New chief named for troubled Vatican financial-oversight agency
November 27, 2019
Pope Francis has named Carmelo Barbagallo, the head financial supervisor for the Bank of Italy, as president of the Vatican’s Financial Intelligence Authority (AIF).
Barbagallo replaces Rene Bruelhart, who left office on November 19. Bruelhart has told reporters that he resigned after a clash with other Vatican officials. Pope Francis told reporters that Bruelhart left at the end of his term, which was not renewed because of concerns about improper administration.
The AIF, which was established in 2014 to provide oversight for Vatican financial affairs and ensure transparency, has been caught up in questions about its own operations, after an October raid in which Vatican prosecutors confiscated documents from the AIF offices. The exact reasons for that raid, and the documents that were taken, has not been revealed.
Apparently the Vatican prosecutor was investigating a suspicious London real-estate transaction, arranged through the Secretariat of State. In the course of that investigation, the prosecutor became aware that the AIF was conducting its own independent inquiry into the transaction, and seized the documents connected with that AIF investigation.
However, the AIF had received information— about the London deal and other transactions— from regulators in several other countries, through a consortium known as the Egmont Group. Under the terms of the Egmont Group’s agreement, such information much be treated as confidential. When the Vatican prosecutor raided the AIF offices, Rene Bruelhart protested that the seizure of documents violated the Egmont agreement, and would jeopardize the Vatican agency’s membership in the group.
Despite Bruelhart’s protests, the prosecutor refused to provide AIF with even a list of the documents that had been confiscated. And in fact the Egmont Group suspended the Vatican’s participation. Mariano Federeci, the Egmont chairman, told the Wall Street Journal that the suspension was due to the Vatican’s failure to explain the status of the seized documents. He added: “There is also no assurance that this situation will not happen again under the current state of affairs, and that further information won’t be seized.” At this point (according to his own account), Bruelhart resigned. Another member of the AIF board, Marc Odendall, also resigned, saying that the AIF had become an “empty shell” and could not fulfill its purpose of preventing financial misconduct.
The AIF’s suspension from the Egmont Group is a serious setback for the campaign to restore confidence in Vatican financial affairs. But Pope Francis, speaking to reporters during his flight home from Japan, made light of that concern, suggesting that critics were grossly exaggerating the problem. “There’s a bit of terrorism going on,” he said.
The task of restoring confidence now falls to Barbagallo, who comes to the assignment from a similar post. “I will work to bring all my experience, accumulated in forty years working at the Bank of Italy, as an inspector, as head of vigilance of the Italian banking and financial sector, and in the context of the supervision of the European banking system,” the new AIF president said.
For all current news, visit our News home page.
- Pope Francis appoints Carmelo Barbagallo to head AIF (Vatican News)
- Resignations and Appointments (Vatican press office)
- Other News (Vatican press office)
- Pope Taps Former Bank of Italy Exec to Head Watchdog Agency (AP)
- Vatican Posed Security Threat, Says Financial Watchdog After Suspension (Wall Street Journal)
- Pope Francis Criticizes Vatican Banking Regulator (Wall Street Journal)
All comments are moderated. To lighten our editing burden, only current donors are allowed to Sound Off. If you are a current donor, log in to see the comment form; otherwise please support our work, and Sound Off!