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IOR - Unmasking The Vatican's Bank
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IOR - Unmasking The Vatican's Bank 10 years, 3 months ago #1136

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IOR - Unmasking The Vatican's Bank

The mysterious Istituto per le Opere di Religione responds to anti-money-laundering laws.

By Alessandro Speciale, 25 January 2011


ROME, Italy — When Pope Benedict XVI makes lofty statements about the role ethics plays in the economy, he speaks from experience.

Within the Vatican is the only branch of the Istituto per le Opere di Religione (IOR), otherwise known as the Vatican bank. Its ATM uses Latin.

Only Vatican employees and religious institutions are allowed to open accounts in the bank — which you’d think would make it the most moral bank in the world.

So why is its chief, economist Ettore Gotti Tedeschi, under investigation for money laundering?

Italy's Central Bank flagged a 23 million euro transfer from an IOR account in an Italian bank, the Credito Artigiano, to two other accounts as lacking some information now compulsory under EU-mandated anti-money laundering laws. So prosecutors seized the money, froze the IOR account, and opened an investigation.

This embarrassing “misunderstanding” — as the Vatican called it in a note published in its newspaper, l'Osservatore Romano — managed to turn the spotlight again on an institution that has been involved in many murky affairs.

“The IOR is not a bank in the normal definition of the term,” wrote Vatican spokesman Federico Lombardi in a recent letter to the Financial Times. In fact, it doesn't lend money or act as a consultant to businesses.

“It is more a fund deposit and transfer institution than a bank,” said Carlo Marroni, a Vatican expert with Il Sole 24 Ore, Italy's financial daily. IOR doesn't invest in the stock market, he thinks, “though they operate on the currency or bond market, or buy gold.” To trade in world markets it must go through other banks, such as the Credito Artigiano.

It is hard to pin down the value of IOR’s holdings. “It doesn't publish a budget or an annual report,” Marroni said. “It is usually held that it has 5 billion euros in deposits, but I don't know how exact this figure is.”

Another often reported figure is that accounts turn a 13 percent yearly interest — tax-free, like the Vatican itself.

But, “I think it's much less than that,” said Marroni. A leaked document from 1987 published in a recent book that made headlines here, “Vaticano Spa” — Spa being the acronym for publicly traded companies in Italian — showed that an IOR account yielded a 9 percent net interest.

IOR's biggest asset, anyway, is its secrecy — all its accounts are identified only by number. This secrecy has been used for unholy goals.

Some of them have been documented in full. The author of “Vaticano Spa,” Gianluigi Nuzzi, gained access to the archive left by the late Monsignor Renato Dardozzi, a key player at IOR from 1974 to the late 1990s. He used it to investigate the bank's involvement in money-laundering for Italian politicians and even mafia bosses. In a letter published by Nuzzi, the previous president of the Vatican Bank, Angelo Caloia, confessed worriedly to cardinal Angelo Sodano, John Paul II's “prime minister,” that IOR had served to “clean” bribes and that it held ciphered accounts for Catholic politicians, such as seven-time prime minister Giulio Andreotti.

When Banco Ambrosiano head Roberto Calvi, know as “God's Banker,” died under Blackfriars Bridge in London in 1982, the Vatican Bank was then the main shareholder of the Banco.

The American head of IOR at the time, Illinois-born cardinal Paul Casimir Marcinkus, a former body guard to Pope Paul VI, resorted to Vatican immunity to avoid prosecution by Italian judges. He died in 2006 and has often been blamed for the scandals that plagued the bank in the 1980s.

“After that, things started to change, starting under Caloia (Marcinkus' successor from 1990)," said Giancarlo Galli, a journalist who wrote a key book on Catholic finance. “Slowly, later than elsewhere, but people in the Vatican began to understand that 'opacity' is no longer a value in the financial world, replaced by 'transparency.'”

Such efforts redoubled with the arrival last year as president of Gotti Tedeschi, an outspoken economist who had worked as Italian representative from Spain's Banco Santander. After news of the money-laudering investigation came out last fall, Tedeschi voluntarily spoke with prosecutors. Italy's Corriere della Sera also reported that 13 IOR accounts not belonging to Vatican employees had been closed.

