Are the Concerns Over Vatican Finances Overstated?
Lack of transparency over Peter’s Pence and expenditures on canonization causes are the two leading issues, in the wake of the publication of new books based on Vatican leaks.
VATICAN CITY — Allegations concerning lack of transparency over Peter’s Pence and expenditure on canonization causes have resulted in widespread unease among the faithful, after the allegations were featured in a new book on Vatican finances published this month.
However, according to sources within the Vatican and elsewhere, the situation may be substantially less problematic than implied by the book.
In The Merchants in the Temple, published Nov. 5, Italian writer Gianluigi Nuzzi drew on leaked documents to show that, in 2013, due to paucity of information and waste, some 80% of donations given to Peter’s Pence ended up paying for the Roman Curia or plugging the Holy See’s financial deficit, rather than going to the purported main purpose of the Church collection: helping the poor.
Peter’s Pence, collected annually by dioceses around the time of the Solemnity of Sts. Peter and Paul in June, is meant for the Holy Father to give to “humanitarian initiatives and social promotion projects, as well as for the support of the Holy See,” according to the Vatican’s website.
Pope Benedict XVI once said the collection, which usually amounts to between $70 million and $100 million (the United States is the largest donor, often providing around 30% of the collection), is the “most characteristic expression of the participation of all the faithful in the Bishop of Rome’s charitable initiatives.”
Nuzzi writes that, according to financial statements and balance sheets, “the management of Peter’s Pence is an enigma cloaked in the most impenetrable secrecy.” Every year, he added, “the amount of the collection is publicized, but there is no explanation of how it is administered.”
“In other words, we know how much money has been collected from the faithful but not how it is spent. Absolute secrecy is maintained around this detail,” he alleged.
He goes on to say that Peter’s Pence managers in the Secretariat of State were initially uncooperative, failing to provide information requested by the Commission for Reference on the Organization of the Economic-Administrative Structure of the Holy See (COSEA), a body set up in 2013 to implement financial reform of the Roman Curia. The book is unable to come to a clear conclusion as to why the response was lacking, suspecting it was due to a mixture of biding time, a tradition of secrecy and a simple unwillingness to cooperate with external bodies.
When data was obtained, it appeared the Secretariat of State was “forced every year to dip into the resources” of Peter’s Pence, especially to cover personnel costs, according to a leaked COSEA report, and to plug deficits. Other information, derived from “partial and misleading reports,” showed disorganized expenditure and discrepancies caused by unidentified reasons.
Father Lombardi’s Statement
In a Nov. 4 statement, Vatican spokesman Father Federico Lombardi stressed that Peter’s Pence is used for “various purposes, also in situations, according to the judgment of the Holy Father.” He said the Pope’s charity for the poor is “certainly one of the essential uses,” but added the Pope himself “may evaluate situations of urgency and the way of responding, in the light of his service for the good of the universal Church.”
This includes service to the Curia, his initiatives outside Rome, communications to the faithful worldwide, “including the poor and distant,” and supporting the Holy See’s 180 diplomatic representations throughout the world, which also help distribute the “Pope’s charity in the various countries,” Father Lombardi said.
Father Lombardi cautioned that “information of this type must be studied, understood and interpreted with care, equilibrium and attention,” as, “often, the same data can give rise to different readings.”
A second area of concern that the book flags involves the management of bank accounts for Vatican postulators, officials who examine candidates for sainthood. Beatification and canonization causes soared during St. John Paul II’s pontificate, and yet Nuzzi alleges there was no documentation on the 450 postulators’ funding or bank accounts.
Like those managing Peter’s Pence, members of the Congregation for the Causes of Saints were initially uncooperative with the commission. According to Nuzzi, this led to Joseph Zahra, a Maltese economist who headed COSEA, temporarily freezing the bank accounts of postulators, almost all of whom were religious, with the exception of two laypeople, Andrea Ambrosi and Silvia Correale.
The leaked documents show the alarm of Msgr. Lucio Ángel Vallejo Balda, COSEA’s secretary, who is under arrest for leaking confidential documents to Nuzzi, that the congregation had not “notified anyone and has not requested from any of the postulators their financial statements from the past years.” This is all “extremely serious,” he wrote. The accounts of Correale and Ambrosi were subsequently unfrozen (Ambrosi’s after a long time), although the book leaves a seemingly unfair air of suspicion over them both.
Nuzzi’s book also argues that saints’ causes involve “huge sums of money” to pay for expert theologians, physicians and bishops. Some causes, he said, have reached a cost of 750,000 euros.
But while the situation is by no means perfect, the Vatican says Nuzzi’s findings are tendentious, only partially true and full of errors. Canonization causes, sources say, are not that expensive when one considers the amount of work that doctors, theologians and others have to undertake — and do so at the expense of their usual work.
