The new statute of the Vatican Financial Information Authority (AIF) better aligns the Authority with new Vatican legislation, and with international standards. It also develops a new kind of Authority. Conceived by the drafter of the first Vatican money laundering law as a sort of «monocratic» authority (a Vatican dicastery presided by a cardinal with broad overall powers) the Financial Information Authority is taking a new shape as a result of progressive improvements to its statue.  

The appointment procedures for the president of the authority have changed. According to article 4 of the old motu proprio that established the Authority, the president was appointed by the pope, just like the head of a Vatican dicastery, and so it was taken for granted that the president should be a cardinal, or at least an archbishop. From November 21 on – when the new statutes has come into effect – the president will be chosen, together with the other four members of the board of directors, «among persons of proven reputation, free from any conflicts of interest and having recognized professional competence in the legal, economic and financial fields as well as in the subject-matters that fall within the scope of activity of the Authority.»

The statute of the Financial Information Authority makes the Authority brand new. The director becomes one of the statutory office holders, to be appointed together with a deputy director. Both are appointed by the Secretary of State.

This is how the Vatican legal/institutional framework to counter money laundering and prevent the financing of terrorism has been further improved, following the recommendations given by MONEYVAL, the Council of Europe’s committee that evaluates the path to financial transparency of its member states.

Tracing back the path that led to this new statute helps us to appreciate all the work done at an institutional level by the Vatican.

The old money laundering law, modeled in the Italian money laundering law, focused the Authority’s functions on its president, just as if he was the head of a Vatican dicastery. Cardinal Attilio Nicora, one of the sponsors of the former law, was appointed president of the Authority. Nicora is still the president of the reformed Authority, which will oversee all the Holy See’s financial and economic affairs.

At the time he was appointed president of the AIF, Nicora was also president of the Administration of the Patrimony of the Apostolic See (APSA) and a member of the board of cardinals of the Institute for Religious Works (IOR) and of the Governorate of Vatican City State. All of these entities were under his supervision as president of the AIF.

The former money laundering law had several shortfalls. For example, a division of labor was missing. The responsibilities of the Vatican Gendarmes Corps, Vatican City State Governorate and Secretariat of State were not precisely delineated. The international cooperation system did not take into account the Holy See’s idiosyncrasies.

These «shortcomings» were a result of the law having been written by external consultants, surely competent on money laundering, but seemingly not cognizant of the Holy See’s sovereignty and its particular nature.

This is why Holy See officials had to adjust the legal/institutional framework. The new money laundering law was issued in a decree on January 25 and met many of the MONEYVAL evaluators’ observations. The new law represented the first quick fix of the institutional framework, to give more weight to the Secretariat of State and to build a customized financial system, tailored to Vatican City State’s particularities (such as the Vatican having no banks and no market economy.)

The MONEYVAL plenary assembly welcomed the changes, and it issued in July 12, 2012 a generally positive report on the Holy See/Vatican City State. The report, as could be expected, requested some adjustments to the law.

Some of these adjustments regarded the Financial Information Authority, and the Holy See carried forward the reform process step by step. In December 2012, two adjustments to the money laundering law gave the AIF the power to issue memorandums of understanding with its counterparts in other countries without the prerequisite of a nihil obstat (no objection) from the Secretariat of State.

These two adjustments further improved the procedures for cooperation and international exchange, and facilitated the AIF joining the Egmont Group (comprised of financial intelligence units from all over the world) in July 2013.

The enhanced authority of the AIF led to the signing of several memorandums of understanding, the most important of them with the U.S.’ FinCEN and with the Italian Unit for Financial Information.

In the meantime, a more general reform of the Vatican financial system was being prepared. With a motu proprio issued August 8, 2013 Pope Francis established the Financial Security Committee (whose members include the director of the Authority), and in October 8, 2013 a new law was issued, which gave the Holy See a sort of «single reference text for financial issues,» according to its characterization by the Vatican Secretary for the Relations with States, Monsignor Dominique Mamberti.

There are three important novelties in the new AIF statute: first of all, it strengthens the independence of the Authority, thus protecting it from possible interferences and power struggles among very prominent people within the Roman Curia; it officially assigns to the Authority prudential supervision, an important issue noted in the MONEYVAL report; and, lastly, as requested by the evaluators, it distinguishes the two functions of the Authority, by establishing two different departments, the Office of Supervision and Regulation and the Office of Financial Intelligence. This distinction made some observer note that the Authority for Financial Information could even be renamed “Authority for Oversight and Financial Information.”

The new AIF president will probably be a lay person, while the tenure of current board of directors seems to be reaching to an end. The board is comprised of Italians, coming (with a couple of exceptions) from the Bank of Italy milieu, who view their work through the anachronistic lens of  a Vatican-Italy special relation.

The appointments of the new president and board of directors, expected soon, will put an end to the only conflict of interest that the MONEYVAL report highlighted. The report did not name the person in the conflict of interest, but it was evident that it was Cardinal Nicora. In paragraph 797, the report underscores that «one of the members of the Cardinals’ Committee is also President of the AIF. This could raise concerns regarding a serious conflict of interest. It is therefore strongly recommended that the same person should not hold positions in the supervisory body and a supervised body.»

One of the very last actions of Benedict XVI was the renewal of the IOR cardinals’ commission. In the commission, Nicora was replaced by Cardinal Domenico Calcagno, his successor as head of the APSA. The decision was clearly to avoid a conflict of interest, but it was nevertheless criticized.

In the Holy See Press Office Bollettino that broke the news about the issuing of the new AIF statute, it was also announced that the professional services agency Ernst & Young was being hired by the Vatican City State Governorate as a consultant. According to the Bollettino, the choice was made after a «procedure of selection, » but this note cannot dispel the shadow of a conflict of interest, since Francesca Immacolata Chaouqui, one of the members of the commission that Pope Francis appointed to rationalize expenses and functions in the 37 Vatican offices, works for Ernst & Young.

Are external consultants really able to understand the Vatican’s peculiarities? The progression of the money laundering law proved that, ultimately, only institutional decisions taken within the walls of the Vatican succeed in projecting the Vatican forward to face new challenges in the world.

The experts of the Promontory Financial Group, retained by the IOR to screen its accounts, are doing nothing more that carrying out what the IOR was already doing. MONEYVAL’s report praised the IOR’s commitment, welcomed the Institute guidelines to apply international transparency standards, and underscored (in paragraph 476) that «the IOR launched a process of client  database review and update in November 2010. The IOR demonstrated a clear commitment and dedication to complete this process by the end of 2012. Six persons are involved in this project and are actively approaching clients to receive updated information.»

Some complaints are already percolating inside the Vatican Walls. It is rumored that the hiring of the Promontory Financial Group has been particularly expensive, although it is not known how much it is actually costing. It would also be interesting to know how much the Vatican is spending to have the Spanish bank Grupo Santander (whose representative in Italy is Ettore Gotti Tedeschi, former president of the IOR Council of Superintendency until he got a no confidence vote) to counsel the Prefecture for the Economic Affairs of the Holy See.

While nothing is known about these costs, there is a downsizing of the Vatican dicasteries’ personnel taking place. It has been explained as a response to a needed austerity and spending review. Five people have been reportedly removed from the Congregation for the Clergy, and it is rumored there is a list of 30 people in the various Vatican dicasteries ready to leave, some of them recalled by their dioceses but others sent back by initiative of the dicasteries themselves. This list would have been put together at the request of Cardinal Giuseppe Bertello, President of the Vatican City State Governorate and, it seems, a veritable deus ex machina inside the Vatican.

Reasons for downsizing the Curia would be part of a wider project of reform. Instead of sending Vatican officials around the world to report back any problems, the Vatican Congregations would be asking the countries’ conferences of bishops to report any problems, leaving them the possibility to take decisions and thus making Roman central power gradually less important. Pope Francis’ reform is intended to give more power to the «peripheries». In the meantime, in the very center of the «empire», there is a risk of a multiplication of small conflicts of interest that would damage the Holy See’s reputation. Consultants are external, with a finite commitment defined in contracts subject to expiration and early termination. The mandates of the commissions appointed by Pope Francis are also limited in time.  Is it truly a good idea to base the reform of the Curia on the advice of outsiders? Is outsourcing in the Vatican really the solution?

The announcement of the publication of the balance sheet is the first important decision taken by Ernst von Freyberg, the new president of the IOR Council of Superintendence. Von Freyberg took over on February 18, after a nine-month search for a successor to Ettore Gotti Tedeschi as president of the IOR’s Council, a.k.a. «board of laymen». Von Freyberg has worked with the IOR employees on putting together a balance sheet during these first three months of his presidency. In this period, there has been a change in Popes. However, the Vatican’s agenda on financial issues is still that inaugurated under Benedict XVI’s pontificate. It is a «transparency program» which addresses all Vatican finances, which have been – rightly or wrongly – pervaded by a myth of opacity and lack of international cooperation.

In the Vatican corridors, this myth is called «a misperception». Vatican officials also state that little credit is given to the Vatican for its actions to bring up to international standards the Vatican’s financial system.

Part of this path toward financial transparency was publicly explained by Paolo Cipriani, the IOR’s general manager. In June of last year, featuring an «open doors policy», he met at the Torrione Nicolò V (the IOR headquarters) with ambassadors accredited to the Holy See and a group of journalists. The aim was to correct any possible misperception regarding the Institute’s work.

The meeting took place at a difficult time, on the heels of the IOR’s board of layman adopting a no confidence motion on its president, Ettore Gotti Tedeschi.  Several weeks after, the plenary assembly of MONEYVAL (the Council of Europe committee that evaluates the financial transparency of its member States) was scheduled to evaluate the Holy See’s adherence to anti money laundering international standards.

