Vatican bank’s sale of 29 church properties under legal scrutiny

The Vatican’s controversial bank, IOR (Institute for Works of Religion), finds itself in the eye of yet another storm following Saturday’s revelation those who ran the bank between 1989 and 2009 are being investigated in relation to suspect real estate deals involving church property.

Senior Vatican spokesman Fr Federico Lombardi, on Saturday, said it had been the present management of the bank who had highlighted the current "problem" to the Vatican City state prosecutor's office.

Media reports claim prosecutor Gian Piero Milano is looking into the sale of 29 church buildings between 2001 and 2008.

IOR itself issued a statement confirming that some months ago it had reported two former bank managers and one lawyer – former IOR president Angelo Caloia, former director-general Lelio Scaletti and lawyer Gabriele Liuzzo. IOR added that the case underlined the management's commitment to "transparency and zero-tolerance, even with regard to suspicious events from the past". The suspicious dealings came to light in the last year, following an assessment of IOR's 20,000 accounts by global risk-control group Promontory Financial.

Alleged fraud

No charges have yet been filed but it has been claimed the three men falsified the sales of church property, declaring low purchase prices but being paid under the counter at full market rates. Media reports claim the three also sold church property cheaply to themselves only to quickly resell it, again at full market rates. In all, the church may have been defrauded of €50-60 million.

All three still have accounts at IOR, accounts which have been frozen and which were found to contain about €17 million. Reuters reports that, in his sequester order, Mr Milano argues the €17 million “stems from embezzlement”.

Allegations of mismanagement and fraud are not new for IOR, which claimed world attention in the early 1980s when it was involved in the downfall of the Milan-based Banco Ambrosiano.

Transparency targeted

In more recent times, financial irregularities and a lack of transparency at IOR proved to be one of the issues most debated by the cardinals at their pre-conclave general audiences last year, prior to the election of Pope Francis.

The pope himself has several times explained he was elected with a mandate to clean up the Vatican’s finances. It was no surprise to hear current IOR president Jean-Baptiste de Franssu express his satisfaction that the “Vatican authorities are acting with determination”.

It is an open secret in Italian public life that, for much of the last 30 years, big business, corrupt politicians and organised crime all had access to IOR, which enjoyed the status of an off-shore bank – but one right in the centre of the Italian capital.

Only last week, Australian cardinal George Pell, the man who heads the Vatican's secretariat for the economy, reported that the bank's situation was "much healthier" than expected because of "millions of euro tucked away in particular sectional accounts ... not on the balance sheet".