INTERVIEW – On April 28, Frenchman Jean-Baptiste de Franssu stepped down as president of the Institute for the Works of Religion (IOR), more commonly known as “the Vatican bank.” Appointed in 2014 by Pope Francis to restore order to a structure riddled with scandals, he succeeded despite the prevailing opacity and constant pressure.
Since when can we say that the Vatican is no longer a tax haven?
Since 2015, when it signed a tax information-sharing agreement with Italy and the United States, the Vatican has been on a gray list, not far from the blacklist of tax havens. The lack of tax transparency was one of its major problems. Because the tax authorities of many countries did not have access to the Vatican’s banking information, account holders at the Holy See could avoid declaring their accounts, even though it was illegal. In France, for example, you can no longer do this with Switzerland and Luxembourg: these countries have been sharing their banking information with the French tax authorities for several years. The tax authorities would automatically find you.
Why is it especially important for the Holy See to share tax information with Italy and the United States?
It’s simple: 80% of our clients reside in Italy. Almost all religious congregations have an account with the Institute for the Works of Religion (IOR) and their headquarters are in Italy. It was also important to establish an agreement with the United States, as that country has the unusual practice of taxing its expatriates regardless of their country of residence. The French, however, are not major clients of the IOR. There are a few accounts belonging to French congregations or dioceses, such as those of Paris or Marseille. When the Bishop of Paris or Marseille travels to Rome, he can use this account for his expenses. These are small accounts. But we strongly encourage them to declare them to the French tax authorities.
You told La Croix that the IOR was “plundered” of nearly 150 million euros between 2004 and 2014. Is this due to the dishonesty or incompetence of those in charge at the time?
I would say both. The former president of the bank (Angelo Caloia, editor’s note) was found guilty of embezzling funds from the IOR in a real estate transaction. The former managing director and his deputy (Paolo Cipriani and Massimo Tulli, editor’s note) were also convicted. Pope Francis once pointed out that there are two types of corruption: financial corruption, but also intellectual corruption, when crimes are committed not to obtain money, but power. It was often power that attracted the convicted Vatican employees.
There was also incompetence on the part of certain supervisory authorities. There was no system of control, reporting, or means to put an end to these practices. This is no longer the case today.
According to Italian journalist Gianluigi Nuzzi, several cardinals had bank accounts at the IOR (Institute for the Works of Religion) with seven-figure sums in 2014. When Pope Francis learned of this, he reportedly became angry and demanded their immediate closure. Is this true?
A cardinal had a lot of money. I won’t tell you more. But nothing prevented him from having an account. He wasn’t forced to close it by Pope Francis. You know, Mr. Nuzzi has quite an imagination… During my twelve years as president, we closed 5,000 accounts at the IOR (that’s one in four, editor’s note) . Because our statutes are clear: to have an account, you have to be a member of the clergy, a seminarian, a religious, a Vatican employee or retiree, or a diplomat. But we had found accounts belonging to ordinary people. They liked to withdraw cash from them. That’s no longer possible today.
When you arrived, only one bank was willing to work with the IOR, compared to more than thirty today. Why is it important for the IOR that banks work with it?
Without them, you can’t do anything. We have different business lines at IOR: traditional banking account management, but also management and investment services. We need to work with banks specializing in foreign exchange markets, real estate transactions, and so on. To invest money wisely, you have to diversify your risks.
In 2016, Pope Francis appeared to take a step backward by allowing the Secretariat of State to regain control of its accounts. That same year, two members of the IOR resigned. Why didn’t you resign as well, at that time?
Because perhaps I was a little unreasonable and hopeful. And I was right to be. We found ourselves in turmoil from 2015 to 2017, because we were starting to uncover a lot of things by lifting the right stones. This is the €150 million loss I told you about. We were then under considerable pressure. A 30-page document was circulating within the Curia, detailing all the alleged misconduct of my career… Some at the IOR said, “This is too much for me.” Others, like me, thought, “We were appointed to fix this.” Out of loyalty to Pope Francis, we stayed. I had made a commitment to him. And he never let us down. Even if we sometimes disagreed.
What is this about?
We wanted to create an open-ended investment company (SICAV) in Luxembourg. Subject to European regulations, it would have guaranteed that investments were made in the most transparent, controlled, and monitored way possible. Some people got it into the Pope’s head that we wanted to engage in tax speculation. Which was absurd. The Pope asked us not to create this SICAV. We obeyed, reluctantly.
In 2019, you refused the State Secretariat a loan of 150 million euros to compensate for a colossal loss in the case of a luxury building it had bought in London. Why?
When I arrived in 2014, we decided to stop issuing loans, as the IOR had done so extensively to Catholic organizations that never repaid them. They considered them donations. In March 2019, the Secretariat of State asked us for a loan of 150 million euros, without providing any details. We said, “You are the State, so we are ready to lend you this sum, provided you are completely transparent.” For three months, we requested documents, without success. We refused the loan. Chaos ensued. I was summoned to the Secretariat of State. “On what grounds are you refusing it?” they asked me. I replied, “On the grounds of international financial regulations.” We obtained the documents. We immediately understood that there had been wrongdoing. We alerted the Pope. He reacted immediately. He put his foot down.
Has discovering so much immorality among these men in the service of God shaken your faith?
Never. Because I learned at the Vatican that priests are just like us. They are human. They therefore have weaknesses. The Church is as much holy as it is human.
Translated and reposted from Le Pelerin