The debate was particularly polarized around the Vatican anti-money laundering law, which the Holy See substantially and vigorously amended following the first on site visit of MONEYVAL evaluators.  The Vatican adopted a new law on January 25, 2012.

Notwithstanding that the revision of the law had been controversial within the Vatican itself, the MONEYVAL report issued on July, 2012 praised the revision. MONEYVAL noted that the new law «introduced a significant number of necessary and welcome changes.» The same report emphasized that «further important issues still need addressing in order to demonstrate that a fully effective regime has been instituted in practice. » Overall, MONEYVAL evaluators gave high marks to several IOR procedures. Browsing the Report’s Executive Summary, one finds out that the IOR security standards surpass those required by Vatican law (Executive Summary, 39); and that the Vatican legislation on secrecy is considered overall compliant with international standards (paragraph 50). The report also praised the high level of Vatican engagement in international cooperation.

The report also left several issues open. For the past twelve months, the Holy See has been working on a general reform of its financial management and control procedures. The reform is also broader than required by international standards. This is evident in a preview of a Holy See report to MONEYVAL, which volunteers a lot of information about the Vatican’s progress on the implementation of a wide range of anti money laundering recommendations. The Holy See/Vatican City State progress report will be presented in December. By then, a general reform of Vatican finances should have come into effect. Probably, this reform will start in June.

The IOR’ publishing of its balance sheet is thus a part of the Holy See’s long term commitment to transparency. Already, since 1990, an international and independent auditing company (Deloitte in recent years) certifies the Institute’s balance sheet. It is then approved by the Council of Superintendence. The board of laymen must present the balance sheet to the IOR Oversight Cardinals’ Commission by April 30. The cardinals present the balance sheet to the Pope, who then decides, within thirty days, how to allocate the dividend to religious works.

Some data: the IOR has more than 6  billion euro in assets, 33 thousand individual accounts and 25 thousand group-accounts (that is, aggregates of all the accounts of a single religious congregation); 60-65 percent of the IOR’s financial activities are in euros and the rest in dollars; and 5 per cent of the funds are invested in highly-rated investments, which are very secure but do not yield high profits.

In the mean time, the Vatican Authority for Financial Information (AIF) continues to follow a path towards full adherence to international standards. On May 7, it signed a Memorandum of Understanding with its U.S. counterpart, FinCEN (Financial Crimes Enforcement Network). It is the fourth Memorandum of Understanding (MOU) signed by the AIF with fellow Financial Information Units (FIUs). The other MOUs are with the FIUs of Belgium, Spain, and Slovenia.

The news of the memorandum signed with FinCEN is particularly important, considering that in March of 2012, the U.S. Department of State had ranked the Vatican as a “not reliable” State regarding financial transparency.

Next step will be the presentation of the Annual Report of the Authority for Financial Information. René Bruelhart, AIF director, will perhaps do so within this week (on Wednesday).

All too often, the mere mentioning of Vatican finances immediately prompts the depiction of mysterious scenarios and obscure arrangements. Recently, an article in the English newspaper The Guardian emphasized that it was funds that the Italian dictator Benito Mussolini’s gave the Vatican that allowed it to build a financial empire that now includes luxury shops in the heart of London. In reality, it is not quite so. History can help us to better understand Vatican finances reason for being. Basically, the Vatican’s financial structure was born with the establishment of Vatican City State, «that piece of land that permits us to fulfill our mission», in Pius XI’s words.

Vatican City State was born as the reparation for a wrongdoing. In 1870, the Bersaglieri soldiers of the Italian King Vittorio Emanuele opened a breach in Rome’s city walls, a dozen metres to the west of the Roman gate – known as Porta Pia – and  marched down Via Pia, defeating Pope Pius IX’s troops. The Pope went into exile to Castel Gandolfo, and most of the Holy See’s patrimony was confiscated. It is in that period that Saint Peter’s Pence collection began. It was a spontaneous collection of offers from the faithful, and this allowed the Holy See to cover its bills. The Kingdom of Italy proposal for reparations, the legge delle guarentigie (Law of Guarantees) was a unilateral offer that did not compensate the Holy See for the loss of goods and lands. In addition, many lands belonging to monasteries and parishes were also confiscated, to give the economy of the Kingdom of Italy a respite. Relations between the Holy See and Italy were very tense. With time, this tension subsided. Catholics re-organized, overcame the Papal ban over political participation in the institutions of the Italian Kingdom, and gave birth to a political thought of their own, along the lines of the “new-born” social doctrine, inspired by Pope Leo XIII –who is considered by many one of the greatest philosophers of the last two centuries. Then, the First World War broke out. Pope Benedict XV was committed to peace, and frustrated by how difficult it was for the Holy See to conduct diplomatic relations. At the time, States entertained diplomatic relations with the Holy See through their embassies to Italy. Countries in war with Italy recalled their ambassadors, and so relations between the Holy See and these States in particular became very difficult. Benedict XV was keenly aware of this: a territory and a sovereign State was needed to carry a mission of peace.

When the First World War ended, Giovanni Giolitti was the Italian premier. Benedict XV considered the possibility of a «Conciliation» between the Church and the Italian State. Giolitti was against any such conciliation because he opposed (like some still do today)  recognizing the Holy See’s sovereignty. «If the Vatican – Giolitti said – would ask me to for a fully sovereign territory the size of a postage stamp (and certainly it would ask for something much bigger), I wouldn’t give it to it. » Giolitti’s words are reported in the Conciliation Memoirs of Cardinal Pietro Gasparri, still unpublished, and also mentioned by Benny Lay – the dean of the vaticanologists – in his book Finanze Vaticane (Vatican Finances). Giollitti’s attitude moved the Vatican to turn its attention to Benito Mussolini, who – when he was just a member in the Chamber of Deputies – took the position that fascism should not preach or practice anti-clericalism. It was 1921. The following year, Mussolini rose to power.

Conciliation negotiations were long and difficult. One of the challenges was agreeing on financial compensation. Pius XI worked personally on this issue. The Pope aimed to obtain an indemnity of 2 billion liras –which the Italian State could pay in instalments. For the Pope, this amount corresponded (with the addition of interests) to what the Italian State had unilaterally committed to pay after the occupation of Rome, per the Leggi delle Guarentigie. Pius XI settled, in the end, with 1 billion and 750 million liras, part in cash, part in bearer bonds.

What to do with this money? Two months after signing the Lateran Pacts and almost thirty days before their ratification, the Pope reached out to Bernardino Nogare (born in 1870, deceased in 1958). Pius XI asked Nogara to manage the funds from the Financial Convention of the Lateran Pacts. This is the «Mussolini money» The Guardian wrote about. This money came, in fact, from the Italian State as compensation for the occupation, and helped the Holy See to carry on its mission.

The Guardian, however, maintains that Mussolini was rewarding the Vatican with a huge amount of money in exchange for support and official recognition of the regime. This money would have been invested in prestigious real estate in London. The real estate belonged to Grolux Investments, a society controlled by the Swiss Profima. The latter could be traced back to the Vatican. In fact Bernardino Nogara was a member of Profima’s board.

Why would any of this be considered breaking news? Bernardino Nogara introduced the Vatican to the holding of stocks. Charged with the Special Section of the Administration of the Apostolic See Patrimony (the so-called Speciale), Nogara bought stocks, making conspicuous and smart investments. Through them, Nogara became a member of the boards of administration of several Italian companies, which enhanced his international prestige. During the Great Depression of ’29, Nogara founded Grolux Investments and the Swiss society Profima, to diversify Holy See investments, particularly by investing in gold and real estate.

The story of the establishment of Grolux is in John Pollard’s book Money and the Rise of the Modern Papacy: Financing the Vatican, 1850-1950. In that book, Pollard follows a money trail over three continents. Pollard’s is said to be a book about Popes and their administration of money. But truly, most of the Popes –with Pius XI one of the exceptions– have not paid any attention to administrative matters.  The latter were delegated to a highly select group of ecclesiastics and lay people with financial expertise. They are fascinating protagonists of this story. Just think about Giacomo Antonelli, Cardinal and Pius IX’s Secretary of State, who oversaw the Papal treasury from 1850 to 1876. Antonelli was one of the architects of the first massive reorganization of the budget for the Papal States. The success of his efforts to balance the budget depended on a loan requested and obtained from the Rothschild Banking House. Some could be surprised: did the Church really ask for a loan to a Jewish bank? In fact, this should not come as a surprise, considering that the Church’s relations with the Jewish community are closer than one may think. So close that Federico Cammeo, a Jewish jurist, drafted the Fundamental Law of the new-born Vatican City State after the Conciliation Bernardino Nogara, furthermore, was a top manager of the Banca Commerciale Italiana, managed by the Jewish banker Giuseppe Toepliz (and because of this, for many years the Vatican did not buy stocks in Italian banks other than the Banca Commerciale Italiana).

Nogara could count on the benefits of a renewed diplomatic activity of the Church.  Benedict XV had left the Vatican coffers empty, because the First World War prevented bishops from coming to Rome for ad limina visits and contribute to Peter’s Pence. From 1930 on, Nogara invested in a web of projects extended throughout Europe and financial centres in the United States and South America. He was the first non-roman to be in charge of the Vatican finances. He came from a family so Catholic that it weep because of the breach of Porta Pia. With a degree in industrial and electro-technical engineering from the University of Milan, he left for England as soon as he married and went to work in a mine in Wales. From there he was sent to a mine in Greece. In 1908, he was living in Constantinople and managing mines in Asia Minor. There, he founded the Eastern Commercial Society, a branch of the Banca Commerciale Italiana. Well-versed in the political and economic realities of the Ottoman Empire, he became the Italian government’s trusted advisor for Easter affairs.  In this role, he was involved in the Ouchy Treaty, which ended the war in Libya between Italy and Turkey. In 1914, Nogara was the Italian delegate to the Board of Administration for the Ottoman Public Debt.  At the end of the First World War, he was part of the economic and financial commission of the Conferences created to draft peace treaties with Austria, Hungary, Bulgaria, and Turkey.

