VATICAN BANK REFORM
Vatican financial watchdog now a ‘shell’ after police raid
by Nicole Winfield / Nov. 19, 2019
“A board member of the Vatican’s financial watchdog has resigned in the wake of a Vatican police raid that resulted in the agency’s suspension from the global communications network of financial intelligence units. Marc Odendall, a Swiss-German retired banker, tendered his resignation late Monday after Pope Francis decided not to renew the mandate of Rene Bruelhart, the president of the Vatican’s Financial Information Authority, or AIF. The Vatican says Bruelhart’s successor will be announced next week. Odendall told The Associated Press on Tuesday that he cited Bruelhart’s removal as well as the decision by the Egmont Group, a consortium of financial information agencies from 130 countries, to suspend AIF from its communications network following the Oct. 1 Vatican police raid on AIF’s offices. “We cannot access information and we cannot share information,” he said. “There is no point in staying on the board of an empty shell.”
"It was a breach." Vatican's financial 007 Rene Bruelhart on the Vatican police raids that led to an institutional crisis and damaged the Vatican's credibility internationally. https://t.co/i3DLr1uBIz
— Nicole Winfield (@nwinfield) November 18, 2019
AIF remains an Egmont member, but is suspended from the secure communications network that is used to share confidential information in the global fight against money laundering and other financial crimes, he said. During the raid, Vatican police seized documents, computers and cellphones from AIF’s headquarters as part of an internal investigation into the Vatican’s investment in a London real estate venture. The raid raised alarm at Egmont and elsewhere given AIF is required to keep other countries’ documentation confidential and secure. Those countries would likely be less willing to share confidential information with AIF in the future if that information could so easily end up in the hands of Vatican police, officials feared. AIF’s own statutes, approved by Francis in 2013, guarantee that data and information held by AIF are “protected with a view to ensuring their security, integrity and confidentiality.” Egmont hasn’t responded to AP requests for confirmation about AIF’s suspension from its communications network.
#Pope defends raid on financial watchdog, dismisses significance of Egmont suspension that resulted. But Vatican is very much out of the global AML system for now. https://t.co/mboEAux03e
— Nicole Winfield (@nwinfield) November 26, 2019
The rationale for the AIF raid isn’t clear. According to the 16-page Vatican search warrant, obtained by AP, Vatican prosecutors only alleged that the AIF’s actions in the real estate operation were “not clear” and faulted its director, Tommaso Di Ruzza, for being in contact with a London law firm involved in the deal. The bulk of the search warrant concerned the actions of the Vatican’s secretariat of state, which in 2012 had put 150 million euros ($165 million) into the luxury apartment building in London’s tony Chelsea neighborhood. The mortgage turned out to be onerous, the property lost its value amid Brexit concerns and middlemen managing the venture were making millions from the Vatican in fees.
“You would never see this in a properly functioning country or banking center,” ex-AIF board member Juan Zarate tells @AP of #Vatican raid. Analogy: If FBI raided Fed and Treasury’s intelligence unit, seized all documents, based on a complaint by Citibank. https://t.co/pEzaNyUJXI
— Nicole Winfield (@nwinfield) November 28, 2019
The secretariat of state in 2018 decided to buy the building outright but needed an extra 150 million euro loan from the Vatican bank, known as the Institute for Religious Works, or IOR, to buy out the other investors so it could extinguish the mortgage. The IOR director, who is close to Francis, and the auditor general’s office raised an alarm with Vatican prosecutors alleging the buyout looked suspicious, sparking the raid. As a result, the Vatican raids appeared more the result of an internal turf battle — between the IOR on one side, and the secretariat of state and AIF on the other — over the secretariat of state’s sizeable financial holdings, which are kept outside the IOR’s shrinking coffers and off the Vatican’s balance sheet. With Bruelhart and Odendall gone, AIF has only three board members left and a director, Di Ruzza, who was suspended after the raid.”
SELLING INDULGENCES (cont.)
From Laundering To Profiteering, A Multitude Of Sins At The Vatican Bank
interview with Gerald Posner / January 30, 2015
“For decades, the Catholic Church has been dogged by scandals involving money. Vatican City — a sovereign state — controls its own finances through the Vatican Bank. It developed as a cross between the Federal Reserve and an offshore bank. In a new history, God’s Bankers, Gerald Posner explains that its roots go back to the mid-19th century.
My 'animated' @vicenews interview on the 5th anniv of @PontfexPope and why he's been stymied in reforming the scandal-ridden Vatican Bank. Tnx to correspondent Caroline Modarressy-Tehrani and producer Ruben Davis for the smart interview and snapshot of Francis's ongoing battle pic.twitter.com/vD4EAWsnKO
— Gerald Posner (@geraldposner) March 16, 2018
“They had 15,000 square miles of what was central Italy with thousands of subjects,” Posner tells NPR’s Renee Montagne. “They levied taxes and paid for this lavish lifestyle — with 700 servants and a big and growing bureaucracy around them. Then, in 1870, Italy’s nationalists have a revolution. They throw the Pope out, they get rid of the papal states. The Vatican goes from being an empire — an earthly empire — to a little postage-stamp size of property called Vatican City.”
