By The Associated Press

Published: Friday, February 15, 2013, 6:54 p.m.
Updated: Friday, February 15, 2013

VATICAN CITY — The Vatican was drawn into a controversy Friday after acknowledging that its bank's new president is chairman of a shipbuilder making warships — a significant 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 the Institute for Religious Works.

The Vatican spokesman was caught off-guard, though, when a journalist noted that the German shipbuilder von Freyberg chairs, Blohm + Voss, is known for warships.

The Rev. Federico Lombardi defended the selection, and issued a statement saying von Freyberg chairs a civilian branch of Blohm + Voss, which repairs and transforms cruise ships and builds yachts — but that the company is part of a consortium that is building frigates for the German navy.

The Vatican steers clear of investments in firms that manufacture weapons or contraceptives, in line with 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 non-military units of Blohm + Voss were sold in 2011 to Star Capital Partners, its military unit, Blohm + Voss Naval, had contracted with the German Defense Ministry for four frigates. Blohm + Voss Naval subcontracted the actual construction of those vessels to Blohm + Voss Shipyards.

Although Blohm + Voss Naval is now known as ThyssenKrupp Marine Systems GmbH, and is entirely separate from the other Blohm + Voss units, the Shipyards unit is constructing the frigates under the legacy contract. After they are built, the company plans to concentrate on non-military 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, but does steel welding and docking. Germany's navy contributed frigates and other ships to the EU's anti-piracy patrols off the Horn of Africa.

Von Freyberg's appointment ends a nine-month search. The previous president, Ettore Gotti Tedeschi, was removed from his post for dereliction of duty. In 2010, Italian police investigated Tedeschi as part of a money-laundering inquiry. In January, the Italian central bank suspended all bank card payments in the Vatican, citing its failure fully to implement anti-money laundering legislation.

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