Benedictus XVI is having a tough month.
First, on 03/07/12, the U.S. State Department named the Holy See, commonly know as the Vatican, as a new “Jurisdiction of Concern” in its 29th annual International Narcotics Control Strategy Report (the “INCSR”). The INCSR reviews conditions in the major illicit drug-producing countries, the major drug-transit countries, and the major source countries for precursor chemicals used in the production of illicit narcotics. In addition, the INCSR discusses conditions in the major money-laundering countries.
Next, on 03/16/12, JPMorgan notified the the Vatican’s financial arm, the Istituto per le Opere di Religione (the “IOR”), that its account would be closed due to a failure to provide sufficient information on money transfers. In the prior 18 months, the IOR had purportedly swept €1.5bn through the JPMorgan account with limited transparency.
The IOR, founded in 1942 by Pope Pius XII to handle the financial activities for priests, nuns, and other Roman Catholic religious institutions, has an unfortunate history of shady dealings. For example, the IOR was entangled in the collapse Banco Ambrosiano, with lurid allegations about money-laundering, freemasons, mafiosi and the mysterious death of Ambrosiano chairman Roberto Calvi – “God’s banker”. At the time of the Banco Ambrosiano collapse, it was the largest private bank in Italy and the IOR was a minority owner. Several investigations have failed to determine the exact role of IOR in the management of Banco Ambrosiano and whether Calvi, who was found hanging under Blackfriars Bridge near London’s financial district, killed himself or was murdered. Despite denying any responsibility for the collapse of Banco Ambrosiano, the IOR paid $250mm to creditors in what it called a “goodwill gesture.”
Perhaps all that smoke means something else is cooking in the Sistine Chapel…