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New chief for scandal-dogged Vatican bank
Publish Date: Jul 12, 2014
New chief for scandal-dogged Vatican bank
Pope Francis
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VATICAN CITY - The Vatican on Wednesday named a French businessman to head up its scandal-plagued bank as part of a radical overhaul of the Holy See's economic framework ordered by Pope Francis.

Jean-Baptiste de Franssu, former chief executive of Investco Europe, will lead a newly streamlined bank following a year of internal investigations which resulted in the closure or suspension of thousands of suspicious, ineligible or inactive accounts.

"Our ambition is to become something of a model for financial management rather than cause for occasional scandal," Vatican finance minister Cardinal George Pell told journalists.

Franssu himself said he was "looking forward to continuing the efforts of transparency."

The appointment comes just a day after the bank said profits last year had been all but wiped out in its efforts to clean up its accounts.

A team of financial experts -- including Franssu and an American consultancy firm -- have been preparing the ground for the reforms since last summer, when Francis vowed to make the Vatican's public finances fully transparent following decades of scandal and intrigue.

The reforms also affect the Administration of the Patrimony of the Apostolic See (APSA) -- the department in charge of real estate and sovereign bonds investments -- as well as the Vatican's pension fund and the media department, a statement said.

In an interview with Vatican Radio, Franssu commented on the bank's recent troubles.

"It is obvious that when men of the Church, priests, bishops and cardinals are in charge of a financial institution, it is not their primary activity. This is not where they received most of their training," he said.

 Reforms 'stage two'

"We are working so that international financial standards will be followed in all the dicasteries and sections of the Holy See," Pell said, though he admitted that "at the moment we are not quite at that stage".

Changes at the Institute for Religious Works (IOR) -- as the bank is known -- will include shifting assets to a new central Vatican Asset Management (VAM), while APSA will be absorbed into the finance ministry.

A new media committee -- headed by British politician and chancellor of Oxford University Chris Patten -- will look into adapting the Vatican to new trends, prioritising Twitter and digital channels over radio.

Outgoing bank head Ernst von Freyberg had spoken Tuesday of the "painful but very necessary process" of cleaning up the murky IOR, but the bank was now ready for "stage two" of the reforms.

Franssu, 51, is the director of Carmignac Gestion asset management and the founder and chairman of mergers and acquisitions firm Incipit.

The father of four is a board member of various charities in the United States and Europe including the World Youth Alliance, and has caught the eye of allies of the pope by working for free for the commission advising on the bank.

Troubled history


The IOR has a reputation for secrecy and intrigue and a history of troubled relationships between management and the Vatican's top clerics.

In 2012, its then head Ettore Gotti Tedeschi was sacked after a major falling out with Vatican Secretary of State Tarcisio Bertone -- the pope's number two.

And according to Italy's investigative weekly L'Espresso, von Freyberg is being replaced after clashing with the pope's personal intermediary to the bank, reportedly over access to information.

In a bid to tighten control over its activities, Francis announced a sweeping study of the bank last June, insisting that the special commission's findings would be reported directly to him.

The IOR said it had paid a colossal price for tidying up its accounts, with last year's profit plunging to 2.9 million euros ($3.9 million) from 86.6 million euros in 2012.

But scandal has continued to plague the institution, with the Vatican admitting earlier this year that it was investigating Italian media reports accusing Bertone of embezzling 15 million euros from the bank.

The IOR's 2013 financial statement listed an unspecified loss of 15.1 million euros, though it was not clear whether this was a reference to the Bertone affair.

Allegations of money laundering have dogged the bank for decades. It was the main shareholder of the Banco Ambrosiano, which collapsed in 1982 amid accusations of laundering money for the Sicilian Mafia.

The chairman of Banco Ambrosiano, Roberto Calvi -- dubbed "God's Banker" -- was found hanging from Blackfriars Bridge in London that year in a suspected murder by mobsters.

More recently the bank has been investigated for money laundering by Italian authorities, with its director general and his deputy placed under investigation and forced to resign last year.

And a former top Vatican accountant, Monsignor Nunzio Scarano -- who worked for the department in charge of real estate and sovereign bonds investments -- was charged by Italian prosecutors in January with laundering fake donations from offshore accounts through the IOR.

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