Fresh start for scandal-dogged Vatican bank

2014-07-09 13:32


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Vatican City - The Vatican was expected to name a French businessman to head up its scandal-prone bank on Wednesday as part of a radical overhaul of the murky institution ordered by Pope Francis.

Jean-Baptiste de Franssu, former chief executive of Investco Europe, is tipped to lead a newly streamlined bank following a year of internal investigations which resulted in the closure or suspension of thousands of suspicious, ineligible or inactive accounts.

A team of financial experts - including Franssu and an American consultancy firm - have been preparing the ground for the reforms since last summer, when Francis vowed to make the Vatican's public finances fully transparent following decades of scandal and intrigue.

Australian cardinal George Pell, appointed the Vatican's finance minister earlier this year, will join Franssu at a press conference to outline the deep structural changes to be made to the Institute for Religious Works (IOR) - as the bank is known.

The IOR said on Tuesday it had paid a colossal price for cleaning up its accounts, with last year's profit plunging to $3.9m from 86.6 million euros in 2012.

But the "painful but very necessary process" had prepared the bank for "stage two" of the reforms and "opened the door to a new, unburdened future of the IOR," outgoing head Ernst von Freyberg said.

The shake-up is expected to result in greater supervision by the Vatican's Financial Information Authority (IAF) of the bank's asset management.

Franssu, aged 51, is the director of Carmignac Gestion asset management and the founder and chairperson of mergers and acquisitions firm Incipit.

The father of four, who holds a postgraduate degree in actuarial studies, is a board member of various charities in the United States and Europe including the World Youth Alliance, and has caught the eye of allies of the pope by working for free for the commission advising on the bank.

Troubled history

The IOR has a reputation for secrecy and intrigue and a history of troubled relationships between management and the Vatican's top clerics.

In 2012, its then head Ettore Gotti Tedeschi was sacked after a major falling out with Vatican Secretary of State Tarcisio Bertone - the pope's number two.

And according to Italy's investigative weekly L'Espresso, outgoing director von Freyberg is being replaced after clashing with the pope's personal intermediary to the bank, reportedly over access to information.

In a bid to tighten control over its activities, Francis announced a sweeping study of the bank last June, insisting that the special commission's findings would be reported directly to him.

But scandal has continued to plague the institution, with the Vatican admitting earlier this year that it was investigating Italian media reports accusing cardinal Bertone of embezzling €15m from the bank.

The IOR's 2013 financial statement, published on Tuesday, listed an unspecified loss of €15.1m, though it was not clear whether this was a reference to the Bertone affair.

Allegations of money laundering have dogged the bank for decades. It was the main shareholder of the Banco Ambrosiano, which collapsed in 1982 amid accusations of laundering money for the Sicilian mafia.

The chairperson of Banco Ambrosiano, Roberto Calvi - dubbed "God's Banker" in the media - was found hanging from Blackfriars Bridge in London that year in a suspected murder by mobsters.

More recently the bank has been investigated for money laundering by Italian authorities, with its director general and his deputy placed under investigation and forced to resign last year.

And a former top Vatican accountant, Monsignor Nunzio Scarano - who worked for the department in charge of real estate and sovereign bonds investments - was charged by Italian prosecutors in January with laundering fake donations from offshore accounts through the IOR.

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