New Vatican banker has ties to warship-making firm

Saturday, February 16, 2013

— The Vatican was drawn into a new controversy Friday after acknowledging that its bank’s new president is also chairman of a shipbuilder making warships - a conflict for an institution that has long shunned ties to military manufacturing.

The Vatican announced to great fanfare that Pope Benedict XVI had signed off on one of the last major appointments of his papacy, approving Ernst von Freyberg as president of the Vatican’s bank, officially known as the Institute for Religious Works.

The Vatican spokesman was caught off-guard, though, when a journalist noted that the German shipbuilder von Freyberg leads, Blohm + Voss, is known for its military ship construction.

The Rev. Federico Lombardi demurred and defended the selection. He later issued a statement saying von Freyberg leads a civilian branch of Blohm + Voss, which repairs and transforms cruise ships and builds yachts - but that the company is currently part of a consortium that is building four frigates for the German navy. The Vatican and its bank have deep-rooted traditions of steering clear of investments in companies that manufacture weapons or contraceptives, in line with Catholic Church teaching.

Michael Brasse, spokesman for Blohm + Voss in Hamburg, said that von Freyberg is chairman of the executive board of Blohm + Voss Shipyards, a unit that concentrates on building civilian ships.

But before Blohm + Voss Shipyards and other nonmilitary units of Blohm + Voss were sold in 2011 to Star Capital Partners, its military shipbuilding unit, Blohm + Voss Naval, had contracted with the German Defense Ministry for four new frigates. Blohm + Voss Naval subcontracted the actual construction of those vessels to Blohm + Voss Shipyards.

Though Blohm + Voss Naval is now known as Thyssen-Krupp Marine Systems GmbH, and is entirely separate from the other Blohm + Voss units, the Shipyards unit is still constructing the frigates under the legacy contract.

After they are built, however, the company plans to concentrate entirely on nonmilitary ships. Von Freyberg will remain its chairman while working for the Vatican.

“The focus of the business is for yachts, and on the repair side for cruise ships or the offshore oil and gas industry,” Brasse said.

Lombardi pointed out that Blohm + Voss is not engineering or designing military equipment, just involved in steel welding and docking. Germany’s navy has contributed frigates and other ships to the EU’s anti-piracy patrols off the Horn of Africa.

The revelation dominated what was supposed to have been the Vatican’s triumphant appointment of a new president for the bank after its last president, Italian banker Ettore Gotti Tedeschi, was fired nine months ago for incompetence.Gotti Tedeschi’s ouster came just as the Vatican was submitting its finances to a review by the Council of Europe’s Moneyval committee in a bid to join the list of financially transparent countries.

The Vatican last summer passed the test of the Moneyval committee, which seeks to prevent money launderingand terrorist financing. But the bank and the Vatican’s financial watchdog agency received failing grades.

The new president will be tasked with bringing the bank into compliance by Moneyval’s next review.

The Vatican stressed von Freyberg’s Catholic credentials, noting that he was a member ofthe Sovereign Military Order of Malta, an ancient chivalrous military order drawn from European nobility. He himself is a member of one of Germany’s aristocratic families.

Information for this article was contributed by David Rising and Juergen Baetz of The Associated Press.

Front Section, Pages 8 on 02/16/2013