Pope Rejects the Setup of an Investment Fund

By Andrea Tornielli
Vatican Insider
May 22, 2015

The decision had been given the green light by the IOR’s lay Board of Superintendence. But it was halted first by the body’s supervisory Commission of Cardinals and then by the Pope himself. The Institute for the Works of Religion (IOR) will not have its own SICAV - (Societe d’Investissement a Capital Variable) a type of investment fund that has a variable share capital. The IOR’s president, Jean-Baptiste de Franssu had wanted to set up this fund in Luxembourg. However, Francis has, since the very start of his pontificate, opposed the IOR’s tendency to behave like an investment bankin some cases. The reform of the Vatican’s finances also means making choices of this kind, in order to underline the unique nature of the “Vatican bank” and ensure that it remains true to the original purpose for which it was created.

The point of the setting up of a SICAV investment fund was to help IOR managers manage a portion of the Institute’s deposits. Luxembourg was chosen as the area where operations would take place as it is in the Eurozone but also offers tax concessions. Vatican Insider has learnt that the decision was taken and formalised by the IOR’s Board of Superintendence headed by de Franssu. But when the project was presented to the Commission of Cardinals headed by Spanish cardinal Santos Abril y Castello, it was discussed and was eventually handed over to the Pope who has been keeping a close eye on key decisions regarding the activities of the Institute.

The fact that the SICAV idea was turned down, shows that the Holy See is keen to steer clear of certain financial instruments. Setting up an investment fund in Luxembourg may have made the controls and checks process more complex.

Readers will recall that, in the question an answer session with journalists on board the return flight from Brazil in July 2013, the Pope himself left open the possibility that the work being done by the Commission for Reference on the IOR - which had been established a month prior to this – could lead to a decision to shut down the Institute. But this did not happen. “The IOR cannot be suppressed: many of the local Churches around the world are poor and in need of funds to build schools, hospitals, assistance centres, seminaries. The real issue at hand is transparency and cleaning up.” This was the explanation which Guzman Carriquiry, Secretary in charge of the Vice-Presidency of the Pontifical Commission for Latin America, gave as to why the IOR had not been shut down. Carriquiry’s statements have been published in the book “La banca del Papa” (The Pope’s bank), By Vatican correspondent Francesco Peloso.

So it looks as though the IOR will continue to exist. But it will not act like an investment bank or make use of certain (legitimate) financial instruments.








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