Just when the Vatican Secretary of State seems to be the only mark for a series of attacks, two news show that the Holy See is making important steps toward a reform intended to bring the Vatican City State to be a fully modern State with full financial transparency. The steps are the path the Holy See is treading to adhere to the international standards of the Concil of Europe about the countering to the money laundering and to the financing of terrorism; and the new regulation of the Prefecturee of the Economic Affairs, which now has enhanced powers and can be now roughly compared to a sort of Vatican Ministery of Economy – while before this new regulation it had just the prerogatives of a Court of Auditors.
The two news are not directly linked, but they are both meaningful. And they show what is the direction the Holy See is heading to, thanks to the Benedict XVI’s «quiet revolution». And card. Bertone, Secretary of State, albeit in the midst of the storm, is bringing on Benedict XVI’s wills. Now it is the time for a more in depth analysis of the two «Vatican financial» news of the week.
The new regulation of the Prefecture for Economic Affairs
On March, the 9th had come into effect the new regulation of the Prefecture for the Economic Affairs of the Holy See. The regulation had been published on February, the 22nd and has been signed by the cardinal Tarcisio Bertone, Vatican Secretary of State. The regulation is – more than a little revolution – a way to keep pace with times and with the responsabilities of the Roman Curia, that is – it is written in the letter of presentation fo the new regulation by the prefect Giuseppe Versaldi – «one of the main instruments that the Holy Father has at his disposal» to act as a Pope.
Established by Paul VI in the 1967, the Prefecture for the Economic Affairs is entrusted with overseeing all the offices of the Holy See that manage finances, regardless of their degree of autonomy. It does not manage finances itself, but instead audits the balance sheets and budgets of the offices that do. It then prepares and publishes annually a general financial report. It must be consulted on all projects of major importance undertaken by the offices in question
It means that the Prefecture oversees all the dicasteries of the Roman Curia and of all the consolidate administrations, and the Vatican Radio, the Vatican Typography-L’Osservatore Romano publishing house, the Vatican Publishing House and the Vatican Tv Center. The Prefecture also oversees the balance sheets of Vatican City State.
In 34 articles, the text outlines the amplification of the competences of the Prefecture, that is the body «responsible for the economic address and program, as well as it is responsible to the vigilance and the control of the administrations of the Holy See». The change is considerable. Just take a look to the previous regulation – delivered November, 20th 1999, where only «surveillance and control» were mentioned. So, the Prefecture can be now roughly compared to a Ministry of the Economy. The Prefecture – art. 2 of the new regulation – «prepares the document of economic planning in which are outlined all targets» that the administrations of the Holy See must jointly achieve. More: the document «periodically proposes the main macro-economical parameters» the administrations should refer to for their financial forecasting.
Which are the functions of the Prefecture for Economical Affairs? It prepares the annual reports, it carries out extraordinary administration acts and obviously it controls the annual statements. In the article 5 of the new regulation it is also mentioned the promotion of the «cooperation among the dicasteries, even through meetings, to jointly study, examine and evaluate relevant facts of administrative and financial management». This article of the new regulation recall, in some ways, what card. Bertone, Vatican secretary of State, underlined during the last meeting with heads of Vatican departments (Prefectures and Pontifical Councils). Bertone asked more coordination among the several branches of the Vatican curia, and also pointed at the encroach of the «passion for the little news of ecclesiastical gossip, that undermine the Holy See prestige and sometimes crab the climate of confidence and trust among the Holy See’s bodies».
The commitment to surveillance also includes the «analysis, in order to assure a precise and critical acquisition and preservation of the document with juridical relevance referred to any board». During the Papal Vacant See, the Prefecture is kept to give the final balanced and consolidated of the current year to the Cardinal Chamberlain.
One more step toward financial transparency
«Within the framework of the active co-operation between the Holy See and MONEYVAL (the Department of the Council of Europe which deals with the evaluation of systems adopted by member States to counter money-laundering), meetings of a technical nature were held in the Vatican between 14 and 16 March 2012». This is the beginning of the official press communiqué delivered at the end of the second on-site visits to the Holy See of the advisors of the Council of Europe. These visits are not inspections.
