authority, to bring the Holy See into compliance with European Union directives;
- Merging the separate real estate empires now held by two separate entities (APSA and the Congregation for the Evangelization of Peoples – aka Propaganda Fide);
- Clamping down on IOR’s deposit-taking and funds transfers, probably limiting these activities to bona fide customers (Vatican employees, religious orders, charitable enterprises); and maybe
- Reducing the IOR to its role as a credit union, leaving the more speculative investments to APSA and perhaps to a network of international money managers.
The discussion below of Vatican financial institutions is to give readers a map for the organizational recommendations likely to be rolled out in the near future. The focus is on the following:
The Vatican Bank, aka IOR;
APSA, the holding entity for most of the Vatican’s real estate and securities;
The Financial Intelligence Authority, regulator of the Vatican Bank;
The Prefecture for Economic Affairs, a central financial and budgetary control agency.
The essential point regarding money laundering through the IOR is that only “clergy, religious institutions and Vatican citizens” may open an account with the IOR; but these persons (actual or legal) may give a delega [power of attorney with rights to transact] to anyone “to operate the accounts as they wish, without limit on the number of deleghe and without there being a register [list] of who has the deleghe.” Which means that any one of 25,000 eligible Vatican individuals may give account-signing authority to an unlimited number of delegati.
One of the prelates now under investigation by the Italian regulators is Don Evaldo Biasini known as ‘Don ATM’ through whose IOR account some ˆ30 million (about $40 million) moved over a 12-month period. On the salary of a monsignore.
Proceed at your own risk.
Financial Institutions of the Holy See
The IOR
The Istituto per le Opere di Religione is a teenager in the context of the centuries-old history of many Vatican institutions. It was established in June of 1942, via a papal ‘chirografo’ (a sort of personal decree, not a canonical one) of Pope Pius XII, (a) giving the IOR legal expression; (b) establishing it separately from the traditional Vatican bureaucracy (Curia Romana); and (c) giving it the mandate to manage assets, whether securities or liquid funds, “destined for the works of religion and Christian piety.”
The timing of the IOR’s creation should be kept in mind, because this was the high-water mark of Nazi ascendancy in Continental Europe. The Turn of the Tide (in Churchill’s resonant phrase) came later, towards the end of 1942.
In mid-1942 the European war had been going on for almost three years, and conventional wisdom considered the Nazis to be invincible as the Wehrmacht raced towards the Volga and beyond it, to the strategic oilfields of the Caucasus.
The creation of the IOR also occurred as European financial institutions in neutral countries (Switzerland, Sweden and Spain, to name a few) were doing a land-office business in foreign exchange operations, asset custody, and fund transfers, involving:
Jews from many Nazi-occupied countries who were being dispossessed;
‘Aryans’ who grabbed Jewish property for a few pfennigs on the Reichsmark;
Industrialists from neutral countries trading lucratively with belligerent nations on both sides; and
Wealthy families in occupied Europe worried about the dominant German influence over their own countries’ banks.
The timing of the IOR’s origins and its autonomy from traditional Curia Romana oversight go a long way in explaining the bank’s propensity to erupt periodically into scandal over its seven decades, as outlined in more detail in the “Past Eff-ups” section below.
APSA
This is the Vatican’s ‘Administration for the Patrimony of the Holy See’. It is the holding entity for Vatican assets, organized into two sections: one for fixed assets (real estate), and one for liquid assets (negotiable instruments). It was established by Pope Paul VI in 1967. (The Congregation for the Evangelization of Peoples, formerly Propaganda Fide, also has a very sizable real estate portfolio.)
APSA is often confused with the IOR, but think of APSA as the custodian of the papal family’s real estate and financial investments, while the IOR functions as a credit union (not really a ‘bank’) for financial operations involving deposit-taking, and for direct investments in complex financial instruments (derivates, anyone?).
Financial Intelligence Authority
This regulatory entity was established in 2010 by Pope Benedict XVI “for the prevention and the countering of illegal activities in the monetary and financial fields;” and “to supervise obligations undertaken to prevent and to counter recycling and the financing of terrorism” [Annuario Pontificio, 2012].
The initiative was in response to post 9/11 pressure from U.S. and European Union regulatory authorities. And it brings us back to the IOR, which until 2010 was the only bank of any size completely beyond the jurisdiction of the regulators. Most of the ‘safe banking havens’ beyond the reach of the U.S. and the EU, notably Switzerland, had reached bilateral agreements with the U.S. and the EU to clamp down on money laundering transactions. But the IOR was completely ‘extra-territorial’.
