BENEDICT XVI: NEWS, PAPAL TEXTS, PHOTOS AND COMMENTARY

This is a rather belated commentary by Magister, which generally echoes the commentary by John Allen as soon as the Moneyval report came online [see post on the bottom of Page 330 of this thread], with a few minor differences. Nonetheless, any commentary is welcome, because the Moneyval report did not get the media attention it deserves, for the simple reason that it did not roundly condemn the Vatican, as the Cassandras predicted, but gave it positive points where they were deserved...

The Vatican and financial issues:
The ongoing effects of the Moneyval report
Benedict XVI's drive for transparency now obliges
all Catholic institutions to follow the example


ROME, August 3, 2012 – Very few have read it, and it is unlikely to be sold in bookstores, with its 500 pages of text and attachments. But the Moneyval evaluation report on financial regulation at the Vatican represents a historic watershed. {The attachments are particularly useful since they represent the texts of all Vatican laws and regulations relevant to regulating financial activities of all organisms within the Vatican, texts which would otherwise not be available online.]

For the first time, the Holy See has subjected its agencies and its laws to evaluation by an external international body [in this case, Moneyval, the agency of the Council of Europe that is responsible for enforcing international measures against money laundering and funding of gterrorism.]

For the first time, it has committed itself to being voted on and given tasks for compliance by a secular authority in the area of God and Mammon, where many offenses have been committed.

This watershed event marked by the Moneyval report once more obliges a rewrite of the conventional profile purveyed about Benedict XVI.

The theologian-Pope has shown himself an inflexible man of government. He gave the order that in the financial area, everything at the Vatican should be made transparent and exemplary, even at the cost of triggering conflicts within the Vatican of unprecedented harshness, as we have seen so far.

Moneyval has acknowledged that the Vatican "has gone a long way in a truly short time". It has been among the most recent among the states to legislate financial transparency measures, but in the space of only two years, it has been ranked 10th - following Germany and Italy - among the 29 states periodically evaluated by the Moneyval task force to measure how effective these measures are. After a Moneyval onsite inspection in April, the Holy See received nine positive votes out of the 16 'core and key' criteria which determine the rankings.

The Moneyval report focuses on two Vatican agencies that received most of its observations pro and con: the IOR and the newly created Authority for Financial Information (AIF), an investigative and supervisory agency required of each state monitored by Moneyval. Indeed, by the end of summer, Vatican sources expect major changes in both agencies.

The IOR will get a new president, after its administrative council ousted Ettore Gotti Tedeschi with a non-confidence vote, accusing him openly of manifest incompetence in office.

Gotti Tedeschi has said that his brutal dismissal from IOR was due to irreparable conflicts with the rest of IOR management, especially with Cardinal Secretary of State Tarcisio Bertone, regarding two major issues.

The first was the attempt to gain control of the financially-troubled San Raffaele medical center in Milan, which had been obstinately desired by Bertone, against the eventual strenuous opposition of Gotti Tedeschi [who, in fairness to Bertone, had initially considered the proposal favorably. Of course, the Pope himself thereafter vetoed Bertone's initiative.]

The second issue had to do with the changes introduced in 2011 by the Secretariat of State to the original Vatican law on financial transparency, Law 127 promulgated by the Holy Father on December 30, 2010.

Cardinal Attilio Nicora, whom the Pope had named to head the AIF created by that law, said the amendments represented a 'step backward' compared to the original, and Gotti Tedeschi said they could be rejected by Moneyval [since the amendments also gave supervisory functions to the Secretariat of State, the Vatican Governatorate, and the Vatican gendarmerie].

But this was apparently not considered negative by Moneyval, which recommended two major corrections in IOR regulations: a more stringent and selective verification of the profile of its clients, and a more rigorous accounting of cash flow, especially money sent to non-European countries who do not have transparency regulations.

Law 127 in general was positively seen by Moneyval, but it did note that the subsequent amendments weakened the investigatory functions of the AIF on all Vatican agencies, as provided for by the original law. [Allen's presentation of statements from Moneyval is more accurate and reliable than Magister's who is translating/knterpreting the English of the original Moneyval report into Italian.]

Although Moneyval agreed with Cardinal Nicora in this, they also directed two criticisms against him. The first is that he had not yet carried out any concrete investigation and supervision as he was authorized to do, and especially not of the IOR. Therefore, the AIF still has to prove that it can be effective.

The second is a conflict of interests, since he is also a member of the five-man cardinals' commission that oversees the IOR. Nicora is expected to leave the IOR commission soon, which means Cardinal Bertone will have one less adversary at IOR.

The above was published first in L'Espresso magazine which went on sale on August 3. On the www.chiesa site, Magister adds the following considerations:

First of all, the harm caused by Gotti Tedeschi's 'defenestration' from IOR, is far from being healed.

