February 26, 2014
By Christina Pazzanese, Harvard Staff Writer
In keeping with Pope Francis’ growing reputation as an egalitarian-minded maverick, the Vatican announced Monday that he will begin revamping the Holy See’s financial operations by creating a new ministry, called the Secretariat of the Economy, that will have broad authority and report directly to him.
The agency is expected to bring order and transparency to the notoriously secretive Vatican Bank, which critics charge operates like an offshore tax haven for organized crime and money launderers and is now mired in a string of corruption scandals. Last month, a senior cleric serving as a top Vatican accountant was charged criminally for trying to smuggle €20 million from Switzerland into Italy through the private, unregulated bank, which is formally known as the Institute for the Works of Religion (IOR).
Headed by Australian Cardinal George Pell, a longtime reform advocate, the new ministry will be advised by a 15-person council that includes eight prelates and, for the first time in church history, seven lay financial experts. An auditor appointed by the pope will have the power to review all financial records.
Vatican watchers say the pope’s move is the most dramatic structural overhaul of the church bureaucracy in 25 years, with some calling it unprecedented for its swift and substantive nature in addressing an issue that has dogged the church for decades.
Gregg Fields, M.P.A. ’95, is a veteran business journalist and currently a research fellow at the Edmond J. Safra Center for Ethics at Harvard University. Fields, who is studying the threat that institutional corruption poses to the U.S. economy and how the cozy affinity between Washington, D.C., and Wall Street has undermined the effectiveness of financial industry regulations, spoke with the Gazette about the significance of the Vatican’s reforms and the challenges that Pope Francis faces in trying to restructure and bring transparency to an entrenched financial institution.
GAZETTE: How significant are the actions the pope took this week, and more broadly, what he’s done since last August, such as hiring a Washington, D.C.-based company to conduct a forensic review of the bank’s finances?
FIELDS: Two things I found very interesting this week. One, I do think that the creation of this authority is very significant because it’s going to totally rework the way the Vatican handles its assets, the way the Vatican looks at things like due diligence and review. I think it was the pope who said it’s going to be less Vatican-centric in terms of the way it operates. So I think that’s very significant. The other thing I found interesting about the statement, frankly, was what wasn’t in it. Unless I have missed something, what was not in it is any mention of the IOR, the Vatican Bank. And we know last week, the pope was briefed about the bank. We don’t know what he was told, but we do know that last year he said, “Maybe the bank doesn’t have a future.” I suspect, just as a journalist looking at what’s not there, this is a way of changing the IOR’s role in a way that diminishes it, and could be a prelude to getting rid of it.
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