Some postulators charge more for their work, but the Vatican insists such money is not being stolen and postulators are not charging exorbitant amounts. Furthermore, there is resentment in the Vatican that the reputations of Ambrosi and Correale had been unfairly tarnished and that allegations of corruption, based on lack of transparency as to where the money is ending up, are simply innuendo and not based on facts.
Regarding the question of transparency and lack of cooperation with COSEA, one argument heard in the Vatican is that the terrorist attacks on the United States on Sept. 11, 2001, caught the Holy See “off guard” and that what were considered “normal processes” became difficult because of checks and counter-checks, imposed from the outside by international financial agreements designed to prevent money laundering and funding for terrorist activities.
Regarding much of Nuzzi’s book, and a similar one called Avarice by Emiliano Fittipaldi, also published in early November, Father Lombardi said in his Nov. 4 statement that most of the information disclosed “is already known.” It also dates back to 2013 and the early part of 2014, while COSEA was in existence and before it made way for the new Vatican Secretariat for the Economy, which was created in March 2014 — one of COSEA’s key recommendations.
Increased Monitoring and Transparency
Since that time, the Vatican, through the Secretariat for the Economy headed by Cardinal George Pell, has sought to understand precisely what was happening with Peter’s Pence and to ensure maximum visibility with its funds so that donors know precisely where their donations are ending up. The Vatican believes this is not only a moral obligation, but also a legal one followed by most governments.
This is also true regarding other financial information, such as that concerning the Congregation for the Causes of Saints, which, until recently, had only been visible to individual dicasteries. Now Pope Francis, the Council for the Economy (a body set up to monitor the work of the secretariat and other financial entities) and the secretariat have access to the information and have instituted new laws and statutes to acquire it.
With regard to the Congregation for the Causes of Saints, much work has been done on improving reporting and monitoring of cash and payments and the way that monitoring is applied. Procedures have also been strengthened to flush out any cost issues associated with various causes and to prevent any lack of transparency in the future, although still more work has to be done in this area.
Overall, Vatican sources say finance departments are working overtime to address the Vatican’s deficit (this includes a massive 900 million euro gap — approximately $965 million — in its pension fund between liabilities and assets). That is not considered problematic in the short term, said an informed source, but could cripple the Vatican in 10-15 years’ time if not tackled now.
A recent statement from the Secretariat for the Economy details how each dicastery is being called upon to submit budgets as a means of increasing transparency and identifying any corrective action that might be needed. And by bringing in one of the “big four” auditing firms (KPMG, McKinsey & Company, Ernst & Young and Promontory Financial Group), the Vatican is confident all financial information will be obtained and corruption rooted out.
These reforms have met some significant opposition from a minority within the Curia, but most officials are said to be fully supportive of the Pope’s reforms. And given that level of support, there is some perplexity about why, if true, Msgr. Vallejo and Francesca Chaouqui, a former member of COSEA, leaked documents to Nuzzi.
Those involved in the reform process cannot see how the leaks help the reform process — ostensibly and allegedly the main motive of the leakers. Zahra told the Register Nov. 13 he had “no idea” what the leakers’ motives could have been. “We can hypothesize on so many motives, including an external pressure to push forward the reforms. The result has been that of creating more confusion in people's minds.”
The two suspects were arrested by Vatican police on Nov. 3, and, this week, the Vatican revealed that Nuzzi and Fittipaldi are also being investigated by Vatican police based on evidence of possible participation in the leaks, although the Italian government has yet to receive a formal request for them to be handed over to the Vatican authorities.
In his Nov. 4 statement on the books, Father Lombardi said their publication creates the impression “of a permanent reign of confusion, lack of transparency or, indeed, the pursuit of particular or inappropriate interests.” He said it would be greatly appreciated if focus could be placed on “the courage and commitment with which the Pope and his collaborators have faced and continue to face” in reforming “temporal goods in the service of the spiritual.”
But for Ettore Gotti Tedeschi, a former president of the Vatican Bank under Benedict XVI, no reform will be possible unless those implementing it have ethical values that are in accordance with Catholic morality. He proposes a two-pronged approach to reform: “moralization” of Church members’ behavior and regulatory reform. This should comprise “a law against money laundering consistent with international law”; “procedures of law enforcement” and “supervisory authorities that are truly independent.”
Concerning “moralization” of Church members, he believes a simple solution could be achieved practically through the Spiritual Exercises of St. Ignatius semi-yearly for a month and carried out “in absolute silence” — a process, he said, which would simply amount to “conversion.”
Zahra said the reforms “are not mono linear” and cover a “number of entities and entail governance, new policies and procedures and accounting principles, to mention a few.”
Asked by the Register how long the reforms might take, he replied, “There is no one single plan with a deadline. The new structures of the Council for the Economy, the Secretariat for the Economy and the office of the auditor general now have responsibility in moving the changes forward. We see them operating effectively since their inception.”
Edward Pentin is the Register’s Rome correspondent.