The scandals associated with the Vatican bank, particularly over the last four decades, are sordid. They include money laundering for narcotics traffickers, bribery, skimming charitable funds to enrich priests, and tax evasion for wealthy Italians. The Church’s past offenses of selling indulgences and charging fees for sacraments have been updated for the world of modern finance, complete with shell companies, speculation and secret transfers. In May 2012, Pope Benedict XVI’s butler was arrested for leaking documents bristling with claims of financial corruption and criminal activity involving major Italian companies. The last Vatican bank chairman, Ettore Gotti Tedeschi, was shown the door when it was revealed that the bank was running afoul of international money-laundering standards. Leaked material and reporting reveals a bank that appears to be a kind of rogue offshore vehicle favored by various kinds of miscreants, including right-wing politicians, mafia types and tax evaders who wish to hide their financial transactions. The IOR functions as an “off-shore” financial institution for rightwing politicians, the Mafia, Italian tax-evaders and other disreputable characters. The IOR ensures privileges to be granted in exchange for political backing, legal provisions and business support.
Subsequent investigations have resulted in a shutdown of credit card transactions at all Vatican venues - God only accepts cash right now.
In the 1980s, the Vatican bank was involved in a major political and financial scandal involving the $4.7 billion collapse of Banco Ambrosiano. American monsignor Paul Marcinkus, chief of the Vatican bank from 1971 to 1989, avoided indictment when the Italian courts ruled that his status as a priest and high-ranking prelate of the Vatican gave him diplomatic immunity from prosecution. Perhaps some also recall that a certain Roberto Calvi, known as “God’s banker”, was the chairman of Banco Ambrosiano. He also did business with the Mafia, and was found in June 1982 swinging from Blackfriars Bridge in London the day after his dismissal from the bank.
Der Spiegel described the corruption at the heart of the Vatican bank:
“Its business model depends on keeping things as shrouded as possible from all financial authorities. Capital gains are untaxed, financial statements are not disclosed and anonymity is guaranteed. The bank's exotic status of belonging to a religious monarchy in a sovereign state the size of a city park has shielded it from investigations and unpleasant external monitoring.”
Feudalism arose in the 8th and 9th centuries in Western Europe. Wealth was obtained from the toil of the peasants working the land. Holy Roman Emperor Charlemagne granted the Church great power and gave it ownership of large tracts of land. In 1066, William the Conqueror gave over a quarter of the land in England to the Church. The Church had other means of income besides landholdings. Indulgences were the Church-granted remission of time spent in purgatory as punishment for sin and could be obtained through penance, prayer and good works. The pope decreed that indulgences could be purchased. Then in 1859 Peter’s Pence was revived. These donations had begun in the seventh or eighth century in England and were a type of tribute collected from the laity for the pope as their monarch. The new Peter’s Pence came from “both clergy and laity, the rich and powerful, including the pretender to the French throne, Emperor Maximilian of Mexico, Austrian archdukes, and Roman princes, as well as the poor.”
Being dependent on the generosity of others did not sit well with the popes and their curia (the bureaucracy running the Vatican) during this period. So when Benito Mussolini’s offer of $1 billion (in 2006 dollars) and independent sovereignty for the Vatican City State in return for the Church’s support of his dictatorship was made in 1929, the deal was accepted. Pope Pius XI hired a layman, financial genius Bernardino Nogara, to handle the windfall. Nogara agreed to take the position on two conditions:
1. That he not be restricted by religious or doctrinal considerations in his investment-making.
2. That he be free to invest funds anywhere in the world.
From June 1929 onwards, the investments of the Vatican, following the strategy of Bernardino Nogara, moved into the financial markets of the world. The Vatican was now allied with the 1% with no allegiance to any nation, cause, or group save themselves. Their global property and investments are hidden behind layer after layer of false fronts and holding companies and that the British government accused Nogara of “engaging in activities contrary to Allied interests” during World War II. Of more interest to Americans might be another of Nogara’s investments, the South American Banco Sudameris, “which in the eyes of the Allies was simply an Axis Bank.”
In addition to the Institute for Religious Works there exists the Administration of the Patrimony of the Holy See. That is the unit which holds the secret investment and property portfolios. There are also about 80 departments, agencies, and foundations in the Vatican each having their own money and investments, but those funds are generally restricted to the purpose of the each department. Also the Prefecture for Economic Affairs administers the Vatican City State. When the Vatican makes its annual non-detailed financial statement on the Holy See (as the Church’s government is called) and the Vatican City State and announces whether they made or lost money for that fiscal year, it is referring to the income from the museums, gift shops, donations from Peter’s Pence, the bishops and religious orders and expenses such as salaries and communications.
The new incoming Pope will be taking over as the CEO of a multi-national business enterprise rather than a church.
From here and here
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