2013-10-02 L’Osservatore Romano - Our goal is to “ensure the transparency of our activities and to meet the legitimate expectations of the Church, our clients, the Vatican Authorities, our correspondent banks and the public”. This is how Ernst von Freyberg, President of the Board of Superintendence since 26 February and General Director ad interim, commented on the first Annual Report published Tuesday, 1 October, by the Vatican’s Institute for Works of Religion (ior). In an interview given to L'Osservatore Romano von Freyberg reveals the latest steps taken towards transparency by the Institute.
What are the key issues dealt with in the report?
When we started in April, one issue was clear: we needed to be more transparent. We have made progress. Following the decision of the Board of Superintendence, three steps were taken. The first step was to engage the media and in a continuous way. This led us to establish a press office for the ior, headed by Max Hohenberg, which works closely with the Holy See Press Office. We went on to launch the website (www.ior.va), which allowed us for the first time to be an authoritative source for the ior on the internet. The third step is the present publication of the Annual Report, something which every financial institution in the world does. The important thing to note is that it is standard and that it is audited. We are working with kpmg, one of the four largest auditing firms in the world. The report shows not only what we are doing but also that our book keeping is carried out in an orderly way, as expected.
Were there any surprises?
It shows that we are a relatively small and conservatively managed financial institution. The surprise is that there is no surprise. We serve primarily Church institutions and religious congregations.
Why are you publishing it now?
It was one of three key steps: engaging the media, launching the website, publishing the Annual Report. It is being published now because it has taken until now to properly compile a report of this kind, especially considering that it is the first time that it has been done. Next year it will be ready earlier, I expect before the end of June. And if the ior remains in its present form, in the future this report will be published annually.
What direction will the ior take?
That is for the the Holy See to decide on the basis of the recommendations of the Reference Commission. We are here to run the Institute properly in its present form. Doing so will give the Holy Father options when deciding what task to entrust to us in the future. But it is not for us to judge or make statements on what the future will hold.
What is the process for compiling a report like this?
A presentation of the financial results is at the centre of the report. These results comprise aproximately two thirds to three quarters of the report and were compiled in collaboration with our auditing firm kpmg. It also includes commentary on the past and present year, from the Commission of Cardinals, the auditors, et al. They had to be precise about what was relevant to the public. The work consisted in compiling and checking the numbers. It is a reference document.
Are you looking forward to Moneyval's evaluation at the end of the year?
Moneyval evaluates the State, not us. We are doing everything asked by Moneyval but their focus is primarily on government issues.
Can you tell us more about your efforts to reach the level of transparency desired by Benedict XVI and now by Pope Francis?
Looking back over the past 6 months, our focus has been essentially on three things. First,‘ transparency’ or one might say ‘reputation’. It is very important to the Holy See that the ior become a positive subject and not one that distracts from the message of the Holy Father. The second is the anti-money-laundering process, also known as the Moneyval process. We have devoted enormous resources to this end. We have a team of up to 25 people from Promontory Financial Group who are checking every single account and conducting special investigations for us. The third element is organization and operation. We have also taken over management ad interim. We have created a position of chief risk officer, Antonio Montaresi. We have also introduced a new organizational structure, including handbooks to guard against laundering as well as rules and procedures for other departments of the institution. The next two major issues we are facing are customer service and the way we operate. Once the Holy Father makes a decision about the direction of the ior, we will adapt quickly to the new model.
And do you feel capable of adapting quickly?
We have a very good team, made up of people who have worked here for a long time as well as new people that we have brought in. And the search continues. The key position to fill is that of the General Director. But that can only be done once the Holy Father has made a decision regarding our future. I am only General Director for a brief period of time. The long term solution has yet to be decided.
Are you content with the image of the ior, is it improving, changing?
I think that many realize and credit us as working towards transparency and as continuing down the road of compliance. I wouldn’t want to assume anything, but I think we are getting credit for this. We cannot change the past, the past is the past.
How do you think you are being treated by the media?
By and large I think we are being treated very fairly by the media. What I find is that as long as our intention is to tell the truth and not to fool people, journalists are willing to accept what we say and relate it to their readers. However, I will say that when a journalist claims to have “insider sources”, I would prefer that he speak directly to me. There is an office set up for this very purpose. They can call anytime. We will answer. I would encourage journalists to start at the top when they wish to learn; it will save them from misinformation.
Turning to the measures adopted in updating the handling of accounts...
If clients have been handled abruptly and without explanation, we apologize and are trying to address the issue. But one should bear in mind that what we are doing is a matter of course for any bank in the western world. A bank needs to have your personal details. In some cases, information needed to be updated and we were forced to track individuals down to get that information. For the customer, these procedures might be frustrating because they haven’t done anything wrong. The world has simply changed. Old institutions need to be updated from time to time. Also, we should note that we have defined categories of customers, which have been available on our website since 31 July. Diplomatic missions are among them, in accord with international diplomatic standards. In any case, we apply the same standards and procedures to all our clients, regardless of their status. As for outside criticism, remember that the ior is accountable to Vatican law, which was recently reinforced in August by Pope Francis’ Motu Proprio. If you want to deal with the world at large — for us this means correspondent banks that are willing to collaborate with us — you must comply with international standards. Accountability plays a major role in what we do.