Overall, Nogara was comfortable dealing with multiple relations in diverse context – the diplomatic-political context as well as the banking one. He was the right man to manage a estate with such a clear international make-up that Speciale’s staff were required to be fluent in French and English.

In the meantime, the Opere di Religione (Religious Works) administration increased in importance within the Sacred Walls. Italy’s alliance with Hitler’s Germany in the war, in 1940, makes increasing the operational capacity of the Opere di Religione all the more important and urgent. This branch of the Vatican financial system, since the very beginning of the war, was able to exchange Italian liras for hard currencies, which facilitated the Pope’s aid to the victims of the conflict. How to enhance this work? From 1940 on, the administration of Opere di Religione was placed under a Cardinals’ Commission. Through this mechanism, the Pope’s assistance reached occupied Poland, the Balkans, and wherever the Pope and the Secretariat of State needed it to reach.  As the Ossservatore Romano (the Vatican daily newspaper) recently noted in an article heading, «Pius XII fought Nazism even with (money from the Vatican’s) investments.»

Were these operations legal? Carlo Pacelli – Pope Pius XII’s nephew and general advisor of Vatican City State – raised this issue with some Italian jurists, among them Vittorio Emanuele Orlando – a prominent Italian politician, who had been Prime Minister and was also part of the Italian delegation in the negotiations of the Peace Treaty of Versailles, which ended the First World War. The question was: given that the Opere di Religione operated from the Vatican, were its transactions linked to Vatican City State or could they be considered legally independent? The jurists concluded they could be considered independent. And so, on June 27, 1942, Pius XII promulgated the establishment of the Institute for Religious Works (Istituto per le Opere di Religione, I.O.R.), an entity with its own corporate identity. This permitted the Holy See to deliver the Pope’s aid all over the world, even to Hiroshima and Nagasaki – also thanks to Vatican bank accounts opened in the United States, a request made by Vatican official to the U.S. Chargé d’Affaires Harold Tittman and approved by President Roosevelt.

This is how the Holy See’s estate and financial wealth was born and its management evolved. It is a sovereign wealth fund, managed through a sort of Central Bank (APSA; the Administration of the Apostolic See Patrimony) and an entity (the IOR) which assets are at the sovereign’s disposal, while the Prefecture for Economic Affairs oversees over the dicasteries balances and have now power to address Holy See’s financial and economic policy and everything is under the Authority for Financial Information oversight. These financial arrangements have been enhanced and modernized through the years with new agencies and also new ways to report balances. The Holy See is now committed to a qualitative enhancement toward full financial transparency.  Perhaps this development is most worrisome to those who have been reckless in their interactions with Vatican financial institutions, taking advantages of the latter’s peculiarities and of Vatican sovereignty. Ultimately, the Holy See financial scandals were always about Italian bankers (from Michele Sindona, to Roberto Calvi, to Ettore Gotti Tedeschi, the former IOR president who was recently involved in an Italian bank investigation regarding his role as Italian representative of the Spanish bank Grupo Santander), and in fact relations between Italy and the Holy See have been very tense, seemingly proving a certain level of Italian hostility toward the Holy See’s path to financial transparency. The Holy See has overcome this hostility, embarking on an international standards path, which is the only way to go in a globalized world. This path will eventually make Vatican City State a modern State, with multilateral relations and an internationally recognized financial capacity. This is the only path to make the Holy See independent from any external influence. The question is: who is not comfortable with the Holy See sovereignty?

The news of the law modifications have not been officially announced by the Vatican. This is not unusual, though. The changes are ultimately not going to make substantial modifications to Vatican City State law — they are merely adjustments that improve the law and make it more compliant with international standards. All countries make these sorts of adjustments periodically.

On the other hand, the news that the Bank of Italy (Italy’s central bank) has blocked all electronic payments through cash machines and by credit cards in Vatican City State has provoked a small media storm. The blocking – according to Father Federico Lombardi, director of the Holy See Press Office – was due to a “technical problem”: the supplier, i.e. Deutsche Bank Italia, did not ask for the «required authorization» to operate. Deutsche Bank Italia manages since 1997 the electronic payments circuit in Vatican City State. Back in 1997, Italian regulations against money laundering were different (based on law 197, promulgated in 1991, and updated through the decree 153/1997) and Deutsche Bank Italia likely thought that it had to guide itself by Vatican legislation, not Italian.

The inspection that lead to the blocking took place in 2010 – right when the Holy See path to gain full financial transparency began. The Bank of Italy wanted to make it clear that Deutsche Bank Italia is under Italian jurisdiction, and thus under Bank of Italy oversight. When Deutsche Bank Italia applied for the required authorization, it was denied. The reason: Italy considers Vatican City State a «not equivalent extra-communitarian country» with regards to financial and anti-money laundering oversight – as underlined by several «anonymous» and «financial circles» sources that have spoken to journalists about this issue recently.

There is still no information about when this «technical problem» will be resolved. Some sources say that everything should be ok within a week, while others maintain that more time is needed because Vatican City State is not in the Italian white list.  Italy may want to wait for the MONEYVAL fifth-round evaluation report – that will take place within the next four years – before including Vatican City State in its white list.

Anyway, all of this would hardly amount to a new Vatican financial controversy. On the contrary, the most recent changes to the anti-money laundering law (contained in the law n. CLXXXV of 2012) are another Holy See step toward full financial transparency, in view of the inclusion of the Vatican Authority for Financial Information (AIF) to the Egmont Group, the global network of Financial Intelligence Units (FIU). That the Vatican initiated the membership procedure to join the Egmont Groups is significant: it places the Holy See among reputable countries on financial transparency.

The network of FIUs is named after the «Egmont Hotel» in Brussels, where Units from all over the world gathered in 1995. The aim of the group is to have a common framework  to cooperate in combatting money laundering and the financing of terrorism, and to improve each country’s program. The AIF initiated long time ago the process to join the Egmont Group, and communicated this decision to MONEYVAL evaluators (MONEYVAL is the body of the Council of Europe that assesses if its member states are meeting international standards against money laundering and the financing of terrorism) while the MONEYVAL peer evaluation on Holy See/Vatican City State was taking place. Already in the MONEYVAL report released in July, it is clearly stated that the Holy See was considering to join the Egmont Group. «The FIA – it is written in point 30 of the report – is seriously considering joining the Egmont Group and has already taken steps to initiate the membership procedure which would enable it to cooperate directly with other FIUs in the Egmont Group in accordance with Egmont principles.»

MONEYVAL evaluators rendered a positive assessment of the Holy See’s economic/financial structure, but they also identified some areas for improvement. One such area noted that the Authority for Financial Information only had limited powers to exchange information and sign Memorandums of Understanding with other Financial Intelligence Units.

Everything changed with the law modification that the Pontifical Commission for Vatican City State – i.e. the Vatican legislator – approved on December, 14. Small changes, with a big impact. Clause 7 of article 2 of the Vatican anti-money laundering law (Vatican law n. 127) previously stated that «the Authority for Financial Information, if the State Secretariat will grant the nihil obstat, can enter into Memorandums of Understanding with comparable authorities of other countries in order to exchange information about financial transfers suspected of money laundering or of financing terrorism.» The law modification eliminated the need for a Secretariat of State’s nihil obstat. The Secretariat of State is already the body in charge of the foreign policy and the coordination of internal policy, including anti-money laundering policies.

Article 41 of the law n. 127 also changes. In its new version, it widens the range of the international exchange of information, no longer limiting it to suspect transactions only.  Instead, it is now generally oriented towards preventing and combating money laundering and the financing of terrorism.

These two changes can be considered in the end another step of the Holy See toward the building of an economical/financial structure projected for the long term. As such, it should be welcome both by MONEYVAL and by individual States – for example, Italy – that pay a lot of attention to the Vatican path to financial transparency.

After the no confidence vote. The words of Gotti Tedeschi

After receiving a no confidence vote by the IOR Board of Superintendence, Ettore Gotti Tedeschi became part of the investigation on the Italian defense company Finmeccanica. He is not charged with any crime, but he is suspected to have stored documents of Finmeccanica CEO Fernando Orsi. As Gotti Tedeschi, Orsi hails from Piacenza. They are long-time friends. That is why Gotti Tedeschi’s house in Piacenza and his office in Milan were searched. The police took 47 folders, that are said to contain Gotti Tedeschi’s private documents – and not IOR correspondence. These folders are now in the hands of the Public Prosecutor of Naples investigating Finmenccanica. The Public Prosecutor of Naples sent to the Public Prosecutor of Rome some of the documents. The Public Prosecutor of Rome is still investigating 23 million euro transferred by the IOR in September 2010 (20 million were transferred from a IOR account to a branch of Credito Artigiano and 3 million from a IOR account to Banco del Fucino toward a IOR account to a JpMorgan branch in Frankfurt). Gotti Tedeschi has been questioned by both Public Prosecutors. On the one hand – according to the press – he said he wanted to be discreet and not to speak about the IOR in order not to cause pain to the Pope (he insistently has asked for a private audience with Benedict XVI); on the other hand, he reportedly said that there had been opposition to him for his commitment to transparency, his desire not to have any more cipher accounts in the IOR, and his work to add the IOR to the list of virtuous banks compiled and monitored by the Bank of Italy.  On this, he would have had the collaboration of Anna Maria Tarantola, then number two of the vigilance in the Bank of Italy and now general manager-elect of Italy’s public broadcaster, RAI Television.

