Vatican 2014-07-08 - The Institute for Religious Works (IOR) released its balance sheets Tuesday for the year 2013 showing that in a bid to strengthen transparency the IOR closed the accounts of three thousand customers.
They also show that in 2013 the institute, also known as the Vatican Bank allocated € 54 million euro to the budget of the Holy See.
Speaking to Vatican Radio’s Fr Bernd Hagenkord, the outgoing President of The Institute for Religious Works, Ernst Von Freyberg said that Phase One of the reform of the IOR had been concluded.
Below find a full transcription of an interview in English with President of the Institute for the Works of Religion, IOR, Ernst Von Freyberg. Listen to this interview with the Head of Vatican Radio’s German section Father Bernd Hagenkord SJ.
Q. You’re concluding Phase One of the reform of the IOR. That’s the main title, so to speak, of the document you published today. What does that mean: Phase One? What are you concluding?
A. The conclusion of Phase One we’re presenting our financials for 2013 and we’re giving an outlook for 2014. Phase One of the reform of the IOR had four key elements. We checked all accounts, we investigated our principle legacy cases, achieved transparency and improved our procedures. What does that mean? We decided very early on that the future of the IOR will depend on absolute transparency on who its clients are. So we took the best specialists we could find in the world, in that case for monitoring, and brought them over with a team of thirty to check every single account for twelve months. Now after more than sixteen thousand accounts checked so diligently, we know that only a tiny, tiny fraction and not more than one would expect in any standard investigation of that kind, could cause problems. The vast majority is Catholic institutions, congregations and employees of the Holy See and Vatican City State, dioceses, parishes, those who we really want to serve. The second thing is we investigated our principle legacy cases, IOR has been associated with a number of scandals, we wanted to know the facts about them. Those have all been investigated and the relevant authorities informed, so that today it can be decided based on facts what to do. We achieved transparency in a very simple way, we put our annual accounts on the internet and now everybody can check in great detail what IOR is doing with clients, how much money it has under management. Finally, as with any institution, you constantly need to improve your procedures, this was particularly important in our case as the Vatican introduced a parallel legal framework for how a financial institution should run and we have been working over the last twelve months implementing the new regulations and implementing, where we thought it was necessary, different standards.
Q. So these are the main elements of the reform of the IOR you’re mentioning. But looking at the internet you also find losses, you find things, money, the gold that’s worth less, and other things, huge sums…Where do they come from?
A. When you look at the year 2013, our operating income is around 70 million euro. That’s the same as in prior years, by and large. That was a successful year. However, reforms come with their costs and we decided to take a number of steps, The most important was we took a look at certain investments which had been made in the past and wrote them down, we also made a donation of 15 million euro of one particular investment to a Papal Foundation. Finally, we incurred costs for the reform work, if you take these costs roughly 8 million, what one really needs to do is divide them by ten because it is work which in other occasions is done over ten years and then the cost looks much more normal with one element in our balance sheet that is gold, we hold gold since (for) decades 22 thousand ounces and their price goes up and down as the market price goes up and down. The same thing happened to us last year as the market price went down, the value dropped and that cost 11million euro thing is not a real cost, for us it is more bookkeeping than cost.
Q. You also closed accounts. You also mentioned these in the report. Which ones and why?
A. We closed three thousand accounts since I became President, two thousand six hundred were so called dormant accounts. What does this mean? A young seminarian comes to Rome, opens an account, after five years he goes back to his parish. He leaves an account in Rome with a euro or an overdraft of 8 euro. Those were the bulk of the accounts we closed. Then we closed 400 accounts of lay people, those were perfectly fine accounts and they had the right to have accounts here under our old policies and the bulk of this money was transferred to Italy, to Italian banks. And it was perfectly fine also from regulatory viewpoint, however, we had decided in July of last year to focus exclusively on the Church which means congregations, dioceses, members of the clergy and employees of the Vatican and the Holy See, parishes, and for that reason we are closing all the accounts which are not directly related to the Vatican and the Holy See.
Q. So, that’s a result of the new policy to more closely define the scope of who can get an account and who doesn’t?
A. Exactly, we focus on what we call the three C’s: congregations, clergy and religious members of religious orders, and Church institutions like dioceses, foundations, parishes.
Q. You talk about the new structure that’s going to be announced in the coming days, about new leadership. Any thoughts about what’s about to happen?
A. Very early on I said the purpose of Phase One is to give the Holy Father options, options which allow him to choose a strategy and choose a team to carry IOR forward. This is happening now the Secretary for the Economy has been put in charge of IOR. It is now putting in a strategy and a team, this is exactly in line with what was planned from the beginning.
Q. You’ve been working here for over a year now, seventeen or eighteen months, if I recall correctly. What is your personal recollection, impression of this interesting time?
A. It is fantastic to be allowed serve to the Church and to serve the Holy See and I’m most grateful for that. I’ve learned here the importance of transparency. Many of the rumors surrounding IOR, nearly every rumor surrounding IOR was not true, it was not fact-based and with transparency we could put them to rest. In general, that is something that I take away from Rome: transparency is key to carrying the institution forward. It was equally happy and joyful for me to work together with a great group of IOR employees, specialists who came from outside. The board, myself, and the Cardinals Commission are most grateful to all of them and it is impressive to see when the Church calls, when the Holy See calls, how many men and women of good will are willing to join in and to help.