Mary Nolan
What are the key issues dealt with in the report?
When we started in April, one issue was clear: we needed to be more transparent. We have made progress. Following the decision of the Board of Superintendence, three steps were taken. The first step was to engage the media and in a continuous way. This led us to establish a press office for the ior, headed by Max Hohenberg, which works closely with the Holy See Press Office. We went on to launch the website (www.ior.va), which allowed us for the first time to be an authoritative source for the ior on the internet. The third step is the present publication of the Annual Report, something which every financial institution in the world does. The important thing to note is that it is standard and that it is audited. We are working with kpmg, one of the four largest auditing firms in the world. The report shows not only what we are doing but also that our book keeping is carried out in an orderly way, as expected.
Were there any surprises?
It shows that we are a relatively small and conservatively managed financial institution. The surprise is that there is no surprise. We serve primarily Church institutions and religious congregations.
Why are you publishing it now?
It was one of three key steps: engaging the media, launching the website, publishing the Annual Report. It is being published now because it has taken until now to properly compile a report of this kind, especially considering that it is the first time that it has been done. Next year it will be ready earlier, I expect before the end of June. And if the ior remains in its present form, in the future this report will be published annually.
What direction will the ior take?
That is for the the Holy See to decide on the basis of the recommendations of the Reference Commission. We are here to run the Institute properly in its present form. Doing so will give the Holy Father options when deciding what task to entrust to us in the future. But it is not for us to judge or make statements on what the future will hold.
What is the process for compiling a report like this?
A presentation of the financial results is at the centre of the report. These results comprise aproximately two thirds to three quarters of the report and were compiled in collaboration with our auditing firm kpmg. It also includes commentary on the past and present year, from the Commission of Cardinals, the auditors, et al. They had to be precise about what was relevant to the public. The work consisted in compiling and checking the numbers. It is a reference document.
Are you looking forward to Moneyval's evaluation at the end of the year?
Moneyval evaluates the State, not us. We are doing everything asked by Moneyval but their focus is primarily on government issues.
Can you tell us more about your efforts to reach the level of transparency desired by Benedict XVI and now by Pope Francis?
Looking back over the past 6 months, our focus has been essentially on three things. First,‘ transparency’ or one might say ‘reputation’. It is very important to the Holy See that the ior become a positive subject and not one that distracts from the message of the Holy Father. The second is the anti-money-laundering process, also known as the Moneyval process. We have devoted enormous resources to this end. We have a team of up to 25 people from Promontory Financial Group who are checking every single account and conducting special investigations for us. The third element is organization and operation. We have also taken over management ad interim. We have created a position of chief risk officer, Antonio Montaresi. We have also introduced a new organizational structure, including handbooks to guard against laundering as well as rules and procedures for other departments of the institution. The next two major issues we are facing are customer service and the way we operate. Once the Holy Father makes a decision about the direction of the ior, we will adapt quickly to the new model.
And do you feel capable of adapting quickly?
We have a very good team, made up of people who have worked here for a long time as well as new people that we have brought in. And the search continues. The key position to fill is that of the General Director. But that can only be done once the Holy Father has made a decision regarding our future. I am only General Director for a brief period of time. The long term solution has yet to be decided.
Are you content with the image of the ior, is it improving, changing?
I think that many realize and credit us as working towards transparency and as continuing down the road of compliance. I wouldn’t want to assume anything, but I think we are getting credit for this. We cannot change the past, the past is the past.
How do you think you are being treated by the media?
By and large I think we are being treated very fairly by the media. What I find is that as long as our intention is to tell the truth and not to fool people, journalists are willing to accept what we say and relate it to their readers. However, I will say that when a journalist claims to have “insider sources”, I would prefer that he speak directly to me. There is an office set up for this very purpose. They can call anytime. We will answer. I would encourage journalists to start at the top when they wish to learn; it will save them from misinformation.
Turning to the measures adopted in updating the handling of accounts...
If clients have been handled abruptly and without explanation, we apologize and are trying to address the issue. But one should bear in mind that what we are doing is a matter of course for any bank in the western world. A bank needs to have your personal details. In some cases, information needed to be updated and we were forced to track individuals down to get that information. For the customer, these procedures might be frustrating because they haven’t done anything wrong. The world has simply changed. Old institutions need to be updated from time to time. Also, we should note that we have defined categories of customers, which have been available on our website since 31 July. Diplomatic missions are among them, in accord with international diplomatic standards. In any case, we apply the same standards and procedures to all our clients, regardless of their status. As for outside criticism, remember that the ior is accountable to Vatican law, which was recently reinforced in August by Pope Francis’ Motu Proprio. If you want to deal with the world at large — for us this means correspondent banks that are willing to collaborate with us — you must comply with international standards. Accountability plays a major role in what we do.
Mary Nolan