By World War II, the church had sizable investments and created the Vatican Bank in order to hide its financial dealings with the Nazis from the U.S. and the U.K. “I was surprised the extent to which the Vatican was deeply embedded with German companies,” Posner says. “They bundled together life insurance policies of Jewish refugees who had been sent to Auschwitz and other death camps. They escheated these policies early on — meaning they took the cash value of them.”
Later, when the surviving children or grandchildren of the victims tried to collect on the insurance policies, they were refused. “These insurance companies would refuse to pay out saying: ‘Show us a death certificate,’ which they knew was impossible,” Posner explains. “They would keep the money.” In God’s Bankers, Posner sheds light on what he calls the “blood money” that came into the church.
On the Vatican being “equal opportunity profiteers”
“It wasn’t as though they did business with the Germans because they wanted the Germans to win. They did business with everyone, because they called themselves neutral and decided that somebody would win at the end of the war — and they were going to keep their business connections open to everybody. Then, when they saw the war was going against the Germans, they started to hide the connections. And after the war they said, “We didn’t do anything wrong.”
On how the Church knew what the Nazis were doing but were “frozen by indecision and fear”
“The bank officials and those who ran the bank knew very little because, in part, all they wanted to know was what was happening in terms of the war effort and what was happening in terms of business and profits. But on the church end, there’s no doubt that they had churches, local churches in all of the countries, that were the ground zeros for the killing zones. The local priests who were not in favor of the slaughter still reported back to their bishops what was happening on the ground.
That came in daily reports, and they had unfortunately a very clear sense of what was happening early on. They were just frozen by indecision and fear. They were afraid that if they spoke out, the Nazis might in fact move against Catholics in Germany and even move against the Pope and take him back to Germany as a prisoner. But that fear meant that they abdicated their moral position as the head of the world’s largest religion, especially at a time that they continued to make money with the people committing the murder.”
On the Vatican being anti-communist and its participation in the Solidarity movement in Poland in the 1980s
“One of the reasons the Vatican was frozen in fear against the Nazis and had made their alignment with the Fascists in the first place, was that they feared the Bolsheviks more. When John Paul II came in — the first Polish pope, the first non-Italian pope in more than 450 years — and there’s still a communist government in Poland … he formed an alliance with Ronald Reagan. The head of the CIA used to be going over regularly to the Vatican to give him briefings.
I describe a new incident in this book in which Italian intelligence agents, they take $3.5 million in gold ingots from a Swiss bank. They put it into the side panels and a false bottom on an SUV and a priest drives it back into Gdansk from Italy so it can feed the resistance against the communists in Poland. So there was a real alliance between American intelligence, the right wingers and the Vatican on this meeting of minds against communism.”
On the “cocaine cowboy days” at the Vatican Bank
“The thing about the Vatican Bank that makes it different in my view is that it’s essentially an offshore bank in the middle of a foreign country — so that once that bank was formed, it meant that somebody sitting over in Italy who had a lot of money, all they had to do was find a priest or cleric inside Vatican city to take their money in suitcases of cash across the street — just wait for the red light to turn green — walk it over on a cart, deposit it in the Vatican Bank, and it no longer could be taxed. It no longer could be followed by Italian authorities. It couldn’t be followed for a drug investigation.
So what does that result in? It results in the Vatican Bank being one of the top banks in the world for money laundering — a haven often for these business executives involved in scandals in Italy. … Just in the last decade we learn that the Vatican Bank had an account for [Giulio] Andreotti, who was the seven-time prime minister of Italy, the most powerful postwar politician in Italian history. He had a secret bank account through which over $50 million passed at a certain time, most of which was doled out for political favors to friends.
That was what the Vatican Bank had come to be, and it’s what I call its “cocaine cowboy” days, the equivalent of — I live in Miami, the crazy period here was the 1980s when the cocaine cowboys sort of ran the roost. The Vatican Bank has had its cocaine cowboy days. The real question is now whether the new sheriff has arrived in town. Is that Sheriff Francis, and can he really bring them to heel or not?”
On whether Pope Francis has managed to make reforms to the Vatican Bank:
“I’ve been impressed by him. He has changed the structure so that it won’t have the ability to be at the center of those scandals. And he’s brought in some outsiders. They’ve closed hundreds of accounts that have been open that were tied to people that shouldn’t have had them. They are abiding by the rules set by the Europeans for financial transparency because they use the euro. So it’s a different era. What could upend it? He needs to be there long enough that these changes can’t be reversed by a new pope who gets in and can be pushed around by the strong dominant bureaucrats.”
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