"Never in the recent history of the Western world has the president of a major institution been relieved of his position - for whatever reason - with such brutality. We consider Ettore Gotti Tedeschi a person of the highest personal integrity who has always placed his personal responsibility ahead of acritical obedience".

This was the statement issued by leading economists and financial leaders of Italy, most of them not observant Catholics, in a letter to Corriere della Sera on June 3.

And yet, the former IOR president appears to be under a true and proper damnatio memoriae at the Vatican, where even saying his name appears to be taboo.

But in doing so, Vatican authorities are contradicting two key factors in the financial transparency ordered by Benedict XVI: truth and setting the example.

Just as the Vatican opened itself to investigation by Moneyval and thereby agreed to open its institutions to public scrutiny, one also expects the truth about the true motives for chasing out Gotti Tedeschi and the conflicts that led to it, thus doing justice to his name and honor.

One cannot see how this absolute condemnation of Gotti Tedeschi fits into the intention of the Holy Father to make the Vatican set the example to the entire Church in terms of financial transparency.

There are numerous dioceses, religious orders, schools and hospitals around the world who are plagued by financial mismanagement. Now they no loner have any excuses, after the Vatican itself has undertaken an operation of transparency and financial cleansing. The road taken by the Holy See demands that all other Catholic institutions follow the same.

But precisely because of this, there is nothing exemplary in the behavior of Vatican authorities against the man they called to head the IOR in 2009 and whom they have barbarously thrown out of the window.

A second consideration has to do with IOR itself - the image that the public has of it, and its reality.

Compared to a few years ago, the image of the Vatican 'bank' in the media is more positive today, thanks in part to the recent briefings given by its management to ambassadors to the Holy See and to journalists covering the Vatican.

Even the Moneyval report was reassuring, from his viewpoint, since it confirms that an intense work of cleaning up and reorientation is taking place with respect to its accounts and account holders.

Moneyval also confirmed that IOR is able to operate around the world through its relations with more than 40 'corresponding' banks in Europe, the United States, Australia and Japan.

Nonetheless, this does not obviate the fact that Italian magistrates are still investigating some suspected financial transactions by IOR, and that explanations given to them so far have not been found satisfactory.

The best known of these investigations was a 23-million euro transaction in 2010, questioned by an Italian bank that had traditionally been friendly to IOR, Credito Valtellinese, under president Giovanni De Censi, who had been a member of the IOR administrative council at the time, an appointment was terminated on December 31, 2010.

After that, other banks, including JP Morgan, decided against continuing to be corresponding banks to IOR, claiming that it was unreliable in many ways.

A third consideration is the man who led the Vatican delegation to Strasbourg, at the plenary session of Moneyval last May, and who subsequently 'presented' the Moneyval report at a Vatican briefing.

Monsignor Ettore Balestrero, 45, is undersecretary for Relations with States, equivalent to being the deputy foreign minister of the Vatican.

Born in Genoa and a spiritual disciple of the late Cardinal Giuseppe Siri, who was a leading Church 'conservative', Balestrero has served in the Apostolic Nunciatures in South Korea, Mongolia and the Netherlands, and has been in the home office since 2001. He speaks English perfectly since his mother is American.

His mastery of English, the lingua franca of the international financial community, along with his competence on financial matters, give him an advantage on the international stage.

He defined the Vatican's 'success' so far with Moneyval as "a milestone in our constant commitment to combine our moral duty with technical excellence".

He appears to be a rising star in the Vatican firmament.

More background information about the Moneyval report is elicited by Andrea Tornielli in an interview with the Vatican lawyer who took part in the process...

Lawyer Jeffrey Lena sets the facts
straight about the Moneyval report
and how it has been reported only
partially to give a false picture
by Andrea Tornielli
Translated from the Italian service of

August 4, 2012

Jeffrey Lena, 54. is a Californian from Berkeley, oldest son of a family with Italian and Irish origins. He has degrees in history and law from the University of California, and taught those disciplines in the university before being tapped to defend the Holy See in cases filed in the United States.

In 2000, while he was teaching in Turin, he was first introduced to the Vatican by Franzo Grande Stevens who had handled various major cases for the Holy See. He then collaborated with Stevens on two cases filed against the IOR in the United States by Holocaust survivors who accused it of having accepted millions of dollars allegedly robbed from Jews during the Second World War.

Subsequently, Lena represented the Vatican in various cases that involved the attempt to directly involve the Vatican in cases filed against priests accused of sexual abuse, or allegations of fraud. A specialist in the law safeguarding the sovereign immunity of states, he has so far not lost a case for the Vatican.

Lena has always maintained a low public profile. No photograph of his has ever been published nor has he ever given a statement on TV. This discreetness was even more important in 2010 when accusations seeking to hold the Vatican responsible for various abuse cases against priests and dioceses reached a new intensity. He was forced to change his work habits, to transfer the location of his law office, and to take measures to protect the privacy of his family.