IOR transparency

These allegations  are a strong blow to the IOR image. But they are not true. One telling conversation – that is in some ways confirmed from what Paolo Cipriani, IOR general manager, recently told in an interview – even if no one will ever officially confirm it, offers insights.  When Ettore Gotti Tedeschi was still the president of the Institute, Paolo Cipriani, the IOR general manager, asked Gotti Tedeschi to show him where the cipher accounts were, since Tedeschi had been repeatedly calling for their closing. Gotti Tedeschi, angry, did not want to identify which accounts he was talking about and said: «There are such accounts, the Bank of Italy told me about them». Cipriani explained the IOR security and transparency procedures in an interview to the Italian newspaper Corriere della Sera. The policy of the Institute changed in 2002, when the KYC procedures was first and scrupulously applied. KYC stands for «know your customer», and involves a thorough screening of customers.

The IOR has always maintained informal but close cooperation with the Guardia di Finanza, i.e. the Italian financial police. The cooperation is so strong that it is told that Paolo Cipriani once got a letter from the Guardia di Finanza, thanking him for the expediency and the precision of his information in response whenever Guardia de Finanza asked for anything. This was a relationship based on trust.  But the handling of the IOR. account at the JP Morgan branch in Milan did not follow this pattern.

The news of the closing of the account was made public the day after the press release of the second on-site visit to the Vatican of the MONEYVAL advisors. The press release acknowledged the steps forward taken by the Holy See.

Il Sole24Ore – the Italian newspaper that spread the news – claimed that the account was closed because the IOR was «unable to answer» requests for further information regarding some payments of the account to the branch of Milan – a peculiar account, which balance was brought to zero at the end of every day. JPMorgan also recalled that the bank activities of the branch are subject «both to the law of the Italian State and to internal regulations». That is why – after looking atthe IOR needs and the requirements imposed by Italian law and bank regulations – JPMorgan reportedly did not think it had enough information to offer pay and cash services to the 1365 account. However, in fact, it was the IOR that closed the account. The decision to close it was in part also a response to the way in which Italian magistrates had asked for information about the account.

FIUs’ – Financial Intelligence Units –purpose is the exchange of internal information. When there is suspicion of money laundering, the bank alerts the vigilance of the Central Bank, which then alerts its financial intelligence unit. The alerts are kept anonymous, to protect the way that the systemprevents money laundering. These parameters are designed by the Egmont Group of Financial Intelligence Units, a «working group» of FIUs to improve cooperation in combating money laundering and the financing of terrorism, and to help develop each State’s programs against money laundering.

The confidentiality of information is a key element in efforts to combat money laundering, as is also stated in Italy in the law 231/2007, that deals with the competences of the Bank of Italy. Art. 6 of the law says that «the FIU carries its functions with full autonomy and independence. To implement these principles, the Bank of Italy regulates the organization and the functioning of the FIU, including the confidentiality of the information collected. The Bank of Italy provides the FIU with financial means and other adequate resources to insure the efficient pursuit of its institutional goals».

In the case of the closing of the JPMorgan account, none of the standard procedures were followed: the Rome’s Public Prosecutor directly alerted the FIU of the Bank of Italy; the FIU then alerted the vigilance of the Bank of Italy; and the vigilance asked the JPMorgan branch information on the account. But, if the public prosecutors want to investigate an account, they must do it through the Guardia di Finaza. Yet, Ettore Gotti Tedeschi maintained that there were valid reasons why  JPMorgan closed the IOR account of its Milan branch. Gotti Tedeschi’s lack of initiative to defend the Institute was noticed by the IOR Board of Superintendence in the now famous meeting of May, 24, when the board passed the no confidence resolution on its president.

The 24 May board of Superintendence

Usually, the meeting of the Council of Superintendence – called on trimestral basis – are divided in two parts: during the first part – that lasts about half an hour – the members of the Board meet; only after – and this is the second part – Paolo Cipriani, general manager of the Institute, enters, and reports on technical aspects and bank operations of the previous semester.

On May 24, Cipriani had to wait two and a half hours. When he was called by the board, Ettore Gotti Tedeschi had already left the meeting, and the no confidence vote had already taken place. The memorandum was already drafted by Carl A. Anderson, who was the secretary of the Board.

Gotti Tedeschi – as written in the memorandum – began the meeting, and spoke for about 70 minutes. After his speech, the members of the board raised some issues. They remarked to the president his unjustified absence to the last two scheduled meetings of the board (on February, 24 and April, 17). The absence to the last meeting was very disappointing: it was the meeting when the board approved the balances and the earnings to be allocated to the Pope. The IOR, in fact, is not a bank, and its fund are at the Papal disposal. Rumors says that Gotti Tedeschi was in Rome, and he was invited to join the meeting. He did not go.

The board also raised with Gotti Tedeschi news leaks. Among the several documents of the institute leaked to the press in the previous months, there was an e-mail sent by Francesco De Pasquale (general manager of the Authority for Financial Information, so formally a controller) to Ettore Gotti Tedeschi (formally, one of the ones controlled) that complained about the ramifications of the Vatican anti-money laundering law – the law n. 127.  The law had been amended as per MONEYVAL recommendations, and this had sparked a lively debate inside the Vatican.   The e-mail – the members of the board noticed – could have only been leaked by Ettore Gotti Tedeschi’s office.

Last key issue, the closing of the JPMorgan account: why did the president not defend the Institute from the attacks and the inaccuracies of the press? It was then that Gotti Tedeschi, angry, abandoned the meeting. It was – for the members of the board – the climax of a tense and overdue situation. In order to manage thecontroversy,it was decided to publicly release the memorandum of the meeting.

On May, 25 – the day after the no confidence motion– the IOR Commission of Cardinals was convoked to decide how to manage the new situation. Only Card. Odilo Scherer could not be part of the meeting, while Card. Telesphore Toppo arrived right in time from India. In that meeting, the cardinals decided how would Gotti Tedeschi be let go from the institute.

What will follow

While awaiting how the investigation would proceed, and as soon as the news of the «memorandum» of Gotti Tedeschi spread, the Holy See released a press communiqué in which it maintained that it trusted that «the prerogatives acknowledged to the Holy See by the international legal order are being adequately considered and respected by the Italian judicial authorities». It is a clear statement: the Holy See reminds all that those are documents from a sovereign country, seized from an ex president of a «body of State».

To think that this would be of detriment to the evaluation of the Holy See Transparency by the Council of Europe would be wrong. It seems MONEYVAL evaluated the IOR «largely compliant» with international standards.  It was just part of the evaluation. The evaluation is not just about the IOR.  It includes the 120 Vatican bodies that deals with budgets and financial transfers.

Holy See financial transparency. Risks and procedures.

It is worth to clarify some assertions made in the last few days. These assertions had partially come out from the same environment that defended Ettore Gotti Tedeschi. They claim that the Holy See risks not to be added to the white list of the virtuous States in terms of prevention of money laundering; the Holy See has been selected to undergo MONEYVAL inspections; and that the Holy See does not want to cooperate with Italian authorities. But these statements are false or grossly inaccurate. It is thus worthwhile to be  very thorough, and explain everything step by step.

White list

Let us begin with the so-called «white list» issue. MONEYVAL – the body of the Council of Europe that evaluates the adherence to the anti-money laundering norms of Council of Europe State members – does not have a white list. MONEYVAL is a body where peer-to-peer evaluations of member States takes place. There are no inspections. There are processes of mutual evaluation. And these evaluations are part of an on-going process. After the plenary assembly of MONEYVAL – 2-6 of July – the report about the Holy See will be public. The draft of this report was first discussed in Strasbourg, during the meeting between Holy See officials and MONEYVAL evaluators in May. Some weaknesseshave been noted. But these weaknesses often deal with the fact that the Holy See is a peculiar State. MONEYVAL reports are divided in three parts: legal, financial and law enforcement. The evaluators rate the adherence to each GAFI recommendation (40+9 until February, now 40, with several novelties). Rating can be: non-compliant, partially compliant, largely compliant or compliant. Of the GAFI recommendations, 16 are «key and core». Of these 16 key and core recommendations, the Holy See – according to the press – would be partially compliant or non-compliant in 8. Obviously, this could change after discussionsat the plenary assembly. If it got 10 negative ratings, the evaluation of the Holy See adherence to international standards would be then assigned to the GAFI International Cooperation Review Group, and so it would take more time to be evaluated largely compliant. There are also infringement procedures on particular ratings. In 2005, Italy was evaluated generally largely compliant. At the same time, there were – in the Mutual Evaluation Report – several non compliant or partially compliant ratings. After two years, the GAFI closed the infringement procedure.

The meetings with the evaluators.

In fact, there is no intention to vote out a State. And the fact that there are 8 points to discuss does not necessarily lead to a general negative rating. The meetings with the MONEYVAL evaluators are characterized by an open discussion. The Holy See could eventually challenge the rating, and explain to the evaluators the reason for some of its peculiarities. The procedure is very well defined in several steps. During the plenary assembly of MONEYVAL, at least one whole day will be dedicated to discuss the draft report about the Holy See/Vatican City State. Three countries must canvass each of the three parts of the report. Then, the assembly as a whole will hold an open discussion. At the end of this discussion, the draft report could be amended. The final decision will be taken by all the delegates that will take part in the plenary assembly in July.