With the creation of the Vatican’s Financial Intelligence Authority, a regulatory entity something like Washington’s SEC and Comptroller of the Currency, one might have thought that the Vatican State had met the requirements of Good Conduct set out in the EU’s White List of virtuous cooperating banks. Not so, the issue of compliance with the EU is still under negotiation between the EU and the Holy See.
Prefecture of Economic Affairs
This is the entity that exercises administration oversight and budgetary control over the Curia Romana; by definition this authority does not reach the IOR. Think of the prefecture as Washington’s Office of Management and Budget, sort of. So the Vatican has its’ own OMB…OMG!
The IOR’s Past Eff-ups
The IOR has been beyond adult supervision for most of its 71-year history. Past scandals tend to be quickly forgotten, but the recurrence of spectacular eff-ups shows clearly that something is systemically flawed:
- Let’s leave aside the bank’s role as a conduit for U.S. funds pouring into postwar Italy to keep the most geo-strategic country in the Mediterranean out of the reach of Italy’s communist party, the largest one in Western Europe, by nurturing instead Italy’s postwar Christian Democratic Party;
- And let’s not niggle over the funds that moved during the 1980s from Langley, VA through the IOR into Poland, and then distributed via the widespread networks of Catholic dioceses and parishes, and Solidarnosc.
- Not a coincidence that the Reagan Administration in its early days included some fiercely anti-Soviet Catholics, at ease with the complicated ways of the Holy See:
- Secretary of State Al Haig; National-security Advisers Dick Allen and Bill Clark; Director of Central Intelligence Bill Casey; ‘Silent Missions’ specialist Lt. Gen. Dick Walters.
- Also not a coincidence that the U.S. established full diplomatic relations with the Holy See during President Reagan’s first term in 1984, for the first time in the history of the Republic:
- Something that JFK could not have done, given the widespread anti-Catholic feeling that was very much a political factor in the very tight 1960 election (JFK’s popular vote count exceeded Nixon’s by a fraction of one percent).
However, with a bow to The Godfather: Part III, The Sopranos and history, a brief mention of one of the IOR’s most spectacular past eff-ups is in order.
Blackfriar’s Bridge in London
The Blackfriar’s Bridge scandal involves a prominent Italian banker, Roberto Calvi, found hanging from London’s Blackfriar’s Bridge in June, 1982. This story is generally known, but the key points are now fading from public awareness.
Calvi through his Milan bank, Banco Ambrosiano, had entered into a network of transactions with the IOR then in the firm grip of Archbishop Paul Marcinkus (“you can’t run the Church on Hail Marys”).
Monies flowed through the IOR into various schemes promoted by Calvi with the promise of great returns; but in the way of all Ponzi schemes (btw, Charles Ponzi was a Boston homey) inflows eventually dried up and investors scrambled to cash out.
Calvi had secured so-called comfort letters from the IOR, indicating in carefully crafted legal language that the IOR supported the investments of Calvi’s Banco Ambrosiano. Initially, this appears to have reassured many of Calvi’s investors.
After Calvi’s death and the almost-simultaneous apparent suicide of his personal assistant, the Banco Ambrosiano collapsed, and the investors lined up at the IOR to recoup their capital, based on the IOR comfort letters. Keep in mind that virtually all of these investors had probably moved their funds into and through the IOR to avoid annoying details such as taxes and disclosure of the origins of their funds. And some of these investors probably had extra-large neck sizes, and sported pinkie rings. But for a few years after Calvi’s death, the IOR did not feel obliged to oblige the Ambrosiano investors.
Following some years of wrangling (including tens of thousands of attorneys’ billable hours), in May of 1984 “in recognition of moral involvement” the IOR settled with Banco Ambrosiano creditors with a “voluntary contribution” of approximately $240 million.
Sound familiar? An American bishop blasting lawyers for claimants, and then after a few years of wrangling, settling for a very tidy sum without admitting culpability:
In 2003 the Archdiocese of Boston settled 500+ claims of clergy sexual abuse for $85 million;
In 2007 the Archdiocese of Los Angeles settled almost the same number of claims for $660 million. (Who says that Franciscans are no good with money?)
