Pope Francis sacks entire board of Vatican's financial watchdog

Experts from Switzerland, Singapore, the United States and Italy to replace all-Italian group

Pope Francis' new financial watchdog board includes a woman for the first time (AP)

Pope Francis’s battle to clean up the Vatican’s scandal-mired bank, the Institute of Religious Works (IoR), has entered a new stage, with his removal of the entire board of the Holy City’s financial watchdog.

The five Italians heading the Financial Information Authority (AIF) have been replaced with an international group of experts, including a woman, two years before they were supposed to step down. Vatican insiders say the drastic move followed clashes between the board members, who formed part of the old boys’ network and the body’s Swiss director, René Brülhart, an anti-money laundering expert, who remains in charge.

“Brülhart wanted a board he could work with and it seems the Pope has come down on his side and sent the old-boy network packing,” a Vatican source told Reuters. The Vatican said in a statement that Pope Francis had thanked the “illustrious” former members. Spokesman Father Federico Lombardi said the changes were in line with the agency’s “internationalisation” and were in response to the requirements of a new statute introduced last year.

The new board members are Juan Zarate, a Harvard law professor and former US presidential financial security adviser; Marc Odendall, a financial consultant to Swiss charities; Joseph Yuvaraj Pillay, the former head of the Monetary Authority of Singapore; and Maria Bianca Farina, the head of two Italian insurance companies.

According to the Catholic weekly, The Tablet, reformist members of the Curia had urged the Pope to bring in professionals with a global perspective who would back Mr Brülhart’s efforts to modernise the IoR, following years in which the institution had dragged its heels on complying with international standards on financial transparency.

Among the recent scandals, Monsignor Nunzio Scarano, a former senior Vatican accountant who had close ties to the IoR, is currently on trial accused of plotting to smuggle millions of dollars into Italy from Switzerland in order to help rich friends lower their tax bills. Investigators believe he used his two IoR accounts as overseas slush funds. Records show that on one occasion in 2012 he withdrew €560,000 (£455,000) from an IoR account in a single transaction.

Paolo Cipriani and Massimo Tulli, the IoR’s former director and deputy director, who resigned last July after Msgr Scarano’s arrest, have been ordered to stand trial on charges of violating anti-money laundering norms.

Last July Pope Francis also appointed a separate five-person commission to examine the overall management of the Vatican’s finances. But some critics said that instead of a breath of fresh air, they were Vatican insiders, all of whom had IoR bank accounts. Some of the commission members were reported to have personal connections to Carl Anderson, who is a member of the IoR’s board of directors and head of the wealthy Knights of Columbus, which has been described as the “Catholic masons”.

In June last year, a report was released on a 30-month investigation into the IoR. The document said that high demand for recycling cash, together with the lack of checks and controls by the IoR and the Italian financial institutions it dealt with, made the Vatican bank a money-laundering hot spot. The same month it emerged that the IoR was seeking to close 900 suspicious accounts. According to the Corriere della Sera newspaper, four of the suspect accounts were linked to the Vatican embassies in Indonesia, Iran, Iraq and Syria. In a press conference as he was flying back from his trip to the Middle East, the Pope stressed he was committed to bringing “honesty and transparency” to the Holy See’s finances.