This year, Lena's work for the Holy See also stepped up. He now spends considerable time in Rome and was directly drafted into the work group constituted by the Secretariat of State to bring the Vatican in line with Moneyval standards.

In this interview, Lena - who was part of the Vatican delegation to the July plenary session of Moneyval in Strasbourg - answers questions about continuing criticism of the IOR in particular.

"Many criticisms one reads about the Vatican," he says, "arise from a lack of understanding of how things really are and how the Holy See functions. I hope that my initial training as a teacher can help today to communicate this in order to arrive at better understanding".

Before going on to the Moneyval report, I would like to ask you about the Italian prosecutors' investigation of Finmeccanica [Italy's top high-tech defense contractor, under investigation for alleged bribes to facilitate the purchase of helicopters]. It seems they want to know whether any Finmeccanica officials have any accounts with IOR. [Ettore Gotti Tedeschi was interrogated by Italian prosecutors in this connection because he is friends with the Finmeccanica president, and the Italian corporate giant also has accounts with Banco Santander, the Spanish bank whose Italian subsidiary Gotti Tedeschi has headed for years.] What can you say about this?
Unfortunately, some articles on IOR are hardly accurate. They often concentrate on speculation rather than facts.

Then what about Finmeccanica?
It is absolutely false that there are any Finmeccanica accounts in IOR, just as it untrue that there are numbered accounts or anonymous accounts of any kind. It is also untrue that IOR deals with 'shell' banks - fictitious ones. One regrets that a system of leaks has been used to spread false information.

Rather, more attention should be paid to the evaluation by Moneyval, which is that IOR, and the Vatican in general, have been very open and cooperative.

The way you put it, the fault lies with the reporting...
That is not my intention. Journalists play a very important role, and they often are pressed for time to do it. They must be helped, as well as appreciated for what they do. But precisely because they play such an important role, I think it is important that they are able to distinguish speculation and fact, and that they report facts in the right context. I don't think this is too much to ask.

About the Moneyval report - the evaluators say that there is still a lot of work that the Vatican needs to do...][Glass-half-empty approach to a report that was more than glass-half-full!!]
Your statement proves part of the problem. To say that there is still much work to be done, outside the context of what other states have done, gives the impression that the Vatican is an exception in this respect.

If one looks at all the reports for various states, one thing leaps to the eye: There is always much to be done by each state because the standards are constantly being updated and therefore ahead of corresponding national legislations.

But one thing that is not in other country reports but which is in the report on the Holy See is that the evaluators noted and appreciated the openness and the capacity not just of the IOR but of the Holy See itself to work solidly, and very validly, adapting in order to make progress in real time, even during the evaluation process itself.

Why does the report refer to the situation at the Vatican in November 2011?
It is a snapshot in time. November 2011 was the first onsite visit by Moneyval inspectors. The Vatican was given till January 2012 to introduce necessary reforms. So, the points we received even at that first visit were already quite good. It does not however reflect the situation of the Vatican on the date the report was published in July 2012. Much progress was made to improve the measures against money laundering after January 2012, but these later changes are only noted in the footnotes and not in the main text of the report.

The notes do acknowledge that the measures against money laundering, especially at the IOR, are much more advanced than they were nine months earlier. So the reality is even better than the main report says.

Let us come to the most congroversial point. Why does the Vatican have problems cooperating on the international level?
The Moneyval inspectors carefully examined this question of international cooperation with respect to how the VAtican responds to formal inquiries from other states, etc. One must note that although the Vatican has diplomatic relations with more than 170 states, a complaint of non-cooperation has come from only one country. [namely, Italy].

Contrary to what many Italian newspapers have been reporting these months, the Moneyval inspectors concluded, after a careful examination of the facts, that the Vatican has been 'largely compliant' in this respect. We passed this aspect quite easily.

The constant accusation of non-cooperation is unjust. For example, someone wrote in January that the Vatican 'never' responded to a formal request for information sent in 2002, when he could have easily checked to see that the inquiry was never sent, and was therefore never received by the Vatican.

Is it true that the IOR, in effect, rebuffed Italy by refusing to furnish information about events before April 2011, because the measures against money laundering were not retroactive?
The Moneyval inspectors examined the concrete facts and concluded, as the report says, that neither the IOR nor the AIF ever used the non-retroactivity of the law as an excuse for not providing information requested pertaining to any time before April 2011. That's an issue that's been resolved, I would say...

What about the accusations that the Vatican is 'not transparent' or even about 'corruption'?
The Moneyval report simply dismantles the myth of lack of transparency at the Vatican. In the first place, they say that the Vatican has been very cooperative and collaborative. But the other myth they dismiss is that of alleged widespread corruption.

