JP Morgan & The Vatican = Transparency?

JP Morgan of Milan is closing its Vatican account on 30 March 2012 because, according to media reports, it ‘failed to provide sufficient information on money transfers’. So the Vatican bank, also known as Istituto per le Opere di Religione (IOR) [Institute For Works Of Religion]  lacks ‘transparency’ in its transactions, according to JP Morgan?  I’m not saying JP Morgan is laundering money, but its claims are a bit like the pot calling the kettle black!  The timing of JP Morgan’s action seems to coincide with the Tax Police in Italy scrutinising tax avoidance by not-for-profit organisations.


The Vatican Bank

The Secretive Vatican


A Good Partnership?


IOR was founded in 1942 by Pope Pius Xl “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”. It is located inside Vatican City and is run by a professional bank CEO who reports to the Pope through a committee of cardinals. Last year, the Vatican was forced to adapt internal laws to comply with international standards on financial crime, in order to secure a place in the ‘White List’ of states. We are informed that the 110-acre ‘sovereign state’ in the heart of Rome, now complies with the rules of the Paris-based Financial Action Task Force (FATF)

But the closing of its JP Morgan account is a major blow to the Vatican’s chances of being included in that List. The Vatican Hierarchy’s attempt to clear the air of corruption that has surrounded the Vatican for decades has been thwarted. To add to its woes, there is growing doubt among some international law experts that Vatican City actually qualifies as a sovereign state, established in 1929 by the then Prime Minister, Benito Mussolini.

See More: ‘The Case of the Pope’ by Geoffrey Robertson QC.

Barbie Latza Nadeau writes that the Vatican & the Holy See face serious allegations that their curious accounting practices are really a cover for money-laundering schemes and other crimes.

JPMorgan Chase sent a letter to the Vatican on Feb. 15 to notify them of the impending closure after Vatican bankers were “unable to respond” to a series of requests about questionable money transfers from the account. The account was a “sweeping facility” that was zeroed out at the end of each business day. The Vatican account, opened in 2009, and had processed some $1.5 billion of funds to other Vatican accounts, mostly in Germany, according to financial documents published in Italy’s leading financial newspaper Il Sole 24 Ore.

Sweeping facilities are not illegal, but Vatican bankers refused to reveal the reasons for moving so much money in such a short period of time. The notification of the account’s closure was the culmination of an ongoing investigation into the Vatican’s alleged creative accounting. It began in September 2010 when tax police in Rome froze $33 million in Vatican assets after a covert investigation into the way the Catholic Church moves its millions around. The assets were eventually released in June 2011, but the investigation is ongoing.

The revelations above came about through the media release of a letter written to the Pope. Cardinal Carlo Maria Viganò was the writer of the leaked letter. The public image of the Vatican bank has been harmed by the so-called “Vatileaks” scandal, in which highly sensitive documents, including letters to Pope Benedict, were published in Italian media.

The Cardinal was hastily transferred to Washington, D.C., to head the Holy See embassy there earlier this year, after the letter came to light in the media. Rampant corruption within the Holy See was referred to in the letter and sent ripples around Rome. In the letter, on Vatican letterhead and sealed with an official stamp, Cardinal Vigano pleaded for the pope to allow him to stay in Rome to continue his anti-fraud work. “Holy Father, my transfer at this time would provoke much disorientation and discouragement in those who have believed it was possible to clean up so many situations of corruption and abuse of power that have been rooted in the management of so many departments.”

The leaked letter scandal was quickly dubbed “Vatileaks” by the Vatican’s own spokesman. Some of the leaked documents appear to show a conflict among top Vatican officials about just how transparent the bank should be about dealings that took place before it enacted its new laws. The Holy See did not deny the authenticity of the documents. Instead it opened an internal investigation into potential moles. So far, no one has been named as a source for the breach.

The Vatican has a long history of avoiding scrutiny and hiding its ill-gotten gains. People are still trying to sue the Vatican over the Nazi loot that went in through the front door of the Vatican and vanished out the back door.

Despite efforts to prove otherwise, the damage to the church’s financial reputation has already been done. Earlier this month, the U.S. State Department named the Holy See on a list of its own, as a “jurisdiction of concern” for money-laundering practices in its annual International Narcotics Control Strategy Report, alongside countries like Honduras and Syria. The Vatican shrugged off the State Department’s concerns electing that a “jurisdiction of concern” was far better than one of a “primary concern.” But Reuters’ financial columnist Pierre Briançon disagrees. “The best way for the Vatican to come clean would of course be to close the bank: it’s hard to see why it’s needed other than to shroud the Church’s financial dealings in a veil of obsessive secrecy,” he wrote in a recent blog post.

This is not the first time the Vatican bank has been embroiled in immoral activities. Three decades ago, the Holy See faced its first battle against allegations of money laundering and corruption. It was named in the mysterious death of Roberto Calvi, known then as “God’s Banker.” Calvi was president of Banco Amborsiano despite being a Freemason with alleged mafia ties. The bank collapsed amid allegations of sinister activities, and Calvi was found hanging from a rope with bricks in his pockets under the Blackfriars Bridge in London.  Ms Nadeau writes that the ‘Vatican was able to redeem its reputation back then, at least temporarily. Whether it will be able to save face this time may depend on divine intervention, or at least a better accountant’.

Reuters: Money laundering is usually connected with drugs and other illegal activity. Sounds like the old days in England, when the church had its hands in all manner of things.

Since the resignation of  ‘Bunga Bunga’ Prime Minister Berlusconi, Italy has formed a more credible government, headed by Mario Monti as Prime Minister, as well as Minister of Economy and Finance. Mr Monti previously served as European Commissioner 1995 -2004.  He has brought in strict new tax regimes which includes deeper scrutiny of non-profit organisations, the biggest of which is the Catholic Church.  The Catholic Church, through the Vatican, has an Italy-wide network of assets such as extensive property holdings, schools, hospitals, clinics, hostels, apartments, on whose profits the Catholic Church has paid minimal taxes, if any, until now.


More:  The Corrupt Vatican

And: The Vatican Bank or Office For Religious Works

Jesus’ famous quote taken from the Gospel “Give to Caesar what is Caesar’s and to God what is God’s” has never been more relevant to Italy than it is today.

Sources used:

Philip Pullella & Lisa Jucca for Reuters

Barbie Latza Nadeau

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