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Pope Francis sacks entire board of Vatican's financial watchdog Pope Francis sacks entire board of Vatican's financial watchdog
(1 day later)
Pope Francis sacked the five-man board of the Vatican's financial watchdog on Thursday - all Italians - in the latest move to break with an old guard associated with a murky past under his predecessor. Pope Francis’s battle to clean up the Vatican’s scandal-mired bank, the Institute of Religious Works (IoR), has entered a new stage, with his removal of the entire board of the Holy City’s financial watchdog.
The Vatican said the pope named four experts from Switzerland, Singapore, the United States and Italy to replace them on the board of the Financial Information Authority (AIF), the Holy See's internal regulatory office. The new board includes a woman for the first time. The five Italians heading the Financial Information Authority (AIF) have been replaced with an international group of experts, including a woman, two years before they were supposed to step down. Vatican insiders say the drastic move followed clashes between the board members, who formed part of the old boys’ network and the body’s Swiss director, René Brülhart, an anti-money laundering expert, who remains in charge.
All five outgoing members were Italians who had been expected to serve five-year terms ending in 2016 and were laymen associated with the Vatican's discredited financial old guard. “Brülhart wanted a board he could work with and it seems the Pope has come down on his side and sent the old-boy network packing,” a Vatican source told Reuters. The Vatican said in a statement that Pope Francis had thanked the “illustrious” former members. Spokesman Father Federico Lombardi said the changes were in line with the agency’s “internationalisation” and were in response to the requirements of a new statute introduced last year.
Reformers inside the Vatican had been pushing for the pope, who already has taken a series of steps to clean up Vatican finances, to appoint professionals with an international background to work with Rene Bruelhart, a Swiss lawyer who heads the AIF and who has been pushing for change. The new board members are Juan Zarate, a Harvard law professor and former US presidential financial security adviser; Marc Odendall, a financial consultant to Swiss charities; Joseph Yuvaraj Pillay, the former head of the Monetary Authority of Singapore; and Maria Bianca Farina, the head of two Italian insurance companies.
Vatican sources said Bruelhart, Liechtenstein's former top anti-money laundering expert, was chafing under the old board and wanted Francis to appoint global professionals like him. According to the Catholic weekly, The Tablet, reformist members of the Curia had urged the Pope to bring in professionals with a global perspective who would back Mr Brülhart’s efforts to modernise the IoR, following years in which the institution had dragged its heels on complying with international standards on financial transparency.
“Bruelhart wanted a board he could work with and it seems the pope has come down on his side and sent the old boy network packing,” said a Vatican source familiar with the situation. Among the recent scandals, Monsignor Nunzio Scarano, a former senior Vatican accountant who had close ties to the IoR, is currently on trial accused of plotting to smuggle millions of dollars into Italy from Switzerland in order to help rich friends lower their tax bills. Investigators believe he used his two IoR accounts as overseas slush funds. Records show that on one occasion in 2012 he withdrew €560,000 (£455,000) from an IoR account in a single transaction.
The new board of the AIF includes Marc Odendall, who administers and advises philanthropic organisations in Switzerland, and Juan C. Zarate, a Harvard law professor and senior advisor at the Center for Strategic and International Studies, a think tank based in Washington D.C. Paolo Cipriani and Massimo Tulli, the IoR’s former director and deputy director, who resigned last July after Msgr Scarano’s arrest, have been ordered to stand trial on charges of violating anti-money laundering norms.
The other two board members are Joseph Yuvaraj Pillay, former managing director of the Monetary Authority of Singapore and senior advisor to that country's president, and Maria Bianca Farina, the head of two Italian insurance companies. Last July Pope Francis also appointed a separate five-person commission to examine the overall management of the Vatican’s finances. But some critics said that instead of a breath of fresh air, they were Vatican insiders, all of whom had IoR bank accounts. Some of the commission members were reported to have personal connections to Carl Anderson, who is a member of the IoR’s board of directors and head of the wealthy Knights of Columbus, which has been described as the “Catholic masons”.
Francis, who was elected in March 2013 after the resignation of former Pope Benedict, in February set up a new Secretariat for the Economy reporting directly to him and appointed an outsider, Australian Cardinal George Pell, to head it. In June last year, a report was released on a 30-month investigation into the IoR. The document said that high demand for recycling cash, together with the lack of checks and controls by the IoR and the Italian financial institutions it dealt with, made the Vatican bank a money-laundering hot spot. The same month it emerged that the IoR was seeking to close 900 suspicious accounts. According to the Corriere della Sera newspaper, four of the suspect accounts were linked to the Vatican embassies in Indonesia, Iran, Iraq and Syria. In a press conference as he was flying back from his trip to the Middle East, the Pope stressed he was committed to bringing “honesty and transparency” to the Holy See’s finances.
In January he removed Cardinal Attilio Nicora, a prelate who played a senior role in Vatican finances for more than a decade, as president of the AIF and replaced him with an archbishop with a track record of reform within the Vatican bureaucracy.
He also replaced four of the five cardinals in the commission that supervises the Vatican's troubled bank, known as the Institute for Works of Religion (IOR).
Since the arrival of Bruelhart in 2012, the AIF has been spearheading reforms to bring the Vatican in line with international standards on financial transparency and money laundering. But Vatican sources say he has encountered resistance from an old, entrenched guard.
A report last December by Moneyval, a monitoring committee of the Council of Europe, said the Vatican had enacted significant reforms but must still exercise more oversight over its bank.
Francis, who has said Vatican finances must be transparent in order for the Church to have credibility, decided against closing the IOR on condition that reforms, including closing accounts by people not entitled to have them, continued.
Only Vatican employees, religious institutions, orders of priests and nuns and Catholic charities are allowed to have accounts at the bank. But investigators have found that a number were being used by outsiders or that legitimate account holders were handling money for third parties.
Monsignor Nunzio Scarano, a former senior Vatican accountant who had close ties to the IOR, is currently on trial accused of plotting to smuggle millions of dollars into Italy from Switzerland in a scheme to help rich friends avoid taxes.
Scarano has also been indicted on separate charges of laundering millions of euros through the IOR. Paolo Cipriani and Massimo Tulli, the IOR's director and deputy director, who resigned last July after Scarano's arrest, have been ordered to stand trial on charges of violating anti-money laundering norms.
Reuters