Institute for the Works of Religion
|Founded||27 June 1942 (absorption of the Administration of the Works of Religion)|
|Key people||Ernst von Freyberg (President)
Ronaldo Hermann Schmitz (Vice-president)
The Institute for the Works of Religion (Italian: Istituto per le Opere di Religione – IOR), commonly known as the Vatican Bank, is a privately-held institute located inside Vatican City and run by a Board of Superintendence who reports directly to a Cardinals' Commission and the Pope.[note 1]
The institute was founded by papal decree of Pope Pius XII in June 1942. Its assets are not property of the Holy See, and so it is not overseen by the Prefecture for the Economic Affairs of the Holy See. The Annuario Pontificio lists it under neither "Holy See" nor "Vatican City State", placing it among charitable foundations.
In June 2012, the IOR gave a first short presentation of its operations. In the following year, on 22 May 2013, the Vatican's financial watchdog, the Financial Information Authority, whose Director is René Brülhart, published its first Annual Report, and informed that in 2012 it had identified six suspicious activities, only two of which were serious enough to be reported to the Vatican prosecutor. In July 2013, the Institute launched its own website, providing additional financial, historical and governance information, and on 1 October 2013 published its first ever annual report, which is available for download on its website.
On 24 June 2013, Pope Francis issued a chirograph creating with immediate effect a special investigative Pontifical Commission to study IOR reform. The five-member commission includes two cardinals as well as Harvard Law Professor Mary Ann Glendon.
The Istituto per le Opere di Religione was founded on 27 June 1942 by Pope Pius XII. It absorbed the Amministrazione per le Opere di Religione (Administration of the Works of Religion), which had originated in the Commission for Works of Charity (Commissione ad pias causas) established by Pope Leo XIII on 11 February 1887.
It has always been distinct from what has become the Administration of the Patrimony of the Apostolic See, which instead of administering funds destined for works of charity, manages the funds remaining at the disposal of the Pope after the complete loss of the Papal States in 1870 and those that were part of the settlement of the Roman Question by the Lateran Pacts of 1929.
The purpose of the Istituto per le Opere di Religione is "to provide for the safekeeping and administration of movable and immovable property transferred or entrusted to it by physical or juridical persons and intended for works of religion or charity".
Nor is it a central bank responsible for a country's monetary policy and for maintaining the stability of a currency and money supply. This function is regulated by the Monetary Agreement between the European Union and the Vatican City State, authorizing the use of the euro as the official currency of Vatican City. Implementation of that Agreement and oversight of the Vatican law against money laundering and financing of terrorism is in the hands of the Financial Information Authority established by Pope Benedict XVI on 30 December 2010.
Unlike in banking for profit, the IOR's surplus is at disposal of the Holy See, to which the Institute in 2012 made a contribution of 50 million euros. Moreover, the Institute does not use deposits to lend money and does not issue securities for resale or other financial products.
According to its present statutes, which came into effect in 1990, the IOR is composed of five elements:
- A Commission of five Cardinals appointed for renewable five-year terms
- A Prelate. appointed by the Commission with approval by the Pope, who acts as secretary of the Commission and attends meetings of the Board of Superintendence
- A Board of Superintendence
- A Directorate, in charge of operational activities and accountable to the Board of Superintendence
- A Board of Auditors, charged with the internal audit of the IOR books and reporting to the Board of Superintendence
The following are the five members of the Board of Superintendence, appointed on 15 February 2013 for a term that expires in December 2015:
- President: Ernst von Freyberg
- Vice president: Ronaldo Hermann Schmitz
- Non-executive Member: Carl A. Anderson
- Non-executive Member: Antonio Maria Marocco
- Non-executive Member: Manuel Soto Serrano
The following is a list of previous presidents:
- Bernardino Nogara (1942-1954)
- Massimo Spada (1954-1971)
- Archbishop Paul Marcinkus (1971-1989)
- Angelo Caloia (1989-2009)
- Ettore Gotti Tedeschi (2009-2012)
- Ronaldo Hermann Schmitz (2012-2013; interim)
||This article's Criticism or Controversy section may compromise the article's neutral point of view of the subject. (November 2013)|
When the Holy See, whose tax-exempt status on income from Italian investments was revoked in 1968, decided to diversify its holdings, it employed as financial advisor Michele Sindona, who turned out to be "one of the biggest financial swindlers of the century" and to have had links with the Mafia since 1958. The 1974 failure of Sindona's Franklin National Bank and the subsequent collapse of his financial empire, into which he had chanelled part of the Holy See's investments, entailed losses for the Vatican estimated by one source at 35 billion Italian lire (20 million pounds sterling).
