As cardinals from around the world prepare for the conclave to select the next pope, one of the things they’ll be considering is who will be able to deliver greater transparency to the Vatican’s finances.
The tiny city-state has been attempting for years to open up its books and meet international banking standards, but has been linked to allegations of money laundering and fraud.
At the centre of the scandals is the Vatican Bank, formally known as the Institute for Religious Works.
Despite having only around 33,000 accounts, the Vatican Bank holds a staggering $8 billion in assets. Details on the account holders and transactions are private, though the Vatican says most of the accounts belong to members of the clergy.
As pope, Benedict XVI tried to get the Vatican on the OECD’s “white list” of countries that follow international banking standards.
Vatican reporter Andrea Ornielli told CTV News that the church must work to increase accountability over its finances.
“The only problem is the Vatican Bank is the bank of the Holy See and the Holy See is not a nation, but is the central governor of the church. For that reason, they need to be more transparent,” he said.
One of Benedict XVI’s last acts as pontiff was appointing German lawyer and businessman Ernst von Freyberg to the bank’s board in February, in the hopes of increasing its transparency. Von Freyberg replaced Ettore Gotti Tedeschi, who was fired in May 2012 after the board accused him of failing to do his job.
In January, Italian banks were ordered not to do business with the Vatican due to its lack of banking framework and anti-money laundering protections. As a result, all Vatican ATMs were shut down and debit and credit card processing was briefly suspended, prompting a cash-only policy for more than a month.
The policy meant that visitors to the immensely popular Vatican Museums were forced to pay cash, an inconvenience that is estimated to have cost the Vatican tens of thousands of euros. The museums are a significant source of revenue, bringing in an estimated $123 million in 2011 alone.
Also, in 2010 Italian authorities seized $30 million from a Vatican bank account as part of a money laundering investigation. The Vatican said it was “perplexed and surprised” by the probe.
In 1982 the bank was thrust into the spotlight after Vatican financial advisor Roberto Calvi was found hanging from Blackfriars Bridge in London.
Calvi was head of Banco Ambrosiano, which collapsed after $1.3 billion in loans made to companies owned by the Vatican Bank in Latin America disappeared. The Vatican had written the letters of credit for the loans.
While the Vatican Bank denied any wrongdoing, it paid $250 million to Banco Ambrosiano’s creditors.
Five people were charged with Calvi’s death, including a major Mafia figure. All were acquitted in 2007.
With files from The Associated Press
