The Vatican is not just the smallest state in the world. It is also characterized by one of the most opaque financial systems. Gold reserves, real estate, treasury notes and stocks are among his assets. How high it is, however, nobody outside the Vatican walls knows.
"You cannot serve God and Mammon", Jesus Christ once said to his disciples according to the Gospel of Luke, Chapter 16, Verse 13. But times have changed, also for the Vatican. Because he has been mixing since 1942, when Pope Pius XII. founded the bank "Istituto per le Opere di Religione" (IOR) in the international money business. The "Institute for Religious Works", whose owner the respective pontiff has been since then, operates money and investment transactions of all kinds in addition to the granting of loans. How high the respective returns are and how much the Holy See has in assets, however, knows outside the Vatican walls nobody so exactly.
Vatican Financial System: Closed Society
But one thing is certain: the Vatican has considerable wealth. The estimated value is a minimum of 1.2 billion and a maximum of twelve billion euros. These include gold reserves in Switzerland and the US, real estate, treasury bonds, stocks and fixed income securities. The assets are now managed by the Curia’s Asset Administration (APSA) after the IOR financial institution was reformed in 1990 due to repeated financial scandals. However, the new administration hardly provides any insight into the financial situation either.
The keepers of the Vatican money are silent even about the amount of the so-called Peterspfennig, the obulus voluntarily paid by Catholics from all over the world. According to insider speculation, the levy, which brought in around 53 million euros in 2002, was used for years to cover deficits.
Vatican Balance Sheets: More Faith Than Facts
The Vatican, which has published a balance sheet every summer since the banking reform in 1990, recorded profits of over 30 million euros until 2001. This is supposed to be the end of it, if one believes the information, which according to international criteria has little to do with transparent business reports. According to the balance sheets, the Vatican is in the red. In 2003 the expenditure of 213 million euros was offset by income of 203.7 million euros.
The expenses recorded include payments to the various political, religious and diplomatic bodies of the Vatican – from the secretariat of state to the congregations, the papal councils and commissions to the courts -, the financing of the journeys of the Pope and the staff of the Curia, the more than 100 diplomatic missions, the media Vatican Radio, "L’Osservatore Romano" and the Vatican website as well as the renovation of buildings. However, these are often paid for by private foundations. The money for the renovation of the Vatican library came from Germany, while Japan financed the restoration of the Sistine Chapel.
The coffers of the Holy See are in turn filled by the most varied sources of income: through donations and taxes from the bishops’ conferences, rental income, leases, the sale of postage stamps, coins, devotional objects, the sale of rights to photos and films as well as financial transactions. These money transfers by the IOR bank, which is still owned by the pontiff, are hardly subject to international controls – despite an international bankers council as a result of the restructuring of the financial institution. To this day, the IOR is an atypical bank with a select group of privileged customers and the advantages of a tax-free zone, for which the Italian capital export and foreign exchange regulations do not apply.
The dubious business of the "Bank of the Pope"
In the past, the IOR has hit the headlines several times for messy financial dealings. There was talk of money laundering, fraud and mafia entanglements. The IOR experienced the most momentous scandal, the background of which has not yet been clarified, in 1982 when the bank was under the direction of US Archbishop Paul Marcinkus. The archbishop is said to have moved and embezzled funds with the then director of the Milanese Banco Ambrosiano, Roberto Calvi, and Michele Sindona, a money launderer known as a mafia banker.
Calvi, also known as "God’s banker" because of his good contacts with the Holy See, fled to England after the Ambrosiano Bank went bankrupt. There he was found hanged on June 17, 1982 under the "Bridge of the Black Brothers" in London. "Calvi should shut his mouth forever because he knew all the secrets of the mafia money laundering through the Banco Ambrosiano and the Vatican bank," wrote the Roman daily "La Repubblica" at the time. Michele Sindano died of poisoning in an Italian prison in 1986.
Archbishop Marcinkus, on the other hand, remained head of the IOR until his release in 1989, when the restructuring of the bank began, even though the Italian judicial authorities had issued an arrest warrant against him in 1987. The archbishop benefited from the sovereignty of the Vatican: the latter refused extradition.