Pope fires Vatican financial watchdog

The Pope has fired all five members of the Vatican financial watchdog whose terms were to expire in 2016 in a move to reform the Holy See’s banking practices after years of scandals. The all-Italian financial regulators will be replaced by a team of international experts from the US, Switzerland, Singapore and Italy. For the first time, the board includes a woman.

People with inside knowledge have told several media outlets that the Pope Francis wants to stamp out infighting among the old guard.

The new directors, whose terms last five years, are:

  • Juan Zarate, an ex-national security adviser to President George Bush. He had been responsible for developing and supervising the implementation of the US government’s counter-terrorism strategy. He is currently a Senior Adviser at the Center for Strategic and International Studies (a think tank). He is also a lecturer at Harvard Law School.
  • Joseph Pillay, a top-ranking civil servant and adviser to the president of Singapore. He is one of the pioneers who helped build up Singapore’s economy after it separated from Malaysia in 1965. He built Singapore Airlines into one of the world’s major carriers and was Chairman of the Singapore Exchange from 1999 to 2010.
  • Marc Odendall, a Swiss financial consultant with German and French Nationalities. He had worked for Merrill Lynch and JP Morgan Chase before going into philanthropy.
  • Maria Bianca Farina, an Italian insurance specialist who heads two insurance companies.

Eradicating corruption

The Vatican Bank, also known as the Institute for the Works of Religion (Istituto per le Opere di Religione – IOR), is a privately held institute with assets in excess of $8 billion which handles the Catholic Church’s funds.

It became involved in a scandal in 2013 when Monsignor Nunzio Scarano, a senior cleric, was arrested on charges of money-laundering. Italian police allege that millions of euros in false donations from offshore firms had been transferred through Scarano’s accounts.

Scarano and two other individuals are awaiting trial for attempting to transfer €20 million ($27.3 million) out of Switzerland illegally.

Following the scandal, there have calls to align the Holy See’s accounts with international transparency rules by appointing professionals from different countries to work with René Brülhart, head of the Financial Information Authority (AIF). Bruelhart has been pushing for change.

Brülhart, a Swiss national who had been Liechtenstein’s top anti-money laundering expert, has been urging Pope Francis to appoint international professionals.

Reuters quoted a Vatican source who is familiar with the situation, who said “Bruelhart wanted a board he could work with and it seems the pope has come down on his side and sent the old boy network packing.”

In 2013, Pope Francis, the first non-European Pope in 1,272 years, issued a decree aimed at stamping out money-laundering and making sure none of the Vatican’s money could ever be used to finance terrorism.

At the end of May 2014, Pope Francis said:

“The key is trying to avoid that there are more of them [Vatican Bank financial scandals]. Economic administration calls for honesty and transparency.”

Vatican Financial Watchdog

The Vatican Financial watchdog now has a team of international experts.