In 1982, a major political and financial scandal connected with the collapse of Banco Ambrosiano involved the head of IOR from 1971 to 1989, Archbishop Paul Marcinkus, who allegedly had given "letters of patronage" on behalf of the IOR in support of the failed bank. In 1987, an Italian court issued a warrant against Marcinkus, whom they accused of being an accessory to fraudulent bankruptcy. Marcinkus evaded arrest by staying inside Vatican City until the warrant was dismissed in 1991, whereupon he returned to his home country, the United States. Chairman of the Banco Ambrosiano, Roberto Calvi was convicted of violating Italian currency laws and fled on a false passport to London where he was murdered. The Istituto per le Opere di Religione, a 10% shareholder of Banco Ambrosiano, denied legal responsibility for the Banco Ambrosiano's downfall but acknowledged "moral involvement", and paid US$224 million to creditors.
Several books published during the 1980s and 1990s, such as Unholy Trinity: How the Vatican's Nazi Networks Betrayed Western Intelligence to the Soviets, Genocide in Satellite Croatia 1941–1945 and The Vatican's Holocaust, were highly critical of the Institute for the Works of Religion's historical relations with anti-communist governments and especially with the Independent State of Croatia during World War II. Sources such as these engendered controversy, which centers on the authors' conclusions drawn from the documentation rather than the documents themselves.
The book Unholy Trinity says that, according to a 1998 report issued by the US State Department, the Independent State of Croatia treasury was illicitly transferred to the IOR and several banks after the end of World War II.[page needed] A 21 October 1946 report from US Treasury agent Emerson Bigelow, declassified in 1997, quoted a "reliable source in Italy" (who corroborated evidence already obtained by CIC intelligence officials of the Army),[need quotation to verify] who told Bigelow that Croatian officials had sent 200 million confiscated Swiss francs (CHF), largely in the form of gold coins, to the Vatican "for safekeeping", and that they had attempted to send a further 150 million from Austria to Switzerland, a shipment intercepted by British authorities. (Other rumors recorded by the US Treasury were that Ustasha leader Ante Paveliċ brought with him to Austria large amounts of gold, some or all of which he handed to the British authorities before being released or escaping.) The Italian source also reported a rumor that much of the sum allegedly deposited in the Vatican had been sent to Spain and Argentina, a rumor that the Italian source said might be meant to cover up retention of the entire amount in the Vatican. Bigelow's report nowhere made mention of the IOR, only of "the Vatican". The June 1998 report of the US Treasury declared that there was in fact no substance in the Bigelow report of Vatican involvement. "There is no basis in reality to the report", said Vatican spokesman Joaquin Navarro-Valls, as reported in Time Magazine.
Tony Abse, writing on The Weekly Worker (which describes itself as an organ of the Communist Party of Great Britain), says that the CIA used the Institute for the Works of Religion to funnel funds to the Solidarity Polish trade union "as part of the final offensive against the Soviet Union". The organization "American Atheists" says covert United States funds were channelled in the same way both to Solidarity and to Contra guerrillas.
Class action suit by Holocaust survivors
Alperin v. Vatican Bank is a class action suit by Holocaust survivors against the Institute for the Works of Religion and Franciscan Order ("Order of Friars Minor") filed in San Francisco, California on November 15, 1999. The case was initially dismissed as a political question by the District Court for the Northern District of California in 2003, but was reinstated in part by the Court of Appeals for the Ninth Circuit in 2005. That ruling has attracted attention as a precedent at the intersection of the Alien Tort Claims Act (ATCA) and the Foreign Sovereign Immunities Act (FSIA).