MONEYVAL advisors got back to the Vatican after their visit of the last 21-26 November. After their first visit, the Vatican law against money laundering – i.e. the Vatican law n. 127 of 2010 – has been improved and essentially re-written. The new text of the law has been promulgated by the President of the Governatorate of the Vatican City State with a Decree on January, the 25th. The most important news is that the Holy See, by conforming its anti money laundering law to the international standards – «The Vatican is heading in the right direction with the revised norms», Jeffrey Owens, head of tax issues at the Organization for Economic Cooperation and Development, said – seems to show to strongly tread the path to be enlisted in the group of the «virtuous» countries for what concerns the prevention and countering of money laundering and financing of terrorism.
This path is followed step by step by MONEYVAL advisors. At the end of the first on site visit, they explained in an official communiqué delivered on the web site of the European Body that «at the conclusion of its mission, the MONEYVAL team shared and discussed its initial findings with representatives of the Holy See, after which initial views were exchanged». These impressions also dealt with the old text of the law n. 127: MONEYVAL advisors had not such positive impressions of the law, since it seemed to concentrate the warranty of the integrity of «Vatican finance » to the only Authority for Financial Information, without showing the will to truly involve all the Authorities concerned. Perhaps it is not a case that one of the main innovations of the new text of the law n. 127 is about the Authorities involved in the struggle against the money laundering and the financing of terrorism – beyond the Authority for Financial Information, now the text also mentions the Secretary of State, the Pontifical Commission for the Vatican City State, the Vatican Gendarmes Corps.
The trend seems to be in favor of an involvement of the whole Vatican institutional framework, and at the same time in favor of more attention paid to the peculiarities of the Holy See and of the Vatican City State, as MONEYVAL advisors suggested. This effort also merited the appreciation of MONEYVAL advisors. «The meetings – it is written in the press communiqué – had been planned earlier, taking into account both the specific nature of the Holy See and of Vatican City State and the fact that this was the first evaluation of their respective legal systems. The meetings made it possible to continue gathering information on the steps taken thus far in the process of complying with international standards in the area of preventing and countering money-laundering and the financing of terrorism, such as the adoption of the Decree No. CLIX of 25 January 2012, replacing Law No. CXXVII of 30 December 2010, as well as the ratification of and adhesion to certain international Conventions pertinent to the question».
The conventions which the communiqué refers to are the adhesion and ratification to the International Convention for the Suppression of the financing of terrorism (Onu, New York, 1999) and the United Nations Conventions against the transnational organized crime (Palermo, 2000), and the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998) – this latter Convention already signed by the Holy See when it had been adopted by United Nations. It is highly meaningful that the adhesion and ratification to these Conventions had become official on January, the 25th, the same day when the Decree of the President of Vatican Governatorate had been promulgated.
The path to the new law
In actuality, Vatican officials were already working to an improvement of the law n. 127, in full knowledge of the fact that the law had been written in hurry and under several pressures (among these pressures, two investigations promoted by the Rome Public Prosecutor: one about a money transfer from a IOR account deposited with a branch of UNICREDIT Bank in via della Conciliazione in Rome in 2009; and the seizure of 23 million euro transferred by the IOR from two accounts it had in Banca del Fucino and Credito Artigiano to another IOR account to a JpMorgan Bank branch in Frankfurt). The same law n. 127 had to accomplish to the need to put into effect the Monetary Agreement between the Holy See and the European Union, signed in 2009.
It easy so easy to understand why the law n. 127 is important – even if some observers underlined that the law was particularly severe (especially for what concerned the introduction in the Vatican legislation of the auto-money laundering crime, while several legislation – Italian one included – does not contemplate this kind of crime). But there was also the need of a more in-depth reflection to accomplish the Vatican City State peculiarities, since in the Vatican there are no banks and no financial market.
Almost before the MONEYVAL advisors went to the Vatican for the first on site visits, the tops of the Holy See were thinking about how the Vatican could better adhere to the international standards. It was not only a technical problem, it was a problem to let the international standards in a peculiar reality as the Vatican is. This reflection brought to the improvement of the text of the law n. 127.
Who is against financial transparency?
Obviously, this brought to a lively debate within the Holy See officials. As the medias covered, among the opponents to the improvement of the law was the cardinal Nicora, president of the Authority for Financial Information. Nicora – as revealed by the Italian newspaper Il Fatto Quotidiano, that published a note written by card. Nicora – defined the new text of the law . 127 «a step behind» (this sentence had been highlighted several times in the commentaries about the so-called «Vatican finance»). In order to avoid a conflict of interests with the presidency of the Authority for Financial Information, Nicora resigned by the presidency of the APSA – the Administration for the Patrimony of the Apostolic See, a sort of «Central Bank» of the Holy See – but still holds his post within the Vigilance Commission of the Institute for Religious Works (which is under the surveillance of the Authority for Financial Information), within the Council of the Fifteen – a sort of “Little Parliament” made up by 15 cardinals that meet periodically to verify the correctness of “Vatican finance” – and also within the Pontifical Commission for the Vatican City State, that, according to the new text of the law n. 127, will be one of the actors that regulate the Authority for Financial Information.
