Pope Benedict’s resignation has shocked the Catholic Church and angered the Vatican. His successor will face many challenges, from recurring sex scandals to concerns about financial misconduct by the Vatican Bank’s IOR or the Institute of Religious Engineering.
In 2011, Al Jazeera investigated allegations that IOR was involved in money laundering and investigated Pope Benedict’s plans to clean up the secretive system. With many of these reforms failing and the Vatican’s finances still in disarray, the next pope may benefit from revisiting the report.
Every Sunday, the faithful gather in front of the colonnade in St. Peter’s Square, with the Pope presiding over the sacrament and the latest code of conduct from his balcony. More than a billion Catholics turn to the Pope and give their money to the Catholic Church. Most of this money goes into the coffers of the Vatican and the IOR, the Institute for Religious Work, the Vatican Bank.
IOR is the vehicle for thousands of charitable and religious events around the world. Recently, the Italian prosecutor’s office launched an investigation into the bank’s alleged money laundering. €23 million in Vatican funds were seized, a fraction of the suspicious transactions currently under investigation. IOR President Ettore Gotti Tedeschi is also under investigation, and a huge financial scandal is now threatening the Church. For many Catholics, it recalls uncomfortably another scandal 30 years ago, the infamous “Ambrosiano Bank affair,” and some now worry that history may repeat itself.
President Ettore Gotti Tedeschi was asked to clarify the situation, but following the questioning, prosecutors felt they had not received a satisfactory answer. Surprisingly, even the IOR chairman couldn’t find a way to clarify the situation.
The Institute of Religious Works is located behind the walls of the Vatican City State, in a huge tower built by Niccolo V. The bank was founded in 1942 by Pope Pius XII. It was formed to protect the Vatican’s vast wealth in capital and real estate. IOR does not allow anyone to open an account. There are special rules that only allow religious organizations or clergy to do so.
The IOR is managed by industry professionals under the supervision of a Council of Cardinals, but since the IOR has only one central office in the Vatican, it must route its funds through other banks outside the city-state. However, the name of the account holder is kept confidential and the transaction does not contain any identification other than the IOR. This means that the origin of all deposits received by IOR accounts are erased from the records before the funds are transferred into the international banking system, which critics say makes money laundering too easy.
Generally speaking, the IOR profits from financial transactions and deposits during the year are donated to the Pope for charitable work carried out around the world. This amount corresponds to approximately EUR 700,000 to 80 million per year.
Inevitably, this massive flow of untraceable money caught the attention of investigators. The latest investigation began in late 2008, when Father Evaldo Biasini, treasurer of the Missionaries of the Precious Blood guild, answered his mobile phone in the mountains near Rome.
