How has the reputation and public perception of the Vatican Bank changed since you were appointed as Ambassador to the Holy See in 2011?
There was a sense amongst commentators and others that the Holy See had in the past only paid lip service to the need to change its financial structures
“It was a standing joke that whenever a journalist wrote an article about the IOR, it had to include a mention of Banca Ambrosiana and Roberto Calvi under Blackfriars Bridge*. Yet that scandal happened over 30 years ago. There was a sense amongst commentators and others that the Holy See had in the past only paid lip service to the need to change its financial structures. Now, articles about the IOR tend to focus on the process of reform, increasing transparency, and efforts to modernise. Such a process will inevitably cast light into some dark corners. However, even basic steps like publishing better accounts and opening the IOR to outside scrutiny is, in my opinion, gradually changing the organisation’s image for the better.”
*Roberto Calvi, former chairman of Banca Ambrosiana, was found hanged under Blackfriars Bridge, shortly after the bank’s collapse, in a Mafia-associated murder thinly-veiled as suicide. Calvi was nicknamed God’s Banker for his close ties with the Vatican.
The IOR was nicknamed the world’s most secretive bank, by Forbes magazine in 2012. How has it addressed concerns about secrecy and transparency?
“Holy See authorities have made steady progress in opening Vatican financial management up to greater outside scrutiny, in particular through the Moneyval process, focusing on compliance with international money laundering and terrorism financing rules. Its official regulator, the Financial Information Authority has been strengthened through a series of modifications to its working practices and regulations; outside experts have been brought in to scrutinise the IOR and APSA; and staff have been changed. There is a clear direction of travel towards greater openness and professionalism, instituted under Benedict XVI and driven forward by Pope Francis. This is unprecedented.”
Calls for greater transparency of the Vatican Bank resurfaced in June following the arrest of Nunzio Scarano, a senior cleric accused of corruption and fraud. Though Scarano was employed by a different financial arm of the Vatican, the IOR was associated by implication. What effect has this had on the Vatican Bank?
“It is worth remembering that Monsignor Scarano worked for the Administration of the Patrimony of the Apostolic See (APSA) – which manages the Patrimony of the Holy See – not the IOR, the so-called Vatican Bank. Of course, the two tend often to be confused by observers, especially when the basic issue under discussion is financial governance across Holy See and Vatican structures. I cannot comment on the Scarano case, which is sub judice. In my opinion, it is a positive sign, however, that past malpractice is brought to light, even if such stories generate bad press in the short term. It means that efforts to improve transparency and compliance are real, and that there is cooperation between Vatican financial authorities and those of other states. I would be more worried if everything appeared to be squeaky clean. No bank or financial institution anywhere in the world has 100% compliance.”
What measures have since been put in place to ensure that this sort of scandal can’t happen again? And, in your opinion, are these measures sufficient?
“It is difficult to comment, as work is ongoing. I think we can expect important announcements about significant changes to financial governance in the Vatican and Holy See next year, building on the process already underway and in line with international norms.
“The direction of travel is the right one. We’ll have to wait until next year to see what new measures are put in place. It is, though, important to remember that there is never an ‘end state’ in relation to financial compliance. New challenges will continue to emerge, and new measures will have to be applied to tackle them.”
The IOR published its first annual report in October 2013, more than 70 years after it was established. How significant was this, particularly in terms of restoring trust and improving transparency?
“It is an important start. The IOR, if it is to continue to provide financial and other services to Church and Vatican clients, needs for the sake of its own reputation to achieve as strong a degree of professionalism and compliance with international norms as it can, commensurate with its modest size and the relatively limited scope of its operations.
“Lack of trust and transparency in the IOR and other Holy See financial institutions undermined the reputation of the Church. Pope Francis has been very clear about the need for change. Reforms, including bringing in outside experts and exposing Holy See financial institutions to outside scrutiny, were required. It is work in progress, but going in the right direction.”
You were personally invited to the Vatican Bank in 2012, along with other ambassadors and journalists – for a tour as part of the so-called Operation Transparency. What was the purpose and outcome of this tour?
“That visit was a first step. It also begged many questions, and journalists who undertook the same tour rightly asked those questions. It was a way of showcasing the process of change. Since then, however, that process has gone much deeper, involved many more people – including outside agencies – and cast a brighter light on the IOR than perhaps some of those who organised the tour might have imagined just a year and a half ago. Since then, IOR management has been completely overhauled and new people brought in.”
Should religious-financial institutions such as the IOR be classified as public services or private enterprises?
“It is important to remember that the IOR is based in a sovereign entity, the Vatican City State. Its form, structure and identity is for the authorities of the Holy See to decide. What is clear, however, is that if it is to be involved in financial transactions beyond the borders of that state, undertaking cross-border activities including with external customers, it needs to meet strict rules for international compliance. Personally, I do not think classification is the key issue. What is critical is sufficient compliance with existing rigorous international norms.”
How can the IOR further improve its reputation and public perception?
“The aim should be to reach a state when news about the IOR is only ever seen in the financial news of the media, boringly assessing another year of standard financial accounts. The more professional the people, the better its compliance with international regulations, and the stronger its own internal compliance procedures, the more likely that will be.”
Read our full analysis feature in the February issue of economia, released on Wednesday 5 February and see today's full report from Moneyval here