The complaint against the Vatican Bank was dismissed in 2007 on the basis of sovereign immunity, but the case against the Franciscan Order continues as of 2009. According to Reuben Hart, "the case is extremely complicated and potentially massive, considering the large class spread across many countries".
2009–2012 Vatican money laundering investigation
In 2009, the Italian magazine Panorama reported that IOR was being investigated by Italian authorities from the Financial Intelligence Unit of the Banca d'Italia and the Guardia di Finanza over money laundering transactions worth €180 million (US$ 218 million) through a branch of UniCredit located at Via della Conciliazione across from St. Peter's Basilica. The bank handles accounts of the religious orders and other Catholic associations using the "offshore" (i.e., foreign) status of the Holy See.
On 21 September 2010, Italian police declared that Gotti Tedeschi and another IOR manager were under investigation for money laundering charges. €23 million were seized as a precaution. Police began an investigation regarding Gotti Tedeschi around a week before the news was made public after a division of the Bank of Italy alerted police to two transactions involving the IOR that were deemed suspicious. The money seized was bound from an Italian bank, Credito Artigianato, to JP Morgan Chase and another Italian bank, Banca del Fucino. Both the origin and destination of the funds were accounts under the control of the IOR. The IOR had allegedly failed to disclose the origin of the money, a violation of Italian law.
In a statement regarding the investigation, the Vatican said that it was "...perplexed and astonished by the initiatives of the Rome prosecutors, considering the data necessary is already available at the Bank of Italy." According to the police, the presence of the investigation did not mean either of the officials involved had been charged with a crime, and a judicial ruling would be necessary to continue the investigation. In July 2013, the case against Gotti Tedeschi was reported to be dropped.
On 30 December 2010, Pope Benedict XVI established the Vatican's independent Financial Intelligence Authority (Autorità di Informazione Finanziaria, AIF) to oversee the monetary and commercial activities of all Vatican-related institutions, including the IOR. The Vatican's so-called "financial watchdog" monitors all Vatican financial operations and ensures they meet international norms against money-laundering and the financing of terrorism.
On May 31, 2011, Rome's attorney general released the 23 million Euros in assets which had been seized in September, apparently in acknowledgment of the steps taken in the following months to conform the Institute to international standards.
On May 24, 2012, Ettore Gotti Tedeschi was ousted as Head of the Vatican Bank because of "failure to fulfill the primary functions of his office". He has been investigated on suspicion of money laundering, but in July 2013, the inquiry was dropped.
In July 2013 the Holy Sees's Financial Intelligence Authority (AIF), charged with monitoring the monetary and commercial activities of Vatican agencies, was admitted as a full member of Egmont Group, an international network of Financial Intelligence Units.
Monsignor Battista Ricca
On 15 June 2013, with the approval of Pope Francis, the Cardinals' Commission appointed Monsignor Battista Mario Salvatore Ricca as the Institute's Prelate ad interim. The function of the Prelate is to act as secretary of the Cardinals' Commission and to attend meetings of the five-member Board of Superintendence. Following the nomination, the Italian media published reports that Ricca in the past allegedly was involved in consensual homosexual acts. There was also speculation that opponents of reform might have withheld information about possible scandals in Ricca's past or that they might have made up unfounded rumours about Ricca's past. It was reported that Ricca had offered his resignation because of the controversy, but the head of the Holy See's Press Office declared the accusations as "not credible" and Pope Francis himself informed journalists that an inquiry "found nothing".
