Former Vatican Auditors Sue Vatican for Damages
Libero Milone and his former deputy Ferruccio Panicco are seeking to clear their name, five years after they say they were wrongfully dismissed.
VATICAN CITY — The Vatican’s first-ever auditor general and his former deputy are suing the Vatican after lengthy efforts to have the Vatican clear their name fell on deaf ears, following what they claim were unlawful dismissals.
Libero Milone, a former chairman and CEO of Deloitte Italy, a multinational auditing and consultancy firm, and Ferruccio Panicco, an ex-chief auditor for the Italian manufacturer Indesit, are suing the Vatican for nearly $10 million in order to “obtain proper reparations from suffered damages” after they were forced to resign in 2017.
In their claim, which was submitted to the Vatican Tribunal on Nov. 4, the two auditors accuse the Vatican of framing them and forcing them out of their positions when they began uncovering financial malpractice in the Roman Curia months after taking up their posts in 2015.
They are accusing the Vatican of “breach of contract, damage to reputation and moral damage to us and our families.” Panicco is also suing the Vatican for taking important personal medical documents during a raid on their offices. They were not returned — a factor which he claims has led to life-threatening delays in him receiving medical treatment.
The claimants are among a number of former Vatican officials during this pontificate who have complained of unfair dismissal and of no possibility of recourse to clear their names.
Pope Francis created the Vatican’s first ever Office of Auditor General in 2015, as part of his financial reform of the Roman Curia.
After a raid on the offices of Milone and Panicco in June 2017, the Vatican accused them of spying and embezzlement — allegations they have always firmly denied, instead insisting that they were lawfully carrying out their auditing duties of Vatican dicasteries in accordance with the statutes of the auditor general’s office.
The chief accuser was Cardinal Angelo Becciu, at the time the number two official at the Secretariat of State, who resigned in 2019 as prefect of the Congregation for the Causes of Saints following allegations of corruption. He is currently standing trial for his alleged involvement in a Vatican investment in a London property on Sloane Avenue that incurred massive losses for the Holy See.
Cardinal Becciu accused Milone in June 2017 of “spying on the private lives of his superiors and staff, including me,” and said, “if he had not agreed to resign, we would have prosecuted him.” Milone told reporters in September 2017 that “a small group of powers” were trying to defame his reputation. “I was threatened with arrest,” he said. “The head of the Gendarmerie [Vatican police] intimidated me to force me to sign a resignation letter that they had already prepared weeks in advance.”
The Plaintiffs’ Allegations
Milone and Panicco’s recently submitted claim goes further than protesting their innocence. It makes several other allegations and disclosures which, if true, paint a picture of extensive cover-up, corruption and unjust practices at the highest levels of the Roman Curia.
Their claim begins by detailing how Milone was headhunted for the position of auditor general in 2015, a role that was defined as “delicate.” It explains that Milone’s appointment “constituted a real revolution” not only because an audit would bring the Vatican into line with the standards governing other institutions, but also because it would force heads of dicasteries “not accustomed to answer to anyone other than the Holy Father for their actions.”
At Milone’s first private audience with Pope Francis just after being appointed, the Pope asked to be “directly informed” of his activities, pledged his “direct and personal support,” and warned of “probable attempts” to obstruct their work.
Milone and his team of 12 staff then set about their tasks, and were empowered to deal with 136 entities, the third among them being the Secretariat of State. The Council for the Economy also reiterated this in September 2017, three months after Milone had been dismissed.
Moreover, the Office of the Auditor General was, according to its statutes, to be given “full autonomy and independence and follow internationally recognized best practices in public administration.”
The claimants added that they were working in accordance with the highest standards of auditing, the International Standards of Supreme Audit Institutions, and methods of analysis and control approved by Intosai (the international organization that brings together the Supreme Audit Institutions) — an organization to which the Vatican has belonged since 1986.
Milone further stressed that according to their office statutes, they had “the duty to investigate” and report on all anomalous activity while guaranteeing their “confidentiality, integrity and security" and "protecting the identity of the individuals making such reports."
But from the outset, Milone told journalists Nov. 8, they “encountered numerous, serious, and never fully resolved difficulties.” One of them was noticed just three months after Milone’s appointment when it was discovered that malware had been installed on his secretary’s office computer which allowed all of its data and documents to be transferred outside. Investigations by the Gendarmerie “came to nothing,” Milone said.
They allegedly ran into the greatest obstructions when attempting to audit APSA, the Vatican office that managed the Holy See’s properties and assets, and the Secretariat of State. Attempts to receive “more detailed information” on investments, especially those handled by the Secretariat of State, were “never satisfied,” Milone told reporters, even though that dicastery was third on the list for auditing.
“Despite our insistent requests to the Secretariat of State to provide more information regarding these investments, including the London purchase, no data has ever been transmitted to us and, after three years, the Sloane Avenue scandal exploded,” Milone said.
He said it was especially problematic when outside consultants and investigators, whom the general auditor had hired in accordance with the office statutes, presented evidence of irregular financial activity outside the jurisdiction of the Vatican, such as a document showing that then-Archbishop Becciu had failed to pay 600 euros of social security contributions. Although the irregularity was outside his responsibility as it involved the Italian state, Milone ordered the document to be immediately filed, in line with correct procedure.
