The Institute for the Works of Religion (IOR), which is sometimes referred to as the Vatican 'Bank', published its annual report for 2012 on its website, www.ior.va . Released today, it is the first such report to be made public.
Over a hundred pages long, the report reveals that in 2012 the IOR recorded a net profit of 86.6 million euros, a figure which enabled the Institute to make a contribution of 54.7 million euros to the budget of the Holy See. The report in itself is not a novelty, but rather the fact of its publication is; this constitutes a response to the demand for greater transparency in the Institute's activities, according to the president of the IOR, Ernst Von Freyberg, in an interview published today by Vatican Radio.
A German noble, Von Freyberg explained that it is the first annual report published in the 125-year history of the IOR. It contains a description of its work, a summary of 2013 and the first eight months of 2013, statements from the supervisory board, from the commission of cardinals and from the prelate overseeing the IOR, and over sixty pages of detailed financial statements with a full audit statement from the well-known accounting firm, KPMG.Said Von Freyberg, “You do not have to be an accountant to understand these pages; if you read the introductory letter and the description of our business of 2012 and 2013 you will get a good idea of what the Institute for Religious Works is about'”.
Von Freyberg reiterated that the IOR has has been audited for a long time by reputable international accounting firms, such as KPMG in 2013, and insists that this is not unusual; the novelty resides in the publication of the report. “The most surprising thing is how unsurprising it is. You see a rather conservatively managed financial institution safeguarding assets, investing in very conservative investments like government bonds and bank deposits. And you will see a highly capitalised institution. At the end of last year our equity ratio was 15% which is way above what comparable financial institutions would have”.
Von Freyberg emphasized that the publication of the report was “a key element” in the IOR's policy of transparency. “Since March this year we have embarked on a strategy based on three pillars. One is to reach out to the media and engage in a direct and open dialogue, telling the facts as they are in a systematic way. We now have a spokesperson's office for the IOR. The second element is to create a website which can serve as an authoritative source of facts about the Institute. The third element is to publish the annual report”.
For Von Freyberg the report is intended primarily for the “one billion Catholics in the world who have a right to know what this part of the Holy See does”. He added, “They also have a right to understand how we contribute to the wellbeing of the Church around the world. The second group is our partners, i.e. our correspondent banks who rely on us being a financially sound and well-managed business partner. The third group is the media, and financial analysts who may have an interest, and the public at large”.
With regard to the accounts and the general business of the IOR, the verdict is positive. “Since May we have employed the Promontory Group from the U.S. They are reviewing every single account and they are also doing special investigations for us. In addition and together with them we have reviewed our procedures for taking on clients and for dealing with clients to make sure that no money-laundering can happen at the Institute. All three projects have been going according to plan, we do have a new handbook, we do have new procedures, and we are also ready for inspection by third parties”.
Von Freyberg confirms that external help, in this case by the Promontory Group, is necessary for the IOR for two reasons. “The first is that you need someone with state of the art knowledge because he does these procedures time and again for different institutions in the world. The second is equally important. It is a lot of work. We have twenty to twenty-five people from the Promontory Group at any given day doing this work. We would not have these resources in house”.
He added that the report represents “another step on the way to creating a compliant and transparent institution; the Holy Father will then decide later this year or next year in which exact direction he wants to send us. We have gone a long way on transparency and compliance, and the next important step is to look at our service to the client and see how we can improve the products we offer, the services we offer them”.