Until now, IOR's secrecy has been assured by the loyalty and frugality of its employees, mostly priests, and by the fact that the Vatican, a sovereign State, operates as a financial black hole, exempt from all international disclosure and transparency obligations.

This is going to change: The Vatican is working with the Organization for Economic Cooperation and Development to be accepted on a 'white list' of financially accountable countries.

“This could take quite a long time, though,” Marroni said.

A papal decree published on Dec. 30 gave the Vatican for the first time its own money-laundering law. It also created a financial oversight authority with broad powers to investigate any suspicious money transfer.

Also last year, for the first time, the Vatican attached an official figure to IOR, saying in the yearly statement on the Holy See's budget that the bank had donated 50 million euros “for the religious activities of the Holy Father.”

“This is welcome,” Marroni said, “though this shows that IOR turns a profit. And one cannot help but wonder where it comes from.”

Re: IOR - Unmasking The Vatican's Bank 8 years, 3 months ago #2718

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How the Vatican built a secret property empire using Mussolini's millions

The Guardian, Monday 21 January 2013
Papacy used offshore tax havens to create £500m international portfolio, featuring real estate in UK, France and Switzerland

Few passing London tourists would ever guess that the premises of Bulgari, the upmarket jewellers in New Bond Street, had anything to do with the pope. Nor indeed the nearby headquarters of the wealthy investment bank Altium Capital, on the corner of St James's Square and Pall Mall.

But these office blocks in one of London's most expensive districts are part of a surprising secret commercial property empire owned by the Vatican.

Behind a disguised offshore company structure, the church's international portfolio has been built up over the years, using cash originally handed over by Mussolini in return for papal recognition of the Italian fascist regime in 1929.

Since then the international value of Mussolini's nest-egg has mounted until it now exceeds £500m. In 2006, at the height of the recent property bubble, the Vatican spent £15m of those funds to buy 30 St James's Square. Other UK properties are at 168 New Bond Street and in the city of Coventry. It also owns blocks of flats in Paris and Switzerland.

The surprising aspect for some will be the lengths to which the Vatican has gone to preserve secrecy about the Mussolini millions. The St James's Square office block was bought by a company called British Grolux Investments Ltd, which also holds the other UK properties. Published registers at Companies House do not disclose the company's true ownership, nor make any mention of the Vatican.

Instead, they list two nominee shareholders, both prominent Catholic bankers: John Varley, recently chief executive of Barclays Bank, and Robin Herbert, formerly of the Leopold Joseph merchant bank. Letters were sent from the Guardian to each of them asking whom they act for. They went unanswered. British company law allows the true beneficial ownership of companies to be concealed behind nominees in this way.

The company secretary, John Jenkins, a Reading accountant, was equally uninformative. He told us the firm was owned by a trust but refused to identify it on grounds of confidentiality. He told us after taking instructions: "I confirm that I am not authorised by my client to provide any information."

Research in old archives, however, reveals more of the truth. Companies House files disclose that British Grolux Investments inherited its entire property portfolio after a reorganisation in 1999 from two predecessor companies called British Grolux Ltd and Cheylesmore Estates. The shares of those firms were in turn held by a company based at the address of the JP Morgan bank in New York. Ultimate control is recorded as being exercised by a Swiss company, Profima SA.

British wartime records from the National Archives in Kew complete the picture. They confirm Profima SA as the Vatican's own holding company, accused at the time of "engaging in activities contrary to Allied interests". Files from officials at Britain's Ministry of Economic Warfare at the end of the war criticised the pope's financier, Bernardino Nogara, who controlled the investment of more than £50m cash from the Mussolini windfall.

Nogara's "shady activities" were detailed in intercepted 1945 cable traffic from the Vatican to a contact in Geneva, according to the British, who discussed whether to blacklist Profima as a result. "Nogara, a Roman lawyer, is the Vatican financial agent and Profima SA in Lausanne is the Swiss holding company for certain Vatican interests." They believed Nogara was trying to transfer shares of two Vatican-owned French property firms to the Swiss company, to prevent the French government blacklisting them as enemy assets.

