NEW YORK (TheStreet) -- Feeling guilty about investing in "sin" stocks, like makers of guns, cigarettes and alcohol products? Don't. Over the course of its history of investing, the Catholic Church has done much worse.
In the 1960s, Italian media uncovered evidence that the Vatican had invested in entities that conflict directly with the church's holy mission, including Istituto Farmacologico Serono, a pharmaceutical company that made birth control pills, and Udine, a military weapons manufacturer. There have also been unconfirmed rumor of church money in firearms manufacturer Beretta and companies with activities in gambling and pornography. It has been linked to dealings with Nazi gold during World War II as well.
The Catholic Church has a history of corruption, and it is a notoriously opaque institution. Sexual abuse accusations (and the consequent cover-ups) have put it in the headlines most recently, but it has been at the center of numerous scandals over the years, ranging from accusations of ties to the mafia in Rome to allegations of stealing babies in Chile and Spain.
Pope Francis, who visits the U.S. this week, has been credited with bringing enormous change to the Catholic Church since his election to the papacy in 2013, including when it comes to the Church's finances.
Francis has made major overhauls at the Institute for the Works of Religion, commonly referred to as the Vatican Bank, a privately held financial institution located inside Vatican City. Founded in 1942 with the intention of safeguarding and administering property intended for works of religion or charity, the bank only accepts deposits from Catholic institutions and individual account-holders who are tied to the church. It then manages that money and provides services much as other banks do.
The bank has faced numerous scandals over the years. One of the most significant was the 1982 collapse of Banco Ambrosiano, of which the Vatican Bank was the main shareholder. The Italian bank went under after making what was estimated at the time to be $1.4 billion in unsecured loans to dummy companies in Latin America. At the center of an investigation into its dealings was what The New York Times described as a "close but ambiguous" relationship between the Ambrosiano's president, Roberto Calvi, and Archbishop Paul Marcinkus, the head of the Vatican Bank. In the wake of the scandal, Calvi was found dead, hanged from a bridge in what is largely believed to be a faked suicide.
Just recently, the Vatican was caught up in yet another financial scandal, when Monsignor Nunzio Scarano, who was an accountant at the bank that managed the Church's real estate investments, was arrested when he tried to smuggle €20 million ($26 million in 2013, when the plot was uncovered) into Italy, allegedly on behalf of the d'Amico shipping family. He told the authorities that he stood to gain €2.5 million on the deal. Investigators were first alerted to him when he reported paintings stolen from his apartment and police discovered a luxurious pad packed to the ceiling with expensive art and furnishings, which the Monsignor, who draws a small salary as a member of the clergy, claimed were gifts.
Things have come a long way since even then. In fact, Scarano's arrest could be seen as part of the move toward reform.
The Vatican passed its first legislation against money laundering and terrorist group funding in 2011. At the Vatican Bank, Pope Francis has brought in new leadership, increased transparency and limited access to the bank to diocese and other Catholic organizations to further fight against money laundering. Under his watch, the bank also disclosed its very first annual financial report in 2013 (the bank released a second annual report last year).