Vatican Corner 03-11-18


The Vatican Bank, formally known as the Institute for the Works of Religion (IOR) is a private bank inside Vatican City run by a Board which reports to a Supervisory Commission of Cardinals and the Pope. The Bank’s purpose is “to provide for the safekeeping and administration of movable and immovable property transferred or entrusted to it … (that are) intended for works of religious charity.” The Bank accepts deposits from legal entities or persons of the Holy See and the Vatican City State. Its main function is to manage bank accounts for religious orders and Catholic associations. According to 2016 figures, the bank has about $7 billion in assets from about 15,000 customers. It has about 100 employees and turned a profit of about $44 million. The Bank’s surplus belongs to the Church. In 2013 the then- president of the Bank, Ernst von Freyberg, a German businessman, noted suspicious accounting procedures under previous administrations. Freyberg, who was president until 2014 commissioned an independent audit of the sale of properties that had been owned by the Bank. Also Pope Benedict XVI launched a massive internal overhaul of the Bank with reforms of its operations to clean up its reputation as a scandal-plagued off-shore tax haven. Thousands of accounts were closed. The Bank’s internal investigation of the suspicious accounting brought indictments for the former president of the Bank – Angelo Caloia, 78 and his lawyer Gabriele Liuzzo, 94 on embezzlement charges. The trial will begin March 15, 2018. A third man IOR director general Lelio Scaletti who was also initially charged has since died. Caloia and Liuzzo have both repeatedly denied wrong doing. The Bank said the three carried out “unlawful conduct” between 2001 and 2008 during the sale of 29 buildings sold by the Bank to mainly Italian buyers. The damages are estimated to be 62 million dollars and the Bank is seeking compensation. In December 2014 the Vatican’s top prosecutor, Gian Piero Milano, had frozen millions of dollars in accounts held by the three men. In the freezing order, Miiano said the men regularly under-represented the proceeds from real estate sales in the Vatican Bank’s official books. The men allegedly received the difference between the real sale prices and the amount officially recorded and often in cash. Last month the Vatican civil court found two other former bank heads, Paolo Cipriani and Massimo Tulli, liable for mismanagement and bad investments during their time at the bank before they resigned in 2013. They have been ordered to repay the Bank. Italy and the Council of Europe have determined from several evaluations that while the Vatican has made great strides in cleaning up the IOR and other financial departments, it needs to be much more aggressive in bringing cases to trial.

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