ROME—In 2015, the Council of Europe’s financial-evaluation arm Moneyval laid down the law for the Vatican Bank, telling the rather unholy financiers who had been accused of abetting money laundering for years that it isn’t enough to just smoke out suspicious account holders and freeze assets. Instead they said the Vatican Bank, formally known as the Institute for Religious Works, or IOR, needed to start actually prosecuting criminal cases.
Two years later, thousands of accounts have been closed or frozen, but Moneyval still isn’t happy. According to its 209-page December 2017 progress report, the Vatican gets good marks for not funding terrorism and for flagging potential illegal behavior. But the holy bank fails once again to actually hold anyone accountable for what are clearly crimes such as “fraud, including serious tax evasion, misappropriation and corruption,” according to the report.
More curious still, a week before the highly anticipated report was released, the IOR Deputy Director Giulio Mattietti was fired with no advance warning and escorted from his office out of fear he might remove files from his desk.
Mattietti was hired in 2007 by Paolo Cipriani, the former head of the bank who resigned under pressure a few months after Pope Francis was elected in 2013, after a Vatican accountant nicknamed “Monsignor 500” for his penchant for 500-euro notes, was arrested for trying to smuggle $26 million to Switzerland. Mattietti’s removal followed the sacking of a lower-level IOR employee days earlier. The Vatican gives no official reason for either of the firings beyond “reforms,” but a source close to the bank says the bank employees who were let go may have been whistleblowers who were alerting officials outside the bank about continuing impropriety.
In fact, despite apparently precise record keeping on the part of IOR, Moneyval evaluators still found 69 actions involving 38 customers that were not in accordance with money laundering and fraud standards set forth by the Council of Europe. None of those suspect cases were prosecuted to the fullest extent under the law, and instead Moneyval investigators point to vague records that imply that the cases were closed.
“Eight money-laundering investigations have been closed formally without any charges, while six additional investigations have been concluded without an indictment for any offense and their formal closure has been requested,” the report states.
And that is a problem.
The report specifically points to the recent Vatican tribunal case in which the chairman of the Vatican’s children’s hospital was accused of serious financial crimes using around a half million euros in funds meant for sick children to renovate a penthouse apartment for the former Vatican secretary of state, Cardinal Tarcisio Bertone. The cardinal was never under investigation, but the hospital’s former president and treasurer were tried in a Vatican court for using funds they funneled through the Vatican Bank.
Moneyval is calling foul on the judicial outcome. The chairman was given a suspended sentence and the treasurer was acquitted even though the money clearly was misappropriated. “An immediate custodial sentence was not imposed on the former chairman of the foundation. He received a one-year suspended prison sentence and was placed on probation for five years,” the report notes, adding the fact that there was “no application for restitution or compensation to the foundation.” That means the half-million that was criminally mishandled will never go to the sick children for whom it originally was intended.
In this case, Moneyval evaluators have advised the Vatican’s “promoter of justice,” or chief prosecutor, to “impose a fine, as foreseen by the law, in addition to the custodial sentence” essentially demanding that the chairman spend his year in prison.
The Moneyval report also outlines a case in which a Vatican Bank customer who was “a foreign citizen” and not a Vatican resident, withdrew more than $3 million from his private IOR account and deposited that money into three separate safety deposit boxes kept in the bank, which was a practice apparently used by Mother Teresa and others who had big sums of money but who lacked the paperwork to move it around legally.
The Moneyval report says that the cash was then subsequently “gradually withdrawn from the safety boxes and transferred to a third country without declarations.” In 2014, the Vatican Bank reported the case and suspended access to the safety boxes, the contents of which, by then, had been depleted. An unnamed foreign country then opened its own investigation into the deposit of the same sum ($3 million) that had apparently come from the Vatican Bank account.
The Vatican tribunal originally levied a sanction of more than $250,000 on the customer, but in a secret hearing in June of this year, the Vatican promoter of justice apparently reduced the fine by more than half. “The appeal against the administrative sanction was heard by the Vatican Tribunal in June 2017, when the fine, was reduced considerably,” according to the Moneyval report. Moneyval then leaned on the Vatican’s promoter of justice to reopen the case and consider reinstituting the original fine for apparent money laundering but found that “So far there has been no indictment in this case.”
The evaluators went further to suggest the promoter of justice is actually complicit in keeping cases out of its courts. “While this review cannot form a view on the quality of the evidence adduced in financial-crime cases that have so far come before the Tribunal, the success rate of the promoter before the tribunal so far is not encouraging,” the evaluators state. “It is noted that persons have been discharged by the tribunal. That is the tribunal’s prerogative, having heard the evidence in the case. However, if the promoter is dissatisfied with evidential decisions of the tribunal or decisions of the tribunal to convict on lesser charges than those brought by his office, he is encouraged to be proactive in appealing those decisions in appropriate cases.”
The bank once had more than 30,000 account holders, including several religious entities and private citizens who maintained accounts worth millions at the hallowed institution, which is tucked safely within the sovereign state of Vatican City. The bank has since closed several high-profile accounts, including many held by diplomatic missions and the consulates to Syria, Iran, and Iraq who moved millions of euros around through “vague cash transactions,” but it has never been able to shake its troubled past.
Last June the Vatican’s prefect of the Secretariat of the Economy, Cardinal George Pell was sent back to Australia to face child sex-abuse charges in early 2018, leaving a notable gap in the pope’s efforts to reform the church’s troubled finances, which had been a priority since his election in 2013.
The Vatican had little to say after the recent Moneyval report. “The Holy See is committed to taking the necessary actions in the relevant areas to further strengthen its efforts to combat and prevent financial crimes,” was the only official word from the Vatican press office. Just shortly after he was elected, Pope Francis threatened to close the bank for good after widespread allegations that it was involved in corrupt practices including money laundering. No doubt he has been second-guessing the decision to keep it open ever since.