The days of ripping off the Vatican are over Until recently the financial affairs of the Roman Curia were secretive and chaotic. In this exclusive article the cardinal charged with sorting them out explains his mission
CARDINAL GEORGE PELL
Recently a young Spanish lad asked me to explain the nature of my work in the Vatican as prefect of the Secretariat for the Economy, as well as the past and present economic situation of the Holy See. Why? Because as a member of Opus Dei and a first-year university student, he wanted to be able to answer the questions of his fellow students and defend the Church.
A member of a British parliamentary delegation put it in a somewhat different way: why did the authorities allow the situation to lurch along, disregarding modern accounting standards, for so many decades?
In reply, I began by remarking that his question was one of the first that would come to our minds as English-speakers (lumped together by the rest of the world as “Anglos”), but one that might be much lower on the list for people in another culture, such as the Italians.
Those in the Curia were following long-established patterns. Just as kings had allowed their regional rulers, princes or governors an almost free hand, provided they balanced their books, so too did the popes with the curial cardinals (as they still do with diocesan bishops).
Because of the size of the Catholic community, with about 3,000 dioceses spread through every continent, the principle of subsidiarity – that is, local management of diocesan and religious order finances – is the only option.
The responsibilities of the Secretariat for the Economy are limited to the Holy See, Vatican City State and the almost 200 entities directly answerable to the Vatican. But already some cardinals and bishops have wondered aloud whether the new set of financial procedures and chart of accounts, introduced in November this year in the Vatican, might be sent to bishops’ conferences for consideration and use. This is something for the future.
It is important to point out that the Vatican is not broke. Apart from the pension fund, which needs to be strengthened for the demands on it in 15 or 20 years, the Holy See is paying its way, while possessing substantial assets and investments.
In fact, we have discovered that the situation is much healthier than it seemed, because some hundreds of millions of euros were tucked away in particular
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sectional accounts and did not appear on the balance sheet. It is another question, impossible to answer, whether the Vatican should have much larger reserves.
I once read that Pope Leo XIII sent an apostolic visitor to Ireland to report on the Catholic Church there. On his return, the Holy Father’s first question was: “How did you find the Irish bishops?” The visitor replied that he could not find any bishops, but only 25 popes.
So it was with the Vatican finances. Congregations, Councils and, especially, the Secretariat of State enjoyed and defended a healthy independence. Problems were kept “in house” (as was the
We have discovered that the Vatican’s finances are much healthier than they seemed custom in most institutions, secular and religious, until recently). Very few were tempted to tell the outside world what was happening, except when they needed extra help.
Many will remember the scandals at the Vatican bank (IOR) in the early 1980s, with Archbishop Paul Marcinkus and the lay bankers Michele Sindona and Roberto Calvi (who was famously found hanged under Blackfriars Bridge), and the Vatican being constrained to pay $406 million (£259 million) in compensation. Comparative quiet then returned, until the international laws against money laundering needed to be applied within the Vatican.
The authorities supervising the Vatican bank did not move swiftly enough, and some tens of millions of euros were frozen by the Bank of Italy, with many European banks refusing to deal with the Vatican. It was a grave situation where the worst was narrowly averted. It was only this November, after years of dialogue and good work, that the €23 million (£18.3 million) were released.
A major factor in this normalisation was the establishment of the Financial Information Authority (AIF) within the Vatican, an agency, like those in every Western country, dedicated to preventing and eradicating money laundering.
The Swiss layman René Brülhart has just become the first lay chairman of the AIF. Its board principally comprises international (lay) experts. Irregularities or suspected crimes are referred to the Vatican authorities when they occur within the Vatican and are reported to other national authorities, such as Italy, when appropriate. When we return to the last years of Benedict XVI’s pontificate, we find that troubles had returned to the Vatican bank. The bank’s director, Dr Ettore Gotti Tedeschi, was sacked by the lay board and a power struggle in the Vatican resulted in the regular leaking of information. The scandal exploded when Paolo Gabriele, the papal butler, released thousands of pages of photocopied private Vatican documents to the press. My first reaction was to ask how a butler could have enjoyed any access, much less regular access for years, to sensitive documents. Part of the answer is that he shared a large undivided office with the two papal secretaries.
All of this was severely damaging to the reputation of the Holy See and a heavy cross for Pope Benedict, who asked three distinguished retired cardinals to investigate the situation. They did so, presenting Benedict XVI with a confidential report. He then gave it to his successor, Pope Francis, after his decision to resign – the first such resignation since that of Pope Celestine in 1294.
In the pre-conclave meetings before the election of Pope Francis there was an almost unanimous consensus among the cardinals that the curial and banking worlds in the Vatican needed to be reformed and normalised.