German appointed to head scandal-plagued Vatican bank

The appointment, made by a commission of cardinals, was approved by Pope Benedict and is likely one of his last major decisions before he resigns at the end of the month, a move he announced on Monday, stunning Catholics around the world.

As chairman of the Institute for Works of Religion (IOR), Ernst von Freyberg will head efforts to improve the image of the Vatican's bank which is under investigation for money laundering and has been without a head for nine months.

But within minutes of announcing his appointment, the Vatican faced a new public relations challenge when asked to explain Freyberg's chairmanship of Blohm + Voss, a Hamburg-based shipbuilder in which he is a minority shareholder.

Reporters asked Vatican spokesman Father Federico Lombardi how the Church could justify hiring someone who worked for a company with a long history of making warships, including for Nazi Germany.

After initially announcing that the company was no longer involved in that business, the Vatican later issued a statement saying that, while Blohm + Voss's main activity was ship repair and luxury yacht making, it was also “part of a consortium that is building four frigates for the German navy.”

British buyout firm STAR Capital which bought Blohm + Voss in 2011 from ThyssenKrupp said at the time it was acquiring the nonmilitary parts of the industrial conglomerate's ship business.

Lombardi said the fact that Freyberg organized pilgrimages to the shrine at Lourdes and was a Knight of Malta — an elite member of a charitable organization with roots in the Crusades — was proof he had the “considerable human and Christian sensibility” needed for his new role.

In a further clarification, the Vatican said that when Blohm + Voss's work on the four warships is complete, the company “will be 100 percent nonmilitary.”

Freyberg takes a position that has been vacant since May when the bank's board ousted the then head Ettore Gotti Tedeschi, accusing the Italian of neglecting his basic management responsibilities.

Freyberg, born in 1958, will relinquish other roles, including on the board of temporary employment agency Manpower GmbH, to work five days a week for IOR, the Vatican said. Lombardi had previously said he would work only three days a week at IOR.

Carl Anderson, American head of the worldwide Knights of Columbus charity group and board member of the IOR said Freyberg would “contribute significantly to the IOR's ongoing work of modernization and transparency.”

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