Ior Manager Salaries Revealed

By Iacopo Scaramuzzi
Vatican Insider
July 15, 2014

http://vaticaninsider.lastampa.it/en/the-vatican/detail/articolo/ior-35295/

Today the Institute for the Works of Religion (IOR) published its annual report for 2013 on its website www.ior.va, following its recent leadership reshuffle. The independent audit and consulting firm Deloitte & Touche Ltd. gave the green light on 9 July. This is why the document does not contain the names of the IOR’s new management, as these figures, including the new president, Jean-Baptiste de Franssu - were nominated on 9 July. The document contains the information presented last week, plus details regarding the salaries of the outgoing managers and the severance pay received by its former directors. It also provides information regarding the geographical distribution of assets and liabilities and confirms that the 23 million Euros seized by prosecutors in 2010 remain blocked.

The key figures relating to the IOR’s management during 2013 were published in a press release issued by the Institute on 8 July. In 2013, the IOR witnessed a drop in net profit, from 86, 6 million Euros in 2012 to 2, 9 million Euros in 2013 but this grew again in the first half of 2014. At the end of 2013, the IOR had 17,419 clients compared to 18,900 at the end of 2012. The financial statement goes through the process followed to bring the Institute in line with international transparency standards and presents the new legal framework. “Phase I of the reform process successfully completed,” the former president of the IOR, Ernst von Freyberg writes in the report’s introduction.

The report notes that “bank deposits includes EUR 23 m deposited in a third-party bank pending full availability,” showing that the Institute’s relations with the Bank of Italy are still a work in progress.

Ernst von Freyberg earned 208 thousand Euros in 2013. Director general Rolando Marranci who took up his post on 1 July, earned a total of 77 thousand Euros. 260 thousand Euros have been allocated but not paid yet to the Board of Superintendence (Ronaldo Hermann Schmitz, Carl A. Anderson, Antonio Maria Marocco, Manuel Soto Serrano). 1 million Euros goes to “the previous General Management, in office until 30 June, of which EUR 694,000 has not yet been paid out. This includes also the indemnities related to the termination of their contracts.” The document reminds readers that the IOR was headed by Paolo Cipriani and Massimo Tulli from 1 January to 1 July 2013, by Ernst von Freyberg (ad interim) and Rolando Marranci from 1 July to 30 November. Rolando Marranci was single managing director from 30 November onwards. “The expenses for compensation to related parties in 2013 amounted to EUR 1.6m (2012: EUR 877,000).”

The IOR’s international reach is illustrated in the section of the report, which analyses the “geographical concentration of assets and liabilities”. The document includes a table on the Holy See’s exposure to the so-called PIGS: Greece, Ireland, Italy, Portugal and Spain. Italy and Spain also appear in the previous table, which contains the results of a “geographical analysis of assets and liabilities items based on the domicile of the counterparties.” “The IOR has credit exposure mainly through its bond portfolios, with issuers domiciled all around the world, and to banks domiciled outside of the Vatican City State,” the report reads. In 2013, when Ernst von Freyberg was at the helm of the IOR, there was a drop in the Institute’s assets and liabilities compared to 2012. The drop was witnessed across all countries in the list except Germany and the Vatican and Luxembourg (this drop was limited to assets only in the latter two cases).

One paragraph of the report specifies that both at the end of 2013 and 2012 the IOR had no derivative financial instruments. “In 2012 the Institute recorded a loss of EUR 7.1m due to the sale of derivatives embedded in three notes that the Directorate decided to present as Loans and Receivables.”

Reading between the lines, there is an implicit reference in this report as well as in the first statement issued by the IOR last week, to certain rumours that have been going round regarding some shady dealings that went on under the previous management (Cardinal Pell recently mentioned the “serious mistakes” made in the Lux Vide and Optimum ad majorem cases). The decline from 2012 is due to three events which lie outside our ordinary course of business. The IOR donated securities with a book value of EUR 15.1 m to a papal foundation, we wrote down by EUR 28.5m a proprietary investment in external funds, and the value of our decades-old gold holdings declined by EUR 11.5m, in line with the gold price,” von Freyberg writes in the report’s introduction. While the IOR “benefited from a reduction of bond interest rates in the markets in 2012, … those interest rates did not fluctuate much in 2013, so the positive effect we saw in 2012 was not repeated in 2013. In addition, operating expenses rose by EUR 8.3m as our reform process accelerated significantly.”