Earlier in the war, in 1943, the British accused Nogara of similar "dirty work", by shifting Italian bank shares into Profima's hands in order to "whitewash" them and present the bank as being controlled by Swiss neutrals. This was described as "manipulation" of Vatican finances to serve "extraneous political ends".

The Mussolini money was dramatically important to the Vatican's finances. John Pollard, a Cambridge historian, says in Money and the Rise of the Modern Papacy: "The papacy was now financially secure. It would never be poor again."

From the outset, Nogara was innovative in investing the cash. In 1931 records show he founded an offshore company in Luxembourg to hold the continental European property assets he was buying. It was called Groupement Financier Luxembourgeois, hence Grolux. Luxembourg was one of the first countries to set up tax-haven company structures in 1929. The UK end, called British Grolux, was incorporated the following year.

When war broke out, with the prospect of a German invasion, the Luxembourg operation and ostensible control of the British Grolux operation were moved to the US and to neutral Switzerland.

The Mussolini investments in Britain are currently controlled, along with its other European holdings and a currency trading arm, by a papal official in Rome, Paolo Mennini, who is in effect the pope's merchant banker. Mennini heads a special unit inside the Vatican called the extraordinary division of APSA – Amministrazione del Patrimonio della Sede Apostolica – which handles the so-called "patrimony of the Holy See".

According to a report last year from the Council of Europe, which surveyed the Vatican's financial controls, the assets of Mennini's special unit now exceed €680m (£570m).

While secrecy about the Fascist origins of the papacy's wealth might have been understandable in wartime, what is less clear is why the Vatican subsequently continued to maintain secrecy about its holdings in Britain, even after its financial structure was reorganised in 1999.

The Guardian asked the Vatican's representative in London, the papal nuncio, archbishop Antonio Mennini, why the papacy continued with such secrecy over the identity of its property investments in London. We also asked what the pope spent the income on. True to its tradition of silence on the subject, the Roman Catholic church's spokesman said that the nuncio had no comment.
Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves.

Re: IOR - Unmasking The Vatican's Bank 8 years, 2 months ago #2752

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God’s Racket: Why It’s High Time to Shut Down the Vatican Bank

25 February 2013, AlterNet
Think of it as HSBC with God’s imprimatur.

It’s a place where angels fear to tread; where criminals, frauds and mysterious corpses turn up as regularly as rats in the metro. The Institute for Works of Religion, commonly known as the Vatican bank, was set up in 1942 by Pope Pius XII to manage the vast Vatican finances. Often referred to as the world’s most secret bank, the operation is run by a CEO and overseen by five cardinals who report directly to the Pope.

The bank’s official role is to safeguard and administer property intended for works of religion or charity. The actual activities of the bank are somewhat different. They include money laundering for narcotics traffickers, bribery, skimming charitable funds to enrich priests, and tax evasion for wealthy Italians.

Finance, Vatican-Style

The scandals associated with the Vatican bank, particularly over the last four decades, are so sordid and improbable as to strain the creativity of a supermarket tabloid. The Church’s past offenses of selling indulgences and charging fees for sacraments have been updated for the world of modern finance, complete with shell companies, speculation and secret transfers. (For more on the antecedents of the current bank, see Betty Clermont’s handy synopsis at Daily Kos.) Last year, Italian journalist Gianluigi Nuzzi published a book delving into the intrigue and corruption swirling in a bank that has been answerable to no one. It was an eye-opener.

In May 2012, Pope Benedict XVI’s butler was arrested for leaking documents bristling with claims of financial corruption and criminal activity involving major Italian companies. The last Vatican bank chairman, Ettore Gotti Tedeschi, was shown the door when it was revealed that the bank was running afoul of international money-laundering standards. Leaked material and reporting reveals a bank that appears to be a kind of rogue offshore vehicle favored by various kinds of miscreants, including right-wing politicians, mafia types and tax evaders who wish to hide their financial transactions. Kind of like HSBC, only with God’s imprimatur.