The report says specifically, in paragraph 52 - "With regard to corruption, although there have been recent unfounded accusations of corruption made in the media, there is no empirical evidence of any corruption that has occurred in the Vatican." [A very important conclusion which the MSM, especially in Italy, completely ignored, because it belies what they have been trumpeting since January 2012 based only on Mons. Vigano's allegations, for which he presented no specific cases other than the infamously alleged 'overpricing' of the 2009 Nativity scene construction in St. Peter's Square, and which no one in the media even bothered to investigate.]

Can you tell us what really happened at the plenary session in Strasbourg, and how did the Italian delegation behave?
Under the rules of the Council of Europe, all proceedings are confidential, before and during the plenary session. Obviously, this also goes for the 'behavior' of any single national delegation. It would not be respectful of Italy and its institutions to discuss this, and obviously it would be violating Council rules.

How would you define the present status of the Vatican with respect to money laundering?
It happens that some people are seeking to credit the idea that the Vatican is somehow involved in money laundering. First of all, it should be clear that every jurisdiction and every financial isntitution can be the victim of money laundering, but to be a victim does not mean you are complicit, as news reports often make it appear.

In the second place, one must look at the statistics to understand where the problem lies. For instance, in recent months, it was reported that according to the United Sattes government, the Vatican iis 'potentially vulnerable' to money laundering. Only potentially. But the news in itself has contributed to spreading a negative image of the Vatican.

It is clear from reading the US report itself that the 'potentially vulnerable' list is not the category that is truly relevant to money laundering, but rather the list of nations that evoke 'primary concern' - a list that includes Japan, England, Australia and Italy. It is certainly curious, to say the least, that many news reports about the US list did not even bother to compare the 'potential' category of the Vatican compared to the countries which were considered 'risks of primary concern'.

What exactly does the category of 'primary concern' mean?
It means that the country so classified is not just vulnerable but also a primary destination of laundered money. One simply has to examine the reports of Moneyval and of FATF/GAFI* to see which countries are at the highest risk for money laundering and which also have significant problems with organized crime. One will certainly not find the Vatican in that list.

*[FATF/GAFI stands for the Financial Action Task Force against money-laundering, better known by the acronym GAFI of its French name, Groupe d'Action Financiere Inter-Gouvernmentale.]

Back to the Moneyval report, it would seem that the Vatican had failed more criteria than it passed - having passed 49% of all required criteria, while failing 51%.
Your observation demonstrates how easily statistics can be deceiving. An appropriate analysis of the numbers shows a totally different reality.

In the first place, the country that obtained the best rating from Moneyval only scored 75% as being 'largely or completely compliant' with all the criteria.

In the second place, no one has paid attention to the ratings obtained by other countries in similar evaluations - which is available on the Moneyval website. It shows that the Vatican ranked #11 among 30 countries evaluated by Moneyval in its Third Round evaluation, and 13th among 30 for its compliance in general with all of Moneyval's "40+IX' recommendations.

In fact, in more than one category, the Vatican surpassed members of the European Union, for instance, in the area of commitment to international treaties in combatting organized crime. I don't say thia to criticize other nations, but to affirm that the Vatican ought to receive just acknowledgment for what it has achieved.

Are you saying that the countries in the White List - the supposedly 'virtuous' nations - are no better than the Vatican?
I would avoid using the term White List, which is not linked to the evaluation by Moneyval and is no longr even used by FATF/GAFI as a category. Even the term 'virtuous' has become quite common but it is deceptive. There is no such 'virtuous' list, and certainly, the Vaticna cnanot be called a 'non-virtuous' state.

In fact, since the Vatican is among the countries with good results as evaluated by Moneyval, one must ask why it is being treated as a 'not equivalent'[????] state. In terms of financial activity, IOR has relations in more than 100 countries, it has banking relations with 40 of them, and has relations with financial entitities with all the members of the European Union. But it seems to me that only one of them treats the Vatican with disparity, namely, "not equivalent' in terms of combatting money laundering.

Do you mean Italy?
That seems to be a fact. But I believe that this issue will be sorted out by the competent institutions and not through the newspapers.

With the Moneyval process. what do you think is the image that emerges of the Holy See as an institution?
It is important to note that one of the stereotypes about the Holy See is that it needs to be reinforced by 'outside experts'. But all the work carried out to comply with international standards and Moneyval criteria was done for the most part with the VAtican's own internal resources.

Just think of the answers made to the hundreds of formal questions laid down by the evaluators, and to the thousands of pages of material translated by persons who will mostly be anonymous. Of course, external experts can help, but without the professionalism of the personnel actually involved in the Vatican's financial activities - in the Curia, the Governatorate, at IOR, APSA, and in the tribunals - the positive result we obtained would not have been possible.

The Holy See has shown it can act fast and achieve significant objectives, with results that deserve respect and acknowledgment.