The Office Raid
It was this document, which also included other information provided to them but not relevant to their Vatican audit, that Milone claims was used to charge them with spying when their offices were raided on June 19, 2017, on the orders of Cardinal Becciu and the then-commander of the Vatican Gendarmerie, Domenico Giani.
In his claim against the Vatican, Milone states that Gianluca Broccoletti, who is now Giani’s successor, led the raid and knew exactly where to find the file for Cardinal Becciu’s social security non-payment “in one sure hit.” Broccoletti, Milone told reporters, “triumphantly” waved the document and “threatened many times, yelling and telling me to confess the espionage he had just ‘uncovered.’” How could they know the file was there, asked Milone, who believes there must have been collusion between Cardinal Becciu, Giani, and one of the external investigators.
Milone and Panicco were also told that the raid on their offices and subsequent interrogation came after a seven-month investigation and a report prepared by the Gendarmerie. But to this day, according to Milone, they have never had the chance to view this document because the Pontifical Secret had been applied to it.
“Even when, at the beginning of this year and after exasperating insistence on my part, we obtained through Cardinal Pietro Parolin [the Vatican Secretary of State] the removal of the Pontifical Secret, we were never able to view and know the real reasons of our expulsion,” Milone said.
In their claim, Milone and Panicco detail 22 other examples of financial malpractice, including “opaque management” of funds related the 2015 Jubilee of Mercy, misuse of funds by the then-Pontifical Council for the Family, and several incidences of malpractice in APSA.
“These investigations,” Milone explained, “had led to the identification of over €5million of funds returned or to be returned.”
Milone said that in September 2017, he first informed Cardinal Parolin of his intention to “safeguard his honor and reputation from unjust and false accusations,” but each time, despite pledges to help, no concrete assistance emerged. His legal team also wrote in December 2018 and June 2020 to Cardinal Parolin to agree to an out of court settlement, but the efforts yielded no results.
Milone also said that during the last seven years, he had written seven letters to Pope Francis “asking for an audience to illustrate my position regarding this event, but I have never received answers and I have doubts as to whether these letters ever reached him.” He also said that, through Cardinal Parolin, he had recently discovered the Pope “had put a Pontifical Secret on the story of my ‘resignation’ — so much for transparency of the current pontificate,” he said.
Milone said that following his repeated requests, Cardinal Parolin finally was able to lift the pontifical secret a few weeks ago. But, he added, the Vatican now is using its repeal to reopen penal proceedings against him, despite having withdrawn all charges against him in 2018. A preliminary hearing is due to take place on Nov. 14.
In summary, Milone principally accuses Cardinal Becciu of waging an “Eject Milone” campaign, along with the former commander of the Vatican police force, Domenico Giani.
Speaking to the Register by telephone Nov. 9, Cardinal Becciu said he had promised not to give interviews to journalists until the Sloane Street property trial has concluded, and suggested we put our questions to his lawyers.
His lawyer, Fabio Viglione, issued a statement Nov. 10 saying Milone’s statements were “completely unfounded reconstructions that will inevitably provoke immediate legal action to protect the truth and honor of the cardinal.”
Viglione said the cardinal had already explained his situation at a Vatican hearing in May this year and reiterated that he was simply following the instructions of the Pope who told Cardinal Becciu “directly” that Milone “no longer enjoyed his confidence, and therefore invited him to resign.”
Viglione recalled the cardinal’s statement of Sept. 24, 2017 in which he alleged that Milone had been detected using “illegal surveillance activity” commissioned from “an external company to monitor the private lives of members of the Holy See.”
Cardinal Becciu also absolved himself of revoking the first major external audit of the Vatican in 2016 by the accountancy firm PwC, with his lawyer saying the revocation was ordered “by the Cardinal Secretary of State, due to doubts about ‘some clauses of the contract and its manner of execution,’ as stated by the Vatican Press Office on April 26, 2016.”
Other Accusations of Wrongful Dismissal
The Milone and Panicco case is just the latest in a number of accusations against the Vatican of unlawful dismissal. One of the most well-known is that of Eugenio Hasler, a former official in the Governatorate of Vatican City State. Dismissed in 2017 for no formal reason after a decade of service, Hasler was allegedly let go because he called attention to alleged corruption of his superior.
He was summoned to the Pope’s Santa Marta residence where the Holy Father asked him several questions before dismissing him, and awarding Hasler’s superior more responsibility the following day.
Hasler told the Register Nov. 9 that since then he has not been given the opportunity to defend himself or to appeal in any way. “My letters have never been answered,” he said. “I never demanded reparations, only to know the truth.” Hasler stressed that “no charges have ever been made against me, either disciplinary or otherwise, and every legal possibility has been denied me. Every promise of help has vanished.”
Another former official, who out of fear of reprisals asked not to be named but also suffered from what he believes was unfair dismissal, told the Register that he, along many others who would be considered far more junior compared to Milone and Panicco, have suffered the same fate. He said they have chosen not to make claims not only due to their lesser rank, but also “for fear of retaliation, since they believe that currently there is neither justice nor rule of law in the Vatican but instead arbitrariness and vindictiