Vatican Bank: a successful major cleaning

“We don’t manage the Church with Hail Marys,” Bishop Paul Marcinkus, president from 1971 to 1989 of the Institute for Works of Religion (IOR), more commonly known as “the Vatican bank,” liked to say. Certainly. But we also do not serve it by exposing it to financial embezzlement. And these have continued to punctuate the history of the IOR since its creation in 1942.

However, this institute remains an essential structure for a sovereign state like the Vatican. It cannot afford to depend on foreign powers to manage the money for its “works”, which are its religious congregations or even its charitable structures, and which require regular money transfers. Its existence is therefore little contested. The whole problem lies in its opacity.

The first abuses date back to the 1960s. To escape a costly tax on dividends that Italy wanted to impose on the Holy See, Paul VI called on tax experts who advocated the exit of capital from the IOR. From then on, the worm is in the fruit. Business is increasing. The IOR found itself involved in the bankruptcy of a Milanese bank, Banco Ambrosiano, whose president, Roberto Calvi, was assassinated in 1982. Presumably by the mafia.

Later, the prelate of the IOR, Monsignor Donato de Bonis, flooded, among others, the Italian Christian Democrats with Vatican money. “It was indeed the Holy See which made it possible to provide the secret commissions which financed Italian political life in the 1990s,” explains journalist François de Labarre, author of the investigation. Vatican Offshore.

Today, if the Vatican can no longer be considered a tax haven, it owes this in part to the work of the president of the IOR supervisory board, the Frenchman Jean-Baptiste de Franssu, who will leave his post on April 28, 2026. Since 2024, the Holy See has observed each of the 39 recommendations of the experts from Moneyval, the European body for the fight against money laundering: for example the sharing of tax information. In 2012, the Holy See respected almost none of them.

Long-term work

The IOR has therefore come a long way. If we had to wait so long to reform it, it is because John Paul II did not wish to lift this opacity. It allowed him to finance, in complete discretion, opponents of communism in Eastern Europe. The reforms began under Benedict XVI, who did not have the strength to see them through.

Pope Francis, known for his modest lifestyle, then decided to clean the “stables of Augean”. “They must be closed immediately! » he thunders when he discovers that five cardinals have seven-figure bank accounts, says Italian journalist Gianluigi Nuzzi. A highly placed source within the IOR gives another version: “There was an account of a cardinal with a lot of money. I can’t say more. Mr. Nuzzi has a lot of imagination…”

What is certain is that 5,000 IOR accounts were subsequently closed – or one in four – because they did not belong to the only people authorized to have one: seminarians, ecclesiastics or even employees of the City-State.

These improper accounts allowed holders to withdraw cash without declaring it for taxes. The absence of control procedures was thus a godsend for many powerful Italians linked to members of the Holy See. Furthermore, the financiers, recruited from the Vatican to optimize tax arrangements, did not hesitate to collect generous commissions in the process. They sometimes invested the money as they saw fit. Money which then had an unfortunate tendency to disappear as if by magic.

“It’s difficult to know if it was because of embezzlement or bad investment choices,” notes François de Labarre. But it is certain that these financiers, often linked to important people or companies in the Italian state, have long taken advantage of the incompetence of the prelates and the fact that they could benefit from a very practical opaque financial tool in the heart of Rome. » For the journalist, the geographical particularity of the City-State explains everything: “The Vatican is at the heart of Roman power, and therefore of Italian political power. »

The result was catastrophic for Vatican finances. The IOR estimates that it was siphoned off 150 million euros between 2004 and 2014. Then at least 100 million euros in the purchase of a luxury building in London. Who was responsible? Successive investigations and trials have pointed out the responsibility of Italian prelates. Most often, they worked for two powerful entities: the general affairs office of the Secretariat of State, which manages the pope’s expenses, and the Apostolic See Heritage Administration (Apsa), in charge of the Vatican’s real estate assets.

There was probably personal enrichment, even if specialists believe that it was primarily the attraction of power that motivated the builders of this system. Let us cite the work ordered by Cardinal Tarcisio Bertone, Secretary of State from 2006 to 2013, to create a sumptuous apartment. Their funding came in part from donations made on behalf of the Bambino Gesu pediatric hospital…

The sulphurous Cardinal Angelo Becciu, former head of the administrative office of the Secretariat of State, ordered a six-figure transfer for one of his brothers in Sardinia. Above all, in 2023, he was sentenced at first instance by the Vatican courts to more than five years in prison for embezzlement in the London building affair.

At the home of Fabrizio Tirabassi, chief accountant of the Secretariat of State, investigators found 600,000 euros in a shoebox. However, his monthly salary was only 2,500 euros.

Pressure to the end

Pinned down by the reformers, the profiteers of the old system then multiplied the shenanigans. In 2016, a member of the IOR discovered that a document was circulating in the Curia detailing the – imaginary – embezzlement of his career. Under pressure, two members of the Institute resigned that year. “Fortunately, Pope Francis has never let us down,” greets another member.

Francis’ adoption of a tender code in 2020 and a new apostolic constitution in 2022 made it possible to introduce even more transparency and concentrate financial resources in the IOR, with the Secretariat of State being relieved of this competence. “The IOR is now cleaned,” judges François de Labarre. But he does not believe that the work is finished: “There remains a question mark: Apsa, whose functioning remains opaque. If Leo XIV does not reform it, he will not be safe from an unpleasant surprise. »