- Christian finance
- Economy of the Vatican City
- Ettore Gotti Tedeschi
- Index of Vatican City-related articles
- Specific citations
- (Italian) Cfr. art. 2 of the Chirograph signed by John Paul II
- Board of Superintendence
- Cardinals' Commission
- Pollard, 2005, p. 2
- Annuario Pontificio 2012, pp. 1796-1803
- John Paul II Foundation for the Sahel from global-mechanism.org
- Vatican's Financial Information Authority releases Annual Report, Vatican Radio, 22 May 2013
- Philip Pullella: Vatican financial body investigating possible money laundering, Reuters, 22M May 2013
- Giulia Segreti, "Vatican watchdog reports suspect money movements" in Financial Times, 22 May 2013
- IOR launches website, Vatican Radio, 31 July 2013
- IOR: IOR Annual Report 2012
- Vatican bank publishes first ever annual report, BBC News, 1 October 2013
- Nicole Winfield: Secretive Vatican bank takes step to transparency, AP, 1 October 2013
- Chirografo di Giovanni Paolo II con il quale viene data nuova configurazione all'«Istituto per le Opere di Religione»
- Annuario Pontificio 2012, p. 1908
- Roman Curia
- Monetary Agreement between the European Union and the Vatican City State
- Motu proprio for the prevention and countering of illegal activities in the area of financial dealings
- Pope requires full transparency of transactions in the Vatican
- Vatican Bank Discloses Annual Earnings Report for First Time, Bloomberg, 1 October 2013
- Vatican bank launches website in effort to increase transparency, Catholic Herald, 1 August 2013
- "Communiqué of the Press Office of the Holy See: Appointment of the New President of the Supervisory Board of the Institute for the Works of Religion (I.O.R.)". 15 February 2013.
- Frederic Spotts, Theodor Wieser, Italy: A Difficult Democracy (Cambridge University Press 1986 ISBN 978-0-52131511-1), p. 252
- Nicolas Pileggi, "The Tycoon Vanishes" in New York Magazine, 24 September 1979, p. 44
- Mark Lombardi, Robert Carleton Hobbs, Judith Richards, Global Networks (published by Independent Curators in 2003 for a travelling exhibition of the work of artist Mark Lombardi, ISBN 0-916365-67-0), pp. 61-65]
- The Banker, vol. 125, issues 587-592, p. 228
- Dennis Patrick McCarthy, International Economic Integration in Historical Perspective (Routledge 2012 ISBN 978-1-13598750-3)
- Bernard A. Cook (editor), Europe since 1945 (Routledge 2001 ISBN 978-0-20380174-1), p. 1082
- The Vatican Bank is rocked by scandal again
- Benton E. Gup, Bank Failures in the Major Trading Countries of the World (Greenwood 1998 ISBN 978-1-56720208-3), p. 31
- John L. Allen, The Catholic Church: What Everyone Needs to Know (Oxford University Press 2013 ISBN 978-0-19997679-9)
- Aarons & Loftus, Unholy Trinity, p. ??
- Paris, Edmond. Genocide in Satellite Croatia 1941–1945. The American Institute for Balkan Affairs, 1990.
- Manhattan, Avro (1986). The Vatican's Holocaust. Ozark Books.
- Aarons & Loftus, Unholy Trinity, p. 297
- Emerson Bigelow's report
- June 1998 Supplement to Preliminary Study on U.S. and Allied Efforts To Recover and Restore Gold and Other Assets Stolen or Hidden During World War II
- Alan L. Berger, Harry J. Cargas, Susan E. Nowak (editors), The Continuing Agony (Global Academic Publishing 2002 ISBN 978-1-58684211-6), p. 141
- The Vatican Pipeline, Time Magazine, July 22, 1997
- "Vatican: Rotten to the Core". American Atheists. 4 July 2013. Retrieved 22 July 2013.
- "Gelli arrest is another chapter in sordid Vatican bank scandal". American Atheists. 16 September 1998.[dead link]
- Reuben Hart. 2006. "Property, War Objectives, and Slave Labor Claims: The Ninth Circuit's Political Question Analysis in Alperin v. Vatican Bank". 36 Golden Gate U.L. Rev. 19.
- Josephine McKenna (2009-12-07). "Vatican Bank reported to be facing money-laundering investigation". The Times. Retrieved 2010-06-12.
- Agence France-Presse (2010-06-01). "Vatican bank suspected of money laundering: report". MSN. Retrieved 2010-06-05.[dead link]
- AGI News On (2010-09-21). "IOR: GOTTI TEDESCHI UNDER INVESTIGATION, 23 MLN EURO SEIZED". Retrieved 2010-09-21.
- "Vatican Bank 'investigated over money-laundering'". BBC News Online. 21 September 2010. Retrieved 22 September 2010.
- Donadio, Rachel (21 September 2010). "Money-Laundering Inquiry Touches Vatican Bank". The New York Times. Retrieved 22 September 2010.
- ANSA (Italian News Agency), 2 July 2013: "Ior: Gotti Tedeschi verso archiviazione"
- The Vatican Creates a Financial Watchdog, The New York Times, 30 December 2013
- "Vatican bank chief ousted after unanimous no-confidence vote". USA Today. 24 May 2012. Retrieved 24 May 2012.
- Italian prosecutors drop inquiry into former Vatican bank chief, Reuters, 6 July 2013
- "Vatican Financial Intelligence Authority Admitted to Global Network of Financial Intelligence Units". Zenit News Agency. 2013-07-03. Retrieved July 4, 2013.
- "Despite setbacks, Vatican Bank undergoing important evolution". Catholic News Agency. 2013-07-04. Retrieved July 7, 2013.
- Pope Francis appoints prelate to oversee Vatican bank , BBC News, 15 June 2013
- Interim bank appointment means Pope wants cardinals' advice, Catholic News Agency, 17 June 2013
- The Prelate of the Gay Lobby, L'Espresso, 18 July 2013
- Edward Pentin, "Vaticanista Publishes Lurid Tale Surrounding Vatican Bank Appointee" in National Catholic Register, 24 July 2013
- Pope Francis's judgment in question after priest named in gay sex scandalGay scandal at the heart of the Vatican: Pope Francis faces his first crisis Prelate Battista Ricca's 'gay romance' rocks Vatican
- Catholic World News (22 July 2013): "Prelate of Vatican bank reportedly offers resignation"
- Romans always love a Vatican scandal. But what if this time they're right?
- Style and substance
- "Post-WYD Surprise: Pope Francis Gives Wide-Ranging In-Flight Press Conference" (National Catholic Register, 29 July 2013)
- General references
- John F. Pollard: Money and the Rise of the Modern Papacy: Financing the Vatican, 1850–1950 ISBN 0-521-81204-6
- Mark Aarons and John Loftus: Unholy Trinity: How the Vatican's Nazi Networks Betrayed Western Intelligence to the Soviets. New York: St.Martin's Press, 1992. 372 pages. ISBN 0-312-07111-6
- Malachi Martin: Rich Church, Poor Church (Putnam, New York, 1984) ISBN 0-399-12906-5
- Malachi Martin: Vatican (Jove (August 1, 1988)) ISBN 978-0-515-09654-5
- Charles Raw: The Moneychangers: How the Vatican Bank Enabled Roberto Calvi to Steal 250 Million Dollars for the Heads of the P2 Masonic Lodge (Harvill Press, 1992) ISBN 0-00-217338-7
- Giancarlo Galli: Finanza bianca. La Chiesa, i soldi, il potere (Mondadori, 2004) ISBN 88-04-51262-8
- David A. Yallop: In God's Name: An Investigation into the Murder of Pope John Paul I
- Mark Lombardi: Global Networks. Mark Lombardi, Robert Carleton Hobbs, Judith Richards; Independent Curators, 2003 (published for the travelling exhibition of his work, "Mark Lombardi Global Networks"). ISBN 0-916365-67-0
- Jonathan Levy, "The Vatican Bank", in Russ Kick (Ed.), Everything You Know is Wrong (Disinformation Press, 2002) ISBN 1-56731-701-4
- Michael Phayer: Pius XII: The Holocaust and the Cold War, 2008, ISBN 978-0-25334-930-9.
- "Nazi-Era Victims Demand Army, CIA Release Documents on Vatican". CNS News. September 4, 2000.
- The Vatican Bank claims website
- The Vatican Pipeline: U.S. intelligence document links $170 million in Nazi gold to the Vatican—report on declassified memo in Time Magazine, July 22, 1997
- Vatican Bank describes its own history and operations in Court Document" from Wikileaks
- Whistleblower exposes Vatican Bank shenanigans from italianinsider.it