Subsequent investigations have resulted in a shutdown of credit card transactions at all Vatican venues; right now, God can only take cash. In an attempt to restore relations with the international financial community, outgoing Pope Benedict appointed a new director of the bank, German lawyer Ernst von Freyberg, as one of his final acts. So far that’s not looking so good, as Freyberg has been revealed to have unfortunate links with a company with a history of making warships, including those produced for Nazi Germany.

Skeletons In the Vault

The same month the butler story broke, sinister echoes of earlier scandals emerged when the Catholic Church’s top exorcist (yes, you got that right)claimed that a pile of bones buried in the tomb of a notorious gangster – and church doner -- belonged to a missing schoolgirl who was forced to perform for priests' sex parties. The gangster’s girlfriend at the time claimed that American monsignor Paul Marcinkus, the scandal-ridden chief of the Vatican bank from 1971 to 1989, was behind the abduction. Whether or not that’s true, the years of Marcinkus’ reign were certainly unusual.

In the 1980s, the Vatican bank was involved in a major political and financial ruckus involving the $4.7 billion collapse of Banco Ambrosiano. Marcinkus was under consideration for indictment in 1982 in Italy as an accessory to the bankruptcy, but he escaped earthly justice when the Italian courts ruled that his status as a priest and high-ranking prelate of the Vatican gave him diplomatic immunity from prosecution. One Roberto Calvi, known as “God’s banker” because of his close association with the Holy See, was the chairman of Banco Ambrosiano. He also did business with the Mafia, and was found in June 1982 swinging from Blackfriars Bridge in London the day after his dismissal from the bank. The death was ruled a murder, and is widely suspected to have been a mob hit.

Some years earlier, in 1968, we meet the shady figure of Michele “The Shark” Sindona, who became a Vatican financial adviser despite the small matter of his past job as manager of heroin operations for the Gambino crime family. A world-class hustler who specialized in money-laundering, he was a member of the notorious P2 Lodge, a bogus ''Masonic'' lodge considered to have operated something like a right-wing shadow government. Like other Italian bankers associated with the Vatican, Sindona trumpeted his sleazy activities as the defense of free enterprise against leftist political forces.

Sindona ended up in prison for bank fraud and ordering the murder of a lawyer appointed to liquidate his Italian banks. He later died there after drinking a cyanide-laced coffee. Some say his poisoning was an attempt to keep him from talking about the sudden death of 65-year-old Pope John Paul I just 33 days after taking office. The reform-minded Pope had been speaking out against the profiteering of the Vatican Bank, and theologian Abbé George de Nantes, among others, has made a case for murder. (If you saw The Godfather Part III, you may recall a storyline involving the Vatican bank, organized crime and the sudden death of a fictional pope.)

Too Corrupt to Exist

Right now there’s a power struggle going on in the Vatican concerning how the bank should operate, whether to modernize and become more transparent, or to keep on operating under the radar and doing all the shady business it can get away with.

If anyone thinks that the Vatican bank could be cleaned up, I would suggest thinking of the mythic Augean stables. Essentially, a racketeering entity has been operating as a non-profit dedicated to doing God’s work. Jesus was famed for throwing the money-lenders out of the temple. In the Vatican, they run the temple.

The Vatican needs cash, and as its influence in the West declines in favor of poorer areas of the globe, there is no telling what else it will do to get it. The bank has had multiple opportunities to clean up its act after noxious scandals, and has repeatedly failed to do so.

Andreas Wassermann and Peter Wensierski of Der Spiegel described the corruption at the heart of the bank:

“Its business model depends on keeping things as shrouded as possible from all financial authorities. Capital gains are untaxed, financial statements are not disclosed and anonymity is guaranteed. The bank's exotic status of belonging to a religious monarchy in a sovereign state the size of a city park has shielded it from investigations and unpleasant external monitoring.”

Here’s an idea: Shut it down. Why shouldn’t priests use regular banks just like everybody else? Why should a bank housed in a medieval defense tower gobble donations and launder illicit funds, giving haven to cheats, criminals and wealthy parasites? The Vatican bank is too corrupt to exist.

Re: IOR - Unmasking The Vatican's Bank 7 years ago #2875

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