VATICAN CITY — Libero Milone, the Vatican’s first auditor general, will lodge an appeal after a Vatican tribunal last month rejected his demand for compensation on the grounds of unlawful dismissal.

Milone told the Register that his lawyers will present the appeal before a Feb. 20 deadline. 

He and his late deputy Ferruccio Panicco filed a suit in 2022 alleging they were fired after discovering financial irregularities through their standard auditing procedures. 

In a decision handed down Jan. 24, a Vatican tribunal found that the main target of the lawsuit, the Vatican Secretariat of State, could not be held liable for the plaintiffs’ accusations of unlawful dismissal.

The tribunal ordered Milone to pay almost 50,000 euros ($54,000) and Panicco’s estate 64,000 euros ($69,000) in restitution to the Secretariat of State and the office of the auditor general, both of which were named in the lawsuit. 

Milone and Panicco were dismissed in 2017 after Vatican police raided their offices just two years after they were hired.

Milone said he was “kicked out for introducing the applicable international audit procedures, as determined in the statute which created the Office of Auditor General,” and added that Vatican officials “confused auditing with espionage.” 

The Vatican has yet to disclose the precise reasons for dismissing them.

The two auditors demanded 9.3 million euros in compensation for loss of reputation, and the impossibility of finding new work due to the slanderous nature of the removal. Their demand included 3.5 million euros for the loss of medical records during the raid, which Milone alleged led to the premature death of Panicco due to cancer last June.

One of the key arguments Vatican lawyers had made in their defense was that the Secretariat of State had nothing to do with Milone’s hiring or resignation, and so could not be held liable for his dismissal. The Vatican claimed it was instead the Pope who hired Milone and then wanted him out, but the court had no right to judge the Pope’s decisions.

Prior to the ruling, Milone’s lawyers had said they had in their possession a document, signed by Vatican Secretary of State Cardinal Pietro Parolin, explicitly hiring Milone.

Milone and Panicco’s defense argued they were forced out for three main reasons.

First, the two auditors had asked for detailed documentation from the Secretariat of State that would have revealed the Sloane Avenue London property scandal that only came to public attention two years later. The scandal, which incurred enormous losses for the Vatican, led in December to a five-and-a-half year prison sentence and a fine of 8,000 euros for embezzlement for former Deputy Secretary of State Cardinal Giovanni Angelo Becciù — a sentence that he is appealing.

Second, the defense argued that the auditors’ investigations uncovered questionable financing of an extension and renovation of a Vatican apartment belonging to the then Vatican police chief, Domenico Giani.

Third, they pointed to the fact that they were working with external auditors who might have helped uncover a web of corruption and financial mismanagement at the highest levels of the Roman Curia. Cardinal Becciù abruptly halted the external audit just months after it had begun in 2016.

Once the appeal is lodged, the case will be handed over to the Vatican’s court of appeal, which consists of a president and three other judges, similar to the tribunal that heard the initial case. It is not known how long the process will take before a final verdict is given, but it will run parallel with Cardinal Becciù’s appeal, which is expected to last at least one year. 

One of the last former Vatican officials to appeal a Vatican court decision was Angelo Caloia, a former director of the Vatican Bank, who was convicted of corruption and embezzlement in 2021. The Vatican’s court of appeal upheld his conviction in June 2022, 18 months after he was sentenced to eight years in jail.

Last month, the appeals court overturned an earlier acquittal of a priest, Father Gabriele Martinelli, and found him guilty of corruption of a minor.

Under both Vatican and Italian law, both the prosecution and the defense can appeal verdicts, and second appeals are also possible.