This will not lead directly to the Holy See being added to the white list. There is not a white list that is directly linked to the MONEYVAL evaluation. The white list generally refers to the Common Understanding – i.e. the criteria (defined by the EU. regulation 2005/60/EC) used by EU members about efforts against money laundering. A country is added to this white list only if sponsored by a member State, and only after getting a positive evaluation on its AML/FT (Anti Money Laundering/Financing of Terrorism) policies by an independent and authoritative international body. This white list is not perfect or definitive. For example, the list of virtuous countries published every year by the American Secretary of State follows a different approach. Another aspect of this white list is that States can acknowledge the European white list, and still consider a particular country not trustworthy. For example, Italy has excluded Switzerland from Italy’s white list.

Financial transparency is never ending

Even if MONEYVAL will positively rate the Holy See/Vatican City State, the path to transparency will not stop there. MONEYVAL has already done three evaluation rounds, and at this time some countries are being evaluated for a «follow up round», i.e. a fourth round that – beyond the implementation of specific GAFI recommendations – takes into consideration statistics and effectiveness of the legislation adopted by the member States. The first evaluation round took place in 1998-2000, the second in 2001-2004 and the third in 2005-2009. The Holy See became a MONEYVAL member on April 6^th 2011, and it was promptly admitted to the third evaluation round, that looks at the legislation of a country and the international  standards – for example, if the countries evaluated signed and ratified the Palermo and Wien conventions.

MONEYVAL on site visits to the Vatican

MONEYVAL evaluators went for the first time for an on site visit to the Vatican on November, 21-26. The evaluators assess the legislative situation of the countries incombating money laundering. The result of the visit is reserved to the counterpart: it is a report that shows the key findings of the evaluators and that rates the adherence of the country evaluated to each GAFI recommendation. After the completion of the report, the evaluated country has two months to implement the MONEYVAL recommendations.

On January, 25 2012, with the decree n. 59, the Holy See amended its anti-money laundering law n. 127, following MONEYVAL recommendations, and making it more compliant with international standards. That same day, the Holy See signed and ratified the conventions of New York, Wien and Palermo: this was proof of a long-term commitment to financial transparency. The new law was substantially different from the old one, and outlined a better power distribution. The control of Vatican finances was not exclusively entrusted to the one and only Authority for Financial Information. The amendment of the law was the focus of a strong internal debate, and some – in primis Card. Attilio Nicora, president of the Authority for Financial Information – defined the new law «a step back». In fact, the Holy See followed the MONEYVAL recommendations. Jeffrey Owens, head of tax issues at the Organization for Economic Cooperation and Development, praised the Holy See’s reforms. «The Vatican is heading in the right direction with the revised norms», he said to the Associated Press.

This amendment profoundly changed the Vatican legislative scenario. That is why there was the need for a second on site visit of MONEYVAL evaluators, that took place March 14 to 16 . This visit was not an inspection: it was an assessment of progress. After this second evaluation, the draft report was completed and sent out to the Holy See in April. In May – from the 14th to 16th – a delegation of the Holy See went to Strasbourg to comment on the report and get it ready to be presented to the next plenary assembly. Now, a pre-meeting will probably be held before the plenary assembly of July. And finally, the plenary assembly in July, where a decision will be taken: will the Vatican be subjected to an infringement process? Or will its efforts be awarded? « I have not seen any State – a MONEYVAL evaluator said informally to a Vatican official – going so quickly toward the financial transparency, and making so many changements». These words confirms the Strasbourg appreciation for the Holy See job. Neverthless the difficulties, one could also preview a positive MONEYVAL evaluation. And this would be gained in a very short time.

His reform is something more similar to Gregory VII. That of Gregorian reform is an heroic enterprise, brought on by a few man that works to re-moralized their society and so purify the Church. People gathered around Ildebrando of Soana begins a movement whose effect were so vast that a whole world change. Will this happen with the Benedict XVI’s Papacy?

Elected Pope with the name of Gregory VII, Ildebrando do not only care about the purification and moralization of the Church. He also collect the ancient sources, so creating a corpus of papers that will be the first global law of the world, the Canon Law. More, he defends the autonomy of the Church. In Dictatus Papae, Gregory VII affirms the supremacy of the Pope on any other power, the imperial one included. Then, he organizes the Pontifical Legates network. He establishes two kind of Pontifical Legates: the one in loco, charged by the Pope to look after the application of Gregorian reform on a territory; and the one sent by  Rome to accomplish mission in a foreign countries. The defense of the autonomy and sovereignty of the Church is also brought on, during the Gregorian Age, by creating new canonic collection. Gregory VII auspicates the research of the sources of the law, and so many researchers look for documents that affirms that the Papal authority is the source of the law. This research will bring to light the writings of Attone, Anselm from Lucca, Deusdedit.

It is the work Benedict XVI is doing as well. Joseph Ratzinger began his theological research with his Doctoral thesis on the «People of God and House of God in Saint Augustine’s Doctrine of the Church» – defended in 1951 -, and he has always been aware that he needed to look back to the Church, and then he understood that the Church needed to be less worldy, and that being less wordly means to change and unify. Finally, the Canon Law is the tool that the Church has to do it.

Benedict XVI wants to focus on Canon Law, and this is one of the reasons why the Secretary of State is a Canonist and the last Papal nuncios appointed is Charles J. Brown, a non diplomat that served for years in the Congregation for the Doctrine of the Faith. This comeback of the Canon Law is driving the Benedict XVI’s choice for what concern international relations, and even for what concern its commitment for financial transparency. This led to a renewed Vatican anti-money laundering law. Not everybody had been happy about it, inside and outside the Vatican Walls. Why?

The new text of anti-money laundering Vatican Law come into effect

There had been no modification to the Decree n. 159 issued by the Pontifical Commission for Vatican City State. The last 25th of January, Holy See issued the decree n. 159 to amend the Vatican City State Law n. 127 concerning the countering of money laundering and financing of terrorism. As the art. 7 of the Fundamental Law of Vatican City State, the President of the Pontifical Commission for Vatican City State  «in cases of urgent necessity, he can issue dispositions having the force of law, which  however lose their force if they are not confirmed by the Commission within ninety days». The Commission confirmed the decree and – beyond whatever it has been written and told during these last three months – there were no doubts about it.

Anti money-laundering Vatican law: a never ending debate

Ever since the Law n. 127 had been issued, the Governatorate knew that this law had been written in a hurry, under the pressure of the investigation of the Public Prosecutor of Rome on two money transfer ordered by the I.O.R. (the Institute for Religious Works), and with the necessity to fully comply to the norms required by the European Union in the Monetary Convention signed by the Holy See in 2009. Yet while Holy See and European Union were discussing the terms of the Monetary Convention, the then number two of Vatican City State Carlo Maria Viganò showed himself doubtful about what the on-going discussion was going to ask to the Holy See, and proposed to unhook the Holy See by Euro area, in order to preserve its sovereignty.

The law n. 127 reassured Italian prosecutors, but on the other hand it did not completely fit to the international standards. The decree was an improvement of the law promoted by the Vatican City State administration in order to fit to international standards and at the same time to let them adhere to a peculiar State that is Vatican City State, while preserving the Holy See sovereignty.

An Italian problem?

Yet, during these last three months, Italian medias highlighted several rumors coming from «inside the Vatican» against the improvement of the law 127. Il Fatto Quotidiano – one of the most prominent and aggressive Italian newspaper – published a series of leaks of reserved documents. Among these documents, there was also an e-mail sent by the Director of the Authority for Financial Information Francesco De Pasquale (the controller) to the president of the Council of Superintendency of the I.O.R. (the controlled). This documents proved a questionable relationship between two parts of the mechanism of control of the Holy See, and at the same time proved that an animated debate took place within the Sacred Walls about the improvement of the Vatican Law n. 127.

It had been also leaked to Il Fatto Quotidiano a notation by cardinal Attilio Nicora, president of the Authority for Financial Information (but also member of the Council of Superintendecy of the I.O.R., member of the Commission for the Governatorate of Vatican City State and member of the so-called Council of 15, the assembly of 15 cardinals that periodically meet to take stock of the Vatican financial situation). In this notation, Nicora described the amendments to the Law n. 127 as “step behind” confronting with the previous text, which he blessed and promoted. More. The last March, the 19th, an article published on Il Corriere della Sera, the most spread Italian newspaper, let understand that Nicora himself was working to rewrite the text of the decree n.159, in order to bring the law back to the “old” law n. 127. The article proved that – inside the Vatican – the debate never ended.

Why the anti-money laundering law changed

The amendments to the Law n.127 had been requested by the advisors of MONEYVAL, the body of the Council of Europe that analyze and judge the adherence of the States to the 40+9 GAFI recommendations for contrasting money laundering and financing of terrorism. Marcello Condemi, a member of the Vatican Authority for Financial Information and draftsman of the first sketch of the old law n. 127, worked on a second sketch of the law right after the first on site visit of the MONEYVAL advisors in Vatican, that took place in November 2011. Several debates within the Sacred Walls followed. Finally, with the decree n. 159, the law n. 127 had been essentially modified. The “new” law n. 127 is now more adherent to international standard. It strengthens the power of controlling of the Authority for Financial Information, but at the same time distributed the controlling powers on several bodies of the Holy See, according to the principle of the separation of powers (even the Gendarm Corps is now encouraged to strengthen its intelligence in order to take part to the countering of money laundering with proper tools of investigation).  It gave to the Vatican Secreteriat of State the complete management of the relationships between States – «The Secretariat of State – it is written in the decree n. 159, art. 2 quinquies – foster the adhesion of the Holy See to treaties and international agreements, as well as the relations and the participation of the Holy See to institution and international organization qualified to define norms and good practices for what concerns the prevention and countering of money laundering and financing of terrorism».