According to the vaticanista Sandro Magister, even Ettore Gotti Tedeschi, president of the Council of Superintendency of the IOR, was against any intervention on the law n. 127. Gotti Tedeschi even feared the risk of an exam failure of the new text by MONEYVAL. Probably, Gotti Tedeschi – who still seats in the board of the Administration of the Cassa Depositi e prestiti – Loan & Deposit Saving, a public body controlled (with the 70 per cent of stocks) by the Italian Ministery of Economy, and this charge would in theory not tally with his Vatican charge as representative of a body of State – fears that his «image» of solver of the age-old Vatican financial obscurity could be delegitimized. And this image is so important for him that – with an excess of diligence – he agreed to be questioned by the Italian magistrates, even if these latters did not submit the request internationally. Many commentators considered the Gotti Tedeschi’s one a «questionable decision», if not even damaging for the Holy see’s interests, since it could be read as a renounce to the immunity for the Central bodies of the Holy See.
Among the followers of the «step behind» -doctrine there was also the direction of the Authority of Financial Information. An e-mail of the director Francesco De Pasquale to Ettore Gotti Tedeschi had been leaked to the Italian newspaper Il Fatto Quotidiano. In the e-mail, De Pasquale unveil his adversity to the re-writing of the law n. 127. This e-mail also unveil an almost questionable relationship between the controller (De Pasquale) and the controlled (Gotti Tedeschi), also considering that the warranty of the integrity of «Vatican finance» had been depicted to reside in the Authority for Financial Information.
Waiting for July
MONEYVAL conclusions on the Holy See and Vatican City State financial reliability will be delivered the next July at the plenary assembly of the body. This agenda has been agreed long time ago, and it never changed, as the official communiqué well let understand (one can there read that the meetings had been «planned earlier» and that the report «as scheduled» will be examined by the Plenary Assembly of MONEYVAL next July). There will be no eventual change of schedule for the drafting of the final report. One should not even be surprised by the comeback of the MONEYVAL advisors: all the European Countries had at least two, and sometimes even three rounds of evaluation, and this evaluations are about a long-time commitment of adherence to the international standards, and are not an exam about the financial transparency/not transparency to bring into an end within a few months.
Italian vision vs. European (and international) vision
The day after the MONEYVAL on site visit to the Vatican, the Italian newspaper Il Sole 24 Ore spread the news that a IOR account deposited with a branch of JpMorgan Bank in Milan had been closed because the IOR could not satisfy the requests of transparency. The article – very detailed, indeed – can be seen as a counterattack of the followers of the «Italian party». While the Holy See worked in order to accomplish the international standards of transparency, the propaganda on «Vatican obscure finance» rose up especially thanks to the investigations promoted by the Public Prosecutor of Rome and requested by the Unit for Financianl Information of the Bank of Italy. Is Italian State working to consider the Vatican something less than an enclave in the Italian territory? And did this interest toward the Vatican finance rise especially in Italy? And is the Authority for Financial Information itself a player that is playing is game in the field of Italy, and not in the field of the Holy See, that is working to strengthen its international appreciation and acknowledge?
Just take a look to the board of the Authority for Financial Service. Excepted Nicora, Dalla Torre and an internationalist jurist come from other charges within the Holy See, many members of the Authority for Financial Information – e.g. Francesco De Pasquale, Marcello Condemi – come from Italian banks and from the Bank of Italy, where they were not appointed in important charges. The composition of the board is not seen – by some insiders – coherent with the universality of the Holy See (whose employees are traditionally chose internationally) since the imbalance to Italy is considered a sign of weakness and source of risks, more than of opportunity, since the troubles of the Holy See came from a request of the Bank of Italy then headed by Mario Draghi (now president of the European Central Bank).
So, while Europe shows appreciation for the steps forward of the Holy See, on the Italian side the war of the «financial» leaks just began. The news of the closing of a IOR account is probably just a first signal.