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Vatican bank writes off Cardinal Bertone's $20 million investment

Deal with Italian TV company declared a total loss

Vatican bank writes off Cardinal Bertone's $20 million investment

Picture: Reuters/Max Rossi

Philip Pullella for Reuters
Vatican City

August 8, 2014

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Two years ago, the Vatican bank invested 15 million euros [US $20 million] in an Italian television company that makes family movies, including films about popes and a series about a bike-riding country priest who helps police solve crimes.

The Vatican's then Secretary of State Tarcisio Bertone ordered the investment in Lux Vide SpA, which he said shares the Holy See's "lofty goal of evangelisation".

Bertone, who was the second-in-command to former Pope Benedict, pushed the deal through despite objections from the bank's director and board members, who thought the expense was too big and not justified for the bank, according to current and former bank executives.

Last month, the Vatican booked a loss for the entire amount spent, as part of a wider review of Vatican finances that has also led to the closure of hundreds of accounts at the Institute for Religious Works, or IOR by its Italian acronym, as the bank is called.

Bertone, who still stands by the decision to invest in the television company, said that when the bank approved the deal it did so with the board's unanimous consent.

The zeroing of the Lux Vide investment is emblematic of Pope Francis's effort to loosen ties between the Holy See and Italy's business and political world, a longstanding network of relations the Argentine pontiff considers improper to the Church's religious mission.

In his first 16 months in office, Pope Francis has been trying to reform the Curia, as the Vatican's central administration is called. He has hired international consulting firms to improve financial accounting procedures. He has given broad economic powers to an Australian cardinal seen as distant from the centres of power in Italy.

In the process, one of the biggest changes has been to curtail the powers of the Vatican Secretary of State, in particular over the Holy See's financial affairs.

The Secretary of State has always held an important role, serving effectively as deputy pope. But Bertone had amassed an unusually overarching power over Vatican administration and finances when he held the role between 2006 and 2013.

Former Pope Benedict, a theologian who continued writing professorial books after his election, had little interest in administrative affairs and gave Bertone free rein in running the Vatican administration.

Much of Bertone's power, which sowed such conflict within the Vatican over the years as to accelerate Pope Benedict's decision to retire in February 2013, was wielded through the IOR. Bertone presided over a committee of cardinals that oversaw the bank's board and directors.

According to former bank executives, Bertone backed a proposal for the IOR to buy up to 25 percent of Lux Vide in 2010 and, again in 2012. Both times, the bank's directors tried to reject the deal, saying it was not in the IOR's interest to invest in television companies and that the price was high, said the executives who asked not to be identified because they are not allowed to speak about bank business.

But the deal was eventually approved. "The board said 'this is not a good idea' but could not block the deal," said a current bank official. "The message was: the boss (Bertone) wants this."

Under the new structure created by Pope Francis, Bertone's successor as Vatican secretary of state, Cardinal Pietro Parolin, has no direct power over any of the financial affairs of the Holy See, including the IOR and APSA, the Vatican's asset management and investment arm. Pope Francis appointed an independent team of experts to oversee APSA, a sprawling entity that controls the Vatican's real estate holdings and acts as a central purchasing and human resources department, to see whether its deals are central to the mission of the Church.

Full Story: Vatican bank's TV investment loss showed cardinal's power

Source: Reuters UK


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