That the effort of the Holy See had been to adhere to international standards for what concerns the countering of money laundering without denaturalize its own institution is evident when – in the decree n. 159 – the procedures to take into consideration the list of terror organizations issued by the Security Council of United Nations. According to the law n. 127, Holy See does not mechanically transpose the United Nations Lists. This choice is aimed to preserve the Holy See and Vatican neutrality. In fact, lists are written under the «Chapter 7» of Charter of the United Nations, and that Chapter is applied in war time. Holy See could be embarrassed by a mechanical transposition of the lists, since it could be in contradiction with the Holy See orientation –  Holy See is traditionally neutral and in favor of peace. Since Holy See is a Permanent Observer to the Assembly of United Nations, and not a Full Member, a settlement has been made to the autonomy of the Holy See: the Vatican Secretariat of State – according to the new article 24 of the law n. 127– will draw up its own list of terror organizations that will be based on the one issued by the United Nations, so keeping its autonomy, and at the same time showing to be sensitive to the international security goals. Holy See so maintain its autonomy, but at the same time proves sensibility to the international security goal .

Is there a biggest target?

Maybe there is a biggest target on the basis of the polemics that followed the one the another from the moment in which the Holy See began the process enrolled in the «White List», the list of states most active in preventing and fighting the financial crimes.. The critics to the lack of transparency of Vatican finance would hide a sort of attack to the sovereignty of the Holy See itself. Documents leaked by the press – the so-called Vatileaks, that are now under the investigation of a commission made up of the cardinals Herranz, De Giorgi and Tomko – prove that the «sovereignty issue» has never been taken into consideration by the «step behind» theorists. The leaks are about the retroactivity of the «new» law n. 127; about the will to cooperate with Italian investigators; about a diligence toward Italian authorities that led Ettore Gotti Tedeschi to be voluntarily questioned by the Italian magistrates without these latter submitted the request internationally.

Yet, Paolo Cipriani, General Director of the Institute for Religious Works, explained – during one of the seminars periodically held by the I.O:R. to train the administrators of the Congregation with deposits in the «Vatican bank» – that the Institute has always responded to any request submitted by Prosecutors or Central Banks. The responses by the Holy See, Cipriani explained, had come formally – there had been during the last ten years 20 requests submitted internationally to the Holy See (it is a global data, it does not concerns the only I.O.R.): 19 had been fulfilled by the Vatican City State, the last one has been judged by a Vatican Court – and not formally, for a sort of «good neighborhood relationships» with the other financial institutes. Holy See – Cipriani also underlined – did not answer in the only case the request would be considered a vulnus to its sovereignty.

A wider – international – perspective

It is now time to see things from a wider perspective. The announcement of the improvement of the law n. 127 has been launch in the Osservatore Romano, the newspaper of the Holy See, in an article by msgr. Dominique Mamberti, the «foreign minister» of the Holy See. Mamberti linked the news of the improvement of the law n. 127 to the ratification by the Holy See of three international threaties – the news about the ratification had been given the 25th of January as well. Holy See adhered to and ratified 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). Holy See also announced the ratification of the United Nations Convention against illicit traffic in narcotics drugs and psychotropic substances (Wien, 1998): this latter Convention had been already signed by the Holy See when it had been adopted by United Nations.

It’s a long time that the campaigns to expell Holy See by the concert of Nations – as the See Change campaign – broke down in the public opinion. In 2007, The Economist – one of the most authoritative magazines in the world – published an article headlined “God’s ambassadors” about the Vatican diplomacy. The article ended with this advice for the Holy See: «It could renounce its special diplomatic status and call itself what it is – the biggest non-governmental organization in the world».

Within the bureaus of the United Nations and of the other major international organization in which the Holy See seats as an observer, the idea to expel Holy See from the concert of nations is widely spreads. Even if this idea did not succed, and – on the other hand – on July 2004 the General Assembly of United Nations approved a resolution that not only confirm, but even enhanced the presence of the Holy See within the United Nations.

So, a more subtle strategy began. This strategy – brought on in international environments – aims to undermine the moral power of the Catholic Church and of religions in general. It consists in remarking that religious freedom is something like the freedom of expression, or in confusing the religious freedom with the freedom of worship. Vatican diplomacy is undermined, too. If Italian Prime Minister Mario Monti caused an «earthquake» at the Italian Ministry for Foreign Affair by showing his intention to appoint ambassadors not raised up with a diplomatic career, Vatican insiders refer about the intention to appoint lay people as diplomatic representative of the Holy See. Pontifical Legates must be bishops, since they represent the Pope. This rule is valid and effective only for Papal nuncios: they work as Papal ambassadors, they keep relationships with the governments, and at the same time they work as bishops, speaking to the Episcopal Conferences of the countries they are appointed at, give their opinion about the to-be-appointed bishops.

Nuncios that are appointed as permanent observer within the International organizations (United Nations, U.N.E.S.C.O., F.A.O., European Parliament) must only care the relationships between the Holy See and the governments. This would open to the appointment of lay people as permanent observers of the Holy See.

Could this be the beginning of a weakening of the Vatican diplomacy? In the book C’era una volta un Vaticano (Once upon a time a Vatican), Massimo Franco, underlines this lack of international appeal of the Holy See. Too appeased on Italy and on its relations with Italy – Massimo Franco writes .- the Holy See lost sight of its wide global horizon that made of it the most long-lived and solid institution in the world. Canon right is the first really global and globalized law of the history, and it still consists in a solidity that no friendly diplomatic relations would touch.

This same problem spoiled the path to the Vatican financial transparency. Holy See borders are not anymore with Italy, but with the whole Europe. Yet, the members of the Authority for Financial Information are all Italian, coming from the Bank of Italy milieau – even if the Bank of Italy proved a certain hostility toward the Holy See (the investigation of the Roman prosecutors undermined the Holy See sovereignty, since prosecutors asked for information to the Financial Intelligence Unit of the Bank of Italy – which should be independent – instead of investigating with the Guardia di Finanza).

The “old” law n. 127 would have probably solved the “judicial” problems with Italy, but certainly it would also set back – if not avoided – the Holy See path to the white list. The Plenary Assembly of MONEYVAL will meet the next July, and on that occasion the report about Holy See will be issued. It will not be at that moment that the Council of Europe will decide about the enlistment – or the not enlistment – of the Holy See among the virtuous States. But probably, the possibility to be part of the white list would have been more difficult without the improvement of the law n. 127, that the MONEYVAL advisors auspicated.

The last year Ettore Bernabei – one of the major exponents of the world in State bodies, since he has been president of the Rai (the Italian national television) – interpreted the pedophilia scandal as the last attack moved from masonry to Catholicism in Italy. Catholics, he explained, were heading Italy’s economic boom during the Sixties. Catholic ideas were the “engine” of this economic boom. Bernabei – by explaining to «pour Cognac down to children» – outlined a sort of war scenario between Masonry and Catholicism, between lay and Catholic finance (but some call it «Finanza Bianca», white finance). The winner of this war seemed to be the exponents of lay finance. Ettore Gotti Tedeschi – a banker who proclaims himself as a true Catholic and at the same time is a follower of laissez-faire theories – is now the president of the I.O.R., even if one could notice that recently Benedict XVI instituted the Authority for Financial Information to control several Vatican and Holy See bodies, included the I.O.R.; Giulio Tremonti is the Italian Minister of Economy: he was one of the engineers of Otto per mille and he devotes himself to appear faithful of the Church. In the past, he theorized the need of a tax cut, then he wrote a book (La paura e la speranza) to underline – on the contrary – that the person comes before the numbers. Among the great bankers, the last exponent left of the so-called “Finanza Bianca” is Giovanni Bazoli, president of Intesa San Paolo and friend of Romano Prodi, former Italian Prime Minister: Prodi brought Italy into “euro area” and then criticized Fazio for doubting the economic keeping of Italy. While Cesare Geronzi – who had been for years at the top of Bank of Rome and of the Unicredit Bank, with good Vatican relationships reinforced even by sponsoring the World Youth Day in Cologne in 2005 – is now out of the games. Geronzi was one of the first to abandon Antonio Fazio when the former governor was put under investigation. Today, Fazio’s thesis about preservation of the Italian bank system are shared by the people who succeeded him. It is too late.

The reinforcement of Italian banking system was one of the key points of the Fazio’s economic job. He felt the risk that the possible indiscriminate takeover of Italian banks by big international banks would eventually let fall the “architecture” of Italian economy, made up by the little credit institution promoted by don Luigi Sturzo. The system gave birth to several credit institutions: Banche Popolari (Popular banks), Casse di risparmio (mutual savings banks) and Casse Rurali. All of these institutions were attentive to the small companies and anchored to the real economy.

Let’s make some step behind, and see what the financial scenario was before the Fazio’s case. During the spring of 1999, two Public Exchange Offers are launched: the first one is launched by Unicredit Bank to Banca Commerciale Italiana, the second one is launched by San Paolo Imi toward the Bank of Rome. The Bank of Italy do not reject the offers. But nor Unicredit, nor Intesa San Paolo preventively informed Bank of Italy of the offer. According to the regulations – estabilished by the then governor Antonio Fazio together with the Cicr (the government interministerial committee for credit and savings) and become part of the regulations – if one want to control the majority stake of one bank has to inform bank of Italy at least seven days before the board of administration of the bank would eventually meet and launch the offer. Since none of the two banks has followed this rule, the Public Exchange Offers failed. «Fazio uses the supervision as an instrument of power», critics complain.

