I've lost track of the number of times people have told me about the 'enormous wealth of the Vatican'. Some are confused: they think the Vatican owns all the Church's worldwide real estate, lock, stock and barrel. Others think that all that art could be sold for the poor without adverting to the difficulty of selling Michelangelo's Sistine Chapel ceiling or the rooms containing the Stanze of Raphael.
Most just think the Vatican is corrupt and busy laundering vast sums of Mafia money through the 'Vatican Bank'. The papacy hasn't helped itself with its insistence on an absurd level of secrecy and its earlier involvement with criminals like Sindona and Calvi.
Well, now for the first time we actually have some hard facts.
Benedict XVI has been determined to clean up the Holy See's finances. In February 2011 he called in the Council of Europe's experts on anti-money laundering and financing of terrorism, Moneyval. Moneyval and their 241 page July 2012 report (plus annexes) gives us an enormous trove of factual material about the Vatican.
Before dealing with the money, some other interesting facts. As Moneyval says 'although the Holy See (HS) is not a state in itself, it has sovereignty over the Vatican City State (VCS) which is the smallest sovereign state in the world'. It is the HS, not the VCS, which is officially recognised by governments like Australia.
VCS is 44 hectares in area with 595 citizens with 348 of these living outside the VCS. You become a citizen not by birth but by office, that is by appointment to a specific job for the HS/VCS. Citizenship is lost upon the termination of that employment.
With six million visitors annually the VCS needs its own 137-strong police and security force, or Gendarmeria; most are ex-Italian police. Crime rates are very low and mainly involve petty thieving, almost all occurring among the tourists.
Moneyval's main focus was on the HS's two financial institutions: the Institute for Works of Religion (IOR), the 'Vatican Bank', and the Administration of the Patrimony of the Apostolic See (APSA).
The IOR (founded in 1942) essentially operates as a commercial bank whose customer-focus is on deposits 'destined for religious works or charity'. It can also take deposits for other purposes, although its customer-base is restricted almost entirely to religious orders, dioceses, parishes, seminaries, bishops, HS departments, employees and retired employees of the VCS. It has 33,404 accounts and 20,772 customers. There are 47 accounts in Oceania, presumably mainly in Australia. Lay people hold 32 per cent of these accounts and clerics and/or religious 68 per cent. The IOR employs 104 people.
The IOR has 6.3 billion Euros under management. For comparison the Commonwealth Bank has US$500 billion in assets. IOR carries out most bank functions except it doesn't lend money including consumer and mortgage credit, although it issues credit cards; it doesn't provide financial guarantees and doesn't underwrite insurance. It only has one branch and 13 ATMs, all within the VCS accessible only to clients of IOR.
One of its most important services is customer payments via wire services. This is where most of the money-laundering accusations are focused. IOR investments are mainly in low-risk, short-term, fixed interest securities; it avoids the equity, precious metals and foreign currency markets. Most of its revenues are derived from commissions and service fees. The IOR uses the services of more than 40 banks in Europe, the US, Australia and Japan to facilitate its investments and transfers.
The other financial institution is APSA, the Administration of the Patrimony of the Apostolic See. APSA is an office within the Roman Curia. It administers the property of the HS and manages funds given to the HS by Italy in accordance with the 1929 Lateran Treaty, that is the money (1.75 billion lire) paid to the HS for the Italian seizure of the Papal States. This money has been invested and APSA relies on clerical and lay advisors for expert guidance, most of whom work for free.
APSA has 680.7 million Euros under management, accounts and deposits with many central banks (e.g. Bank of England, the Federal Reserve) and invests in financial markets and real estate in France, UK and Switzerland. Besides managing HS real estate, it funds the papacy and curia's annual budget, subsidised by Peter's Pence and other income. APSA also pays the 2400 HS/VCS employees and the pensions of 1600 retired employees.
Moneyval gave the HS/VCS a reasonable pass mark but added that 'further important issues need addressing' for the HS/VCS to be added to the 'white list' of banking systems considered safe from money laundering and financing of terrorism. But it is a first step in the direction of accountability.
Author and historian Paul Collins is a former specialist editor — religion for the ABC.