Pope Francis renews the Statutes of the Vatican Bank (IOR)

Pope Francis renews the Statutes of the Vatican Bank (IOR)

Two clients exit the Vatican Bank

Pope Francis approves the renewed Statutes for the Institute for the Works of Religion (IOR). These include the appointment of an external auditor and new regulations regarding both governance and employees.

By Sergio Centofanti

Pope Pius XII founded the Institute for the Works of Religion (IOR), commonly known as the Vatican Bank, in 1942 – although its origins go back to 1887 and the pontificate of Pope Leo XIII. In 1990, Pope Saint John Paul II approved the IOR’s Statutes in order to better adapt the Vatican Bank "to the needs of the times".

With an Administrative Order, published on Saturday, Pope Francis has renewed those Statutes ad experimentum, for a period of two years.

The mission of the IOR

As expressed in the original Statutes, the purpose of the Institute remains unchanged: “to provide for the custody and administration of goods transferred or entrusted to the Institute by natural or legal persons, designated for religious works or charity”.

The role of the External Auditor

One of the main changes contained in the renewed Statutes is the introduction of an external auditor, who can be a person or a company. The Institute's governing bodies no longer include three internal auditors, whose office was renewable. The Commission of Cardinals appoints the external auditor following the proposal of the Superintendence Board. The position is held for three consecutive financial years, renewable only once, and includes responsibility for the statutory audit of all accounts. The external auditor may “express opinions on the Institute's financial statements in a special report", "examine all the books and accounting documents", and "request any information useful for auditing activities".

The Commission of Cardinals

The IOR’s internal structures have been reduced from five to four. The Commission of five Cardinals, appointed by the Pope for a five-year period, can be confirmed only once, rather than indefinitely as before.

The Board of Superintendence

The Board of Superintendence, composed of seven members (previously five), appointed for a five-year period by the Commission of Cardinals, can also now be confirmed only once. The Board may establish "special advisory committees within the Board in order to receive adequate support in taking decisions on specific matters". The President of the Board of Superintendence, appointed by the Commission of Cardinals, is the legal representative of the IOR.

The role of the Prelate

The Prelate is appointed for five years by the Commission of Cardinals and can also serve only one term. The renewed Statutes describe this role in detail: it includes promoting the "ethical dimension" of administrators and employees so that their work is consistent with Catholic principles and the mission of the Institute, and maintaining constant exchanges with all IOR staff. The Prelate also keeps in his office the archive of the Commission of Cardinals, placing it at the disposal of the cardinals, should they request it.

The Governance

The Institute's fourth governing body is the Board of Directors. The Director General may be appointed for a fixed term (a five-year period that may be confirmed only once) or for an indefinite period: in any case, he or she ceases to hold office at the age of 70.

Replacement of members

According to the new Statutes, any member may be replaced, not only if they fail in their responsibilities, but if they prove to be “incapable or cease to hold office prematurely for any reason".

Exclusivity of employment

There is also a new paragraph regarding staff obligations: "All employees of the Institute are obliged to have exclusive employment rights during their employment. They may not engage in any other activity of an advisory nature, whether paid or unpaid, nor may they engage or participate in any commercial activity, in any capacity, either inside or outside the Vatican City State".

Reference to Canon Law

The IOR has no subsidiaries or branches. The responsibility for the custody and administration of the goods received is governed by the rules of Vatican City State, the Statutes and the Implementing Regulations, as well as by the code of Canon Law. In cases of proven necessity, meetings of the Board of Superintendence may be held by means of telecommunications.

Most recent IOR report

In June this year, the IOR published its balance sheet for 2018, which recorded a profit of 17.5 million euros (compared to 31.9 million in 2017). Despite being lower than the previous year, the IOR said in a statement that this result was achieved "despite strong turbulence in the markets" and "the persistence of very low interest rates". In a press release also issued in June, the IOR stressed its efforts at “refining the introduction of negative and positive screening criteria for selecting financial assets in which to make investments consistent with Catholic ethics, exclusively selecting companies that carry out activities that are compliant with the Social Doctrine of the Catholic Church".

Supporting those in need

The same statement explains how the IOR continues “to make investments aimed at supporting the development of the poorest countries, with choices consistent with the realization of a sustainable future” for the generations to come. The Institute for the Works of Religion also contributes “to the performance of many charitable and social activities, through financial donations and by letting properties it owns at low prices or offering them for free to entities that pursue social aims”.

https://www.vaticannews.va/en