Then, the Cirio and Parmalat cases are brought to light. Since the manager involved in the cracks are Catholics, a scenario of “Catholic managers” helped and sustained by “Catholic bankers” is easily outlined. Even bank of Italy has to weather the storm, since it is accused that its vigilance failed. The trials will eventually absolve all the banks involved, proving that Bank of Italy correctly carried out its job. But, in the midst of the trials, many newspapers trace back the network of friendships of Calisto Tanzi, the head of Parmalat, and underline that he is very close to Opus Dei and to the circles of Finanza Bianca. Yet, just a few remember that Ettore Gotti Tedeschi was briefly part of the Parmalat Trial: he was who that enlisted Parmalat in the stock exchange, and he seated in the Parmalat board for about one year.

In 2005, Consob – the authority that controls Italian stock exchanges – denounces a hidden pact between the Italian raider of Banca Antonveneta. Both Banca Popolare di Lodi (Bpl) and the Dutch Bank Abn Amro are trying to take the Italian Bank over. Officially, Bpl owns the 30 per cent of the sharings of Banca Antonveneta, but – thanks to hidden friends who bought shares on behalf of Bpl – the bank is effectively controlling the 40 per cent of the sharings. Consob suspects that Fiorani eluded the law on the Public Purchase Offer. According to this law, one who gets to control more than 30 per cent of the sharing of a bank must launch a Public Purchase Offer. Bank of Italy inspectors make an investigation on Banca Popolare di Lodi and their report is extremely negative. They send the report to Claudio Clemente, head of the Oversight Services on Credit Institutions of Bank of Italy, and to Giovanni Castaldi. Clemente and Castaldi give a negative opinion on Banca Popolare di Lodi capability to launch a Public Purchase Offer on Antonveneta. Fazio nominates three expert coming from outside Bank of Italy, and they instead give a positive opinion.

The Public Purchase Offer can now be launched. The authorization to the Ppo is not signed by Francesco Frasca, head of Bank of Italy’s Vigiliance – substituted in the mean time as by internal regulations of Bank of Italy – but by Angelo De Mattia. Recently, De Mattia is again on the spot. He is considered by many a man of Geronzi, but he has been for years Fazio’s spokesman in Bank of Italy. Today, De Mattia is now a prominent commentator of economy. While Giulio Tremonti was preparing to hold his speech to the World Day of Savings by giving ethic lessons to I.O.R. account holders in the Vatican, De Mattia animated a debate on the future of the Foundations of Bank Origin. According to Amato-Carli law, the Foundations of bank origin are public holdings, able to manage the majority stake of a bank, but unable to make any banking activity. It is a subtle border. In 2001, Tremonti moved a sort of war to bank foundations, to bring them under a direct public control, in order to nominate the top of the boards and to manage the patrimony of the banks. Tremonti failed, but he did not fully lose the war. He just turned to less laissez-faire oriented position, in opposition to Antonio Fazio. And that’s ironic, since Fazio had always been cautious about free market and its consequences.

From those consequences, Fazio tried to defend the Italian bank system. It is true, he authorizes  to the Public Purchase offer launch by Giampiero Fiorani, head of Bpl. But he authorizes even the Ppos launched by Abn Amro toward Antonveneta and Bilbao Vizcaya toward Banca Nazionale del Lavoro (later, Bnp Paribas will take over to Vizcaya), even if these latter are considered hostile. He does not back Fiorani’s offer for personal interest. Fiorani, on the other hand, keeps Fazio unaware of the illicit part of his manoeuvrings. Fazio explains it when he is called to testify to the trial. On the other hand, Fiorani testifies that Fazio was aware of everything. This discrepancy of testifies would have brought to the Fazio’s condemnation.

Fazio is compelled to resign, and Abn Amro gets from Milan Public Prosecutor the shares of Bpl. But Abn Amro itself is then raided by other international banks and then dismembered. There is more: the Royal Bank of Scotland, a big international bank involved in the dismembering of Abn Amro, fails because of the toxic credits inherited from Abn Amro. The Dutch Bank is then acquired by Grupo Santander, whose board of Italy has among his members Ettore Gotti Tedeschi. In the end, Banca Antonveneta is purchased by Monte dei Paschi di Siena. The “white” (i.e. Christian oriented) fortress of Padua is at the end in the hands of a “red” (i.e. Commonist oriented) fortress. Is it a cross exchange between Masonic lobbies, from the Dutch Abn Amro to the Italian Monte de Paschi? It is even this. But it is just a superficial explanation of this operation. In a few weeks, Grupo Santander gained from Antonveneta 2.5 billion euro.

Antonveneta finally got back to Italy, while everybody now support the need of having Italian bank and institutions to preserve the banking system of Italy. In the midst of an unprecendeted economic crisis, given from an international financial turbulence, the Italian banking system kept his stability thanks to the action of Bank of Italy ruled by Antonio Fazio, and has not the need of Statal interventions (alike Greece). Paradoxically, Fazio was the only one to pay with an exemplar condemnation. Just notice that Francesco Frasca – former head of Bank of Italy oversight, who worked under Fazio’s guidelines – was fully absolved by the trial in Milan, while Fazio was sentenced to 4 year’ imprisonment. This virdict – just a first appearance one – is food for thoughts. Was just Fazio under attack, or was the vision of a catholic-oriented finance under attack?

On September 6, the I.O.R. ordered Credito Artigiano to make two money transfers from an account of the I.O.R. deposited with the Italian bank: one of 3 million to an account at Banca del Fucino in Rome, and another of 20 million to a JP Morgan account in Frankfurt. Both of the recipients were identified only by their IBAN codes. On September 15, the office of financial information at Bankitalia notified Roman authorities about a possible violation by the IOR of the norms against money laundering. On September 20, the court of Rome ordered the preventive seizure of the entire sum deposited in the account of the IOR, and issued two notices of investigation of the president and director general of the Vatican bank, for omission of procedures against money laundering. The money are frozen, the I.O.R. is in the storm.

One year before, in September 2009, Rome Public Prosecutor investigated on money transfer o fan I.O.R. account deposited with a branch of Unicredit Bank based in via della Conciliazione, close to Saint Peter Church. The investigation led nowhere, but it was a signal that the “bank of the Vatican”, had more difficulties than in the past to make money transfers.

In fact, the I.O.R. is not a “true” bank, and it deposits accounts with branches of several banks all over the world to make money transfers. There are some privileged relationships, e.g. the ones with the Jp Morgan Bank and Unicredit. Since the last investigation, Unicredit strengthen the regulation, and asked to specify in a fairer way from who and why the money are deposited or moved in the account and to clarify even the bank check movements. Is the proverbial Vatican bank privateness going to collapse?

Many worried about the possible collapse of the Vatican privateness when  Ettore Gotti Tedeschi, president of the I.O.R., together with Roberto Cipriani, general director of the bank, agreed to be questioned by the magistrates of Rome. Their deposition filled 91 pages of transcripts, portions of which were leaked to the press.

It was a level of cooperation unprecedented in the history of the Vatican bank. In 1993, when he was called for questioning by the magistrature of Milan, Angelo Caloia, at the time  president of the I.O.R. , got the magistrates to submit a request internationally, with the request forwarded through diplomatic channels to the Holy See as a foreign state.  At that point, the I.O.R, responded with a written deposition, also forwarded through diplomatic channels. It delivered the proof of malfeasance – concerning Enimont “payoffs” of about 45 million euros – and received general approval in the press for having cooperated with the legal system. But his spontaneous deposition, Gotti Tedeschi did not succeed his goal, since the magistrates did not deem satisfactory the clarifications given, and responded “no” to the request to release the confiscated 23 million euros.

The goal had been reached with the the law no. 127 of the Vatican State, that adopts four new laws in implementation of the monetary convention – among the ones the Law concerning the prevention and countering of money laundering and of the financing of terrorism – and that regulates the competences of the Authority for Financial Information.

The president of the Authority for Financial information is the Cardinal Attilio Nicora, who also remains president of the Administration of the Patrimony of the Apostolic See. Among the members of the board, there are Marcello Condemi and Giuseppe Dalla Torre. Condemi was the deus ex machina of the new Vatican legislation against money laundering, while Dalla Torre represents the “Vatican” branch inside the Authority, since he is also president of the Court of the Vatican State. The members of the board have the job to give an international warranty to the transparency of the Ior operation, by storing all the money transfer of the I.O.R. in an archive, in order to be able to control each money transfer operation in the bank. Right after the 23 million euro had been confiscated, the I.O.R. – whose accounts are attributed by codes, and not by names – asked his current account holder to fill a detailed schedule to bank more than 10,000 euros. This request has been formalized by the law no. 127. There are problems to apply this law, indeed. If a I.O.R. account holder  directs with an overnight bag to the Torrione Niccolò V – where the bank is based – the Vatican guards would eventually ask him if there is something to declare. But if this account holder declares that he is waited from a cardinal, and that he is bringing to him that overnight bag, no one would stop him at the customs house. Who can be sure that the cardinal who received the overnight bag goes afterward to the I.O.R. to bank the money?

These kind of problems has still not been solved. But the only presence of the law satisfied Italian magistrates, who revoked the seize of 23 million euros. The Holy See made an official statement, underlining its satisfaction, but Ettori Gotti Tedeschi did not. In fact, the new law his not part of the job of his administration, but it is a step a in process toward the I.O.R. transparency whose origins dates before Ettori Gotti Tedeschi presidency, and drove by the A.P.S.A.

