Bloomberg News

Vatican Names German Lawyer to as New Head of Embattled Bank

February 15, 2013

Vatican Bank Head Ernst von Freyberg

German lawyer Ernst Von Freyberg brings “vast experience of financial matters and the financial-regulatory process,” the Vatican said in a statement on its website today. Source: DC Advisory/AP

The Vatican appointed a German lawyer and financial adviser to lead its bank, nine months after its previous head was ousted amid a money laundering probe.

Ernst von Freyberg, 54, a member of the religious order of the Knights of Malta, is founder of a Frankfurt-based financial advisory company currently called DC Advisory Partners. Von Freyberg was among 40 candidates and appointed by a commission of cardinals with the consent of the pope, Vatican spokesman Father Federico Lombardi said at a press briefing in Rome.

Von Freyberg brings “vast experience of financial matters and the financial-regulatory process,” the Vatican said in a statement on its website today.

Filling the post was seen as one of the most important acts pending completion before Benedict XVI’s resignation on Feb. 28, which will make him the first pontiff to quite in nearly 600 years.

The Vatican bank, which is formally called the Institute for the Works of Religion, or IOR, had been under the interim leadership of its vice chairman since the board of directors ousted former head Ettore Gotti Tedeschi in May last year for “failing to carry out various duties of primary importance,” according to a May 24 statement by Lombardi.

Wire Transfers

He and Director General Paolo Cipriani were placed under investigation for allegedly omitting data in wire transfers from an Italian account. Prosecutors seized 23 million euros ($30.7 million) from a Rome bank account registered to the IOR amid suspicion of violations of money-laundering rules.

The Italian prosecutors’ probe triggered calls to bring the city-state in line with European Union financial rules and become more transparent.

The bank, which was set up in 1942 and reports directly to the pope, has stepped up efforts to improve supervision and it’s now under the scrutiny of European authorities in a bid to be added to the Organization for Economic Cooperation and Development’s list of financially transparent countries.

In a report issued in July, Moneyval, the Council of Europe’s monitoring body for money laundering and terrorism financing, said the Vatican was making progress in complying with international standards on financial transparency, though it still needed to improve supervision of transactions.

White List

Moneyval, whose recommendations are used by the OECD, also said the IOR should be independently supervised.

“We have a clear willingness to continue the efforts,” to get on the OECD’s so-called white list, Lombardi said today at the Vatican.

The institute is no stranger to scandal. It was implicated in the fraudulent bankruptcy of Banco Ambrosiano in 1982. The bank’s former Chairman Roberto Calvi, dubbed “God’s banker,” was found hanged under London’s Blackfriars Bridge in June of that year. The Vatican paid $240 million to compensate Ambrosiano’s account holders without admitting any wrongdoing.

Von Freyberg’s appointment also raised questions today because of his ties with Hamburg-based Blohm & Voss group, a German shipbuilder that includes warships among its product line. Von Freyberg has served as chairman of the company since 2012, according to the Vatican website.

Warships

Von Freyberg’s connection to the ship-making company is not an issue, Lombardi said today, praising his “human and Christian sensibility” as well as his “competence.”

In a statement released after the briefing, the Vatican underscored that Von Freyberg will work “exclusively” for the IOR and stressed that the shipbuilder’s main activity is repairing cruise ships and building yachts.

Van Freyberg, who speaks four languages and organizes pilgrimages to Lourdes on behalf of the Berlin Archdiocese, will remain based in Germany and spend three days a week at the Vatican, Lombardi said today.

To contact the reporter on this story: Chiara Vasarri in rome at +39-06-4520-6325 or cvasarri@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at +39-02-8064-4261 or jcolten@bloomberg.net


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