In early June of 1984, the Vatican’s official daily, L’Osservatore Romano, wrote that the IOR agreement was intended to “[translated from the Italian] facilitate a global solution for the consolidation of relationships of an international character.” Hmmm, a quarter of a billion dollars. Financial press commentary at the time indicated that, against outstanding claims of around $1 billion, claimants recovered about one-fourth of their invested capital.
At the time of his demise in 1982, Calvi’s death it was ruled a suicide by the British authorities. But a forensic analysis commissioned by Italian media almost two decades after the fact concluded that the cause of Calvi’s death was strangulation in a nearby dump-site, with the body then moved to Blackfriars Bridge which spans the Thames.
Why the move? Perhaps a subtle message by choreographing Calvi’s death scene just a short distance from Blackfriars Monastery, which is run by the ultra-loyal Dominican Order, at the edge of London’s financial district.
Another lethal message was probably delivered to the Vatican almost exactly one year after Calvi’s death, on June 22, 1983 when a 15-year old girl, Emanuela Orlandi, disappeared in broad daylight from a busy Rome street on her way to a music school located in an ‘extra-territorial’ Vatican building, i.e. beyond the Vatican City but technically within the Holy See. Over the intervening 30 years she has never been found.
The link of this tragedy to the Vatican is two-fold:
Emanuela was a Vatican State citizen by virtue of her father’s employment inside the Vatican, a tradition in the Orlandi family’s history of service to the Vatican going back one century;
On July 3, less than two weeks after her disappearance, Pope John Paul the Great in his Sunday Angelus homily said,
“[translated from the Italian]…I am close to the Orlandi family, which is saddened for their daughter Emanuela who since June 22 has not returned home, without losing the hope in the sense of humanity of whoever has responsibility in this case…”
There are other IOR dramas, going back a few decades and involving spectacular Act Four death finales:
- The Michele Sindona affair, involving the collapse of a prominent U.S. bank, Franklin National of Long Island; Sindona, an adviser to the IOR, was in a maximum-security Italian prison, sipped his morning espresso, and then keeled over, morto;
- The so-called ‘maxi-bribe’ affair of the mid-1990s where the IOR was the transfer mechanism for at least $1 billion in bribes involving Italy’s biggest political parties; and – yes – a couple of suicides, one of them in a maximum-security Italian prison.
What Lies Ahead for Papa Francesco
(intentional double entendre for the word ‘lies’)
The principal financial entities, IOR and APSA, are like a couple of cluster bombs: this ordnance sprays its target area with several lethal bomblets, timed to detonate at unpredictable intervals.
One predictable explosion may involve outgoing Secretary of State Cardinal Tarcisio Bertone. During the self-imposed lame-duck period of Pope Benedict’s papacy, from February 11, 2013, when he announced his intention to resign, until February 28 when his resignation become effective, there were some very peculiar maneuvers involving the IOR:
In mid-February, less than a week after Benedict’s bolt-out-of-the-blue announcement, but while he still reigned supreme, several high-level moves were made within the IOR:
- A new IOR president was announced after a nine-month vacancy, Herr Ernst Von Freyberg, a German national and head of Hamburg ship-builder Blohm & Voss;
- Pope Benedict reconfirmed the five-year mandate of the IOR’s supervisory board of cardinals, including its’ chair, Cardinal Bertone;
- One member of the supervisory board of cardinals, Attilio Nicola, was substituted with Cardinal Domenico Calcagno, controversially elevated to cardinal a year ago and a close associate of Cardinal Bertone;
- The Vatican official in the Secretariat of State responsible for monitoring the IOR – 46-year old Monsignor Ettore Balestrero – was promoted to archbishop, and sent to Bogota, Colombia as papal nuncio with diplomatic immunity; as ‘under secretary of state’, Monsignor Balestrero had been the eyes and ears of Cardinal Bertone, tasked with monitoring the IOR.
Cardinal Bertone’s five-year term as the IOR’s supervisor means that his mandate runs until 2018, extending well into the pontificate of Benedict’s successor(s); unless this were to be modified. It will be interesting to see what happens during the inevitable reshuffle of the IOR. Any continuing influence of Bertone on the IOR could trigger more Vatileaks.
The road ahead is pretty bumpy for Pope Francis. Those who suffered through a political science course in college may remember some of the wisdom of Alexis de Tocqueville who wrote perceptively about the young American republic in the first half of the 19th century. He also had something to say about authoritarian regimes:
The most dangerous moment for a regime is when it begins to reform itself.
|