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Speaking to Vatican Radio’s Fr Bernd Hagenkord, the outgoing President of The Institute for Religious Works, Ernst Von Freyberg said that Phase One of the reform of the IOR had been concluded.
Below find a full transcription of an interview in English with President of the Institute for the Works of Religion, IOR, Ernst Von Freyberg. Listen to this interview with the Head of Vatican Radio’s German section Father Bernd Hagenkord SJ.
Q. You’re concluding Phase One of the reform of the IOR. That’s the main title, so to speak, of the document you published today. What does that mean: Phase One? What are you concluding?
A. The conclusion of Phase One we’re presenting our financials for 2013 and we’re giving an outlook for 2014. Phase One of the reform of the IOR had four key elements. We checked all accounts, we investigated our principle legacy cases, achieved transparency and improved our procedures. What does that mean? We decided very early on that the future of the IOR will depend on absolute transparency on who its clients are. So we took the best specialists we could find in the world, in that case for monitoring, and brought them over with a team of thirty to check every single account for twelve months. Now after more than sixteen thousand accounts checked so diligently, we know that only a tiny, tiny fraction and not more than one would expect in any standard investigation of that kind, could cause problems. The vast majority is Catholic institutions, congregations and employees of the Holy See and Vatican City State, dioceses, parishes, those who we really want to serve. The second thing is we investigated our principle legacy cases, IOR has been associated with a number of scandals, we wanted to know the facts about them. Those have all been investigated and the relevant authorities informed, so that today it can be decided based on facts what to do. We achieved transparency in a very simple way, we put our annual accounts on the internet and now everybody can check in great detail what IOR is doing with clients, how much money it has under management. Finally, as with any institution, you constantly need to improve your procedures, this was particularly important in our case as the Vatican introduced a parallel legal framework for how a financial institution should run and we have been working over the last twelve months implementing the new regulations and implementing, where we thought it was necessary, different standards.
Q. So these are the main elements of the reform of the IOR you’re mentioning. But looking at the internet you also find losses, you find things, money, the gold that’s worth less, and other things, huge sums…Where do they come from?
A. When you look at the year 2013, our operating income is around 70 million euro. That’s the same as in prior years, by and large. That was a successful year. However, reforms come with their costs and we decided to take a number of steps, The most important was we took a look at certain investments which had been made in the past and wrote them down, we also made a donation of 15 million euro of one particular investment to a Papal Foundation. Finally, we incurred costs for the reform work, if you take these costs roughly 8 million, what one really needs to do is divide them by ten because it is work which in other occasions is done over ten years and then the cost looks much more normal with one element in our balance sheet that is gold, we hold gold since (for) decades 22 thousand ounces and their price goes up and down as the market price goes up and down. The same thing happened to us last year as the market price went down, the value dropped and that cost 11million euro thing is not a real cost, for us it is more bookkeeping than cost.
Q. You also closed accounts. You also mentioned these in the report. Which ones and why?
A. We closed three thousand accounts since I became President, two thousand six hundred were so called dormant accounts. What does this mean? A young seminarian comes to Rome, opens an account, after five years he goes back to his parish. He leaves an account in Rome with a euro or an overdraft of 8 euro. Those were the bulk of the accounts we closed. Then we closed 400 accounts of lay people, those were perfectly fine accounts and they had the right to have accounts here under our old policies and the bulk of this money was transferred to Italy, to Italian banks. And it was perfectly fine also from regulatory viewpoint, however, we had decided in July of last year to focus exclusively on the Church which means congregations, dioceses, members of the clergy and employees of the Vatican and the Holy See, parishes, and for that reason we are closing all the accounts which are not directly related to the Vatican and the Holy See.
Q. So, that’s a result of the new policy to more closely define the scope of who can get an account and who doesn’t?
A. Exactly, we focus on what we call the three C’s: congregations, clergy and religious members of religious orders, and Church institutions like dioceses, foundations, parishes.
Q. You talk about the new structure that’s going to be announced in the coming days, about new leadership. Any thoughts about what’s about to happen?
A. Very early on I said the purpose of Phase One is to give the Holy Father options, options which allow him to choose a strategy and choose a team to carry IOR forward. This is happening now the Secretary for the Economy has been put in charge of IOR. It is now putting in a strategy and a team, this is exactly in line with what was planned from the beginning.
Q. You’ve been working here for over a year now, seventeen or eighteen months, if I recall correctly. What is your personal recollection, impression of this interesting time?
A. It is fantastic to be allowed serve to the Church and to serve the Holy See and I’m most grateful for that. I’ve learned here the importance of transparency. Many of the rumors surrounding IOR, nearly every rumor surrounding IOR was not true, it was not fact-based and with transparency we could put them to rest. In general, that is something that I take away from Rome: transparency is key to carrying the institution forward. It was equally happy and joyful for me to work together with a great group of IOR employees, specialists who came from outside. The board, myself, and the Cardinals Commission are most grateful to all of them and it is impressive to see when the Church calls, when the Holy See calls, how many men and women of good will are willing to join in and to help.