Yet, in the past months, trying to un-seize the 23 million, Gotti Tedeschi spoke several times about the “23 million issue”, claiming that the Vatican bank glasnost began under his administration. And a “deep throat” told to Corriere della Sera, the main Italian news daily, that «in ten months, more has been done than in twenty years, there are decades of habits to be changed»: this statement has given flesh and bones to the black legend according to which the legal troubles of the current president of the IOR, Gotti Tedeschi, in office since September 23, 2009, can be attributed to the mismanagement of his predecessor Angelo Caloia, in office during the previous twenty years. Gotti Tedeschi insists that he never said or thought this, while Caloia has demanded that the Vatican secretariat of state make public reparation for the affront, or – at least – to have the opportunity to write an article for the Osservatore Romano.

On march, 12, 2011, Caloia would eventually ended the fouth five year-term as president of the Bank of the Vatican. It was replaced by Ettore Gotti Tedeschi in 2009, but he had already been victim of manoeuvres to be sostituted. In 1999, Hans Tietmeyer, former president of Deutsche Bank, was backed as new president of the I.O.R. from the “old guard” of Vatican Curia. At a conference given by Tietmeyer at the Pontifical Academy of Sciences, Caloia stood up to criticize his ultraliberal theses. The Holy See did agree with Angelo Caloia.

And Holy See still agrees, if one reads the Benedict XVI’s encyclical Caritas in Veritate. But, on the other hand, the new president of the I.O.R. is a staunch proponent of a capitalism inspired by Christianity. Gotti Tedeschi is so ultraliberal to have signed, in 2007, a manifesto in 13 points, spearheaded by the former secretary of the highly secularist radical party, Daniele Capezzone. The manifesto proposed a single 20 percent “flat tax,” presidential government according to the American or French model, tax credits for health care and education, the requirement that the public administrator pay for all damages incurred, the changing of the retirement age to 65, tax exemption for overtime work, the abolition of professional associations and of the legal status of study certificates. When the Caritas in Veritate sketches were ready, Gotti Tedeschi – who was still not president of the I.O.R. – were writing articles on the Osservatore Romano about the creation of “a new economic bubble” to save the economy, and about the need to found a good bank to finance the developing countries – this latter proposal backed from the then British Prime Minister Gordon Brown. Then, Gotti Tedeschi gave his contribution in writing Caritas in Veritate, and now he brings out in several conferences the parts of the encyclical he agrees with, which are the parts considered more in continuity with the John Paul II encyclical Centesimus Annus. Centesimus Annus has never been seriously accepted by the hierarchy or by Catholics as a whole. It has been judged as too friendly toward the capitalist system.  Gotti Tedeschi, on the other hand, considers Centesimus Annus so important to launch the proposal to candidate John Paul II to the Nobel Prize for Economy.

What is the position of the Church? It is sufficient reading a Joseph Ratzinger conference of 1985, when he wrote that «the well-known remark made by Theodore Roosevelt in 1912: “I believe that the assimilation of the Latin-American countries to the United States will be long and difficult as long as these countries remain Catholic.” Along the same lines, in a lecture in Rome in 1969, Rockefeller recommended replacing the Catholics there with other Christians  — an undertaking which, as is well known, is in full swing. In both these remarks, religion — here a Christian denomination — is presupposed as a socio-political, and hence as an economic-political factor, which is fundamental for the development of political structures and economic possibilities».

Ratzinger quoted these theories to criticize them, and this is still is position. Religion is part of integral human development, that  passes through economy, but – firstly – from the human integrity. A “good bank” would not be sufficient. And the I.O.R. does not become a good bank filled with ethics just by changing the legislation. I.O.R. is going to became a “true” international bank. But its privateness criteria will eventually be similar to the Switzerland ones.

As the patriarch was unaware, on that day Pope Benedict’s Motu Proprio had become effective. The Motu Proprio, which regulates Vatican finances, has become the law no. 127 of the Vatican State.It regulates the competences of the Authority for Financial Information, wanted by Pope Benedict to fight money laundering. From now on, nobody can enter the Torrione Niccolò V with more than 10,000 euros cash. If they do, they need to pass very strict checks, justifying the money transfer. All information will be stored in the archives of the Authority for Financial Information, which will also work to guarantee that all operations be conducted at their best and according to European regulations.

But the question of who controls the controllers was, since the start, a thorny issue. All members of the Authority are, in fact, ‘internal’. Their president is Card. Attilio Nicora, who is also head of the Apsa, the “central bank” of the Vatican. Moreover, Giuseppe Dalla Torre, president of the Vatican Court, and Marcello Condemi former appeals attorney for the Bank of Italy and former member of the Gafi (the Financial Action Task Force against money laundering) figure among the members of the board, while the director apppears to be Francesco Di Pasquale, current appeals attorney, and anti-money-laundering expert.

The authority had to be formed according to the agreement between the EU and the Holy See, which allowed the latter to adopt the Euro as a currency while binding it to agree to European norms regarding financial instruments and currency circulation. If the Holy See had not agreed in an year’s time, they would have not been allowed to issue currency or stamps. On December 30, 2010, the Authority for Financial Information was instituted with Pope Benedict’s Motu Proprio.

In this span of time, Ettore Gotti Tedeschi’s “black Tuesday” had taken place. On the 21^st of September, in fact, the president of the IOR was being investigated from judicial authorities under suspicion of omitting anti-money-laundering procedures. This emerged in operations regarding one of the IOR funds in an Italian bank, for a total of 23m euros.

The IOR, in fact, is not a bank in the strict sense of the term. In order to operate financially, it needs other banks’ accounts. There are IOR accounts held, for example, in Deutsche Bank, Credito Artigiano or Unicredit branches. In 2009, an investigation had been launched starting from one of these accounts. However, the investigation led nowhere. Many thought that this transparency move was due to the investigation on Gotti Tedeschi, but that was not the case. Others noticed instead the IOR’s president’s choice to spontaneously testify in front of Italian judges with the general manager Roberto Cipriani. In the 91-page report -much of which is, predictably, kept secret- they explained the mechanisms of the Vatican Bank. But that did not satisfy the jury, and the 23 millions remained confiscated.

It is paradoxical that Gotti Tedeschi, the man designed to bring to a close the ‘transparency move’, had been investigated for money laundering. The IOR president is now the last representative of a so-called ‘finanza bianca’, a Catholic-inspired kind of finance. He can boast a sound educational track record, a powerful bank, and the ability to open his way through the Catholic world through his well-known laissez-faire and books such as ‘Denaro e Paradiso’ (Money and Heaven) , for some an enlightened book;  for some others, heresy.

However, Gotti Tedeschi is not the only heretic in the Vatican. As head of the IOR he is, in fact, a second choice. A quality second choice, of course. Backed by Mr. Gian Maria Vian, director of Osservatore Romano – the daily news of the Holy See – and therefore card. Tarcisio Bertone, Vatican Secretary of State (who would have backed as well Giovanni Bazoli, president of Gruppo Intesa San Paolo, the other big Italian bank), Gotti Tedeschi got the better of Giovanni De Censi, president of Credito Valtellinese, which also controls the Credito Artigiano. And it was Credito Artigiano the one involved in the 23m confiscation affair. It might have been a simple bank transfer, an operation that could be solved with a simple phone call between De Censi and Gotti Tedeschi. That phone call never happened, and De Censi has recently left the board of the Vatican Bank -officially for medical reasons. He was replaced by Antonio Maria Marocco, a solicitor from the Unicredit group.

In the meantime, the IOR money is still under confiscation, while the financial scenario around has changed. On the Financial Times, the news regarding the investigation on Gotti Tedeschi obscured the one regarding the Ceo Alessandro Profumo’s farewell to the former bank of Cesare Geronzi. After moving to the insurance company Generali, Geronzi was forced to resign confronted by the board’s lack of trust. A certain part of the Vatican world trembled in front of the ‘fall’ of one of their gods.

The other god is Mr. Tremonti. The Italian Minister of Economy has Ettore Gotti Tedeschi as financial advisor and paved his way in the Catholic world a long time ago. Mr. Tremonti‘s participation to a periodic Ior meeting with its account holders was meaningful.  Somebody claims it was him to lure behind Geronzi’s fall and he’s aiming at a ‘winner-takes-all’ situation as next prime minister and controller of Italian finances.

His ‘rival’ is Mario Draghi, the Bankitalia governor. He is the one who had been handed a draft of the Caritas in Veritate, Pope Benedict’s social encyclical. Draghi had (in the first months of 2010) a meeting in the Vatican Social Sciences Academy with Hans Tietmeyer (former president of the BundesBank), Ettore Gotti Tedeschi and the president of the Bank of Greece Lukas D. Papademos, in order to solve the Greek financial crisis. Some press even claims there was Draghi behind some advice during the make-up of the Authority of Financial Information.

The bond between Italy and the Vatican is therefore tighter than ever. This is not seen as favourable throughout the whole of the Holy See, and some would like to pursue a different line. Thus it happened that Gotti Tedeschi went to speak about the Caritas in Veritate to the Pontifical Council for the Laity, with spectators such as the vice-president of UniCredit Luigi Gilli and the president of the Banca Monte Paschi di Siena, Giuseppe Mussari -as well with other entrepreneurs, priests and intellectuals. They were all engaged in a discussion on the ethical basis of finance. The Osservatore Romano highlighted Gotti Tedeschi’s speech. However, nobody told of a small diplomatic accident between the Pontifical Council for the Laity and the Pontifical Council for Justice and Peace. The two councils are, in fact, based one a few yards from the other, and while it had been the latter to be involved in the edition of Pope benedict’s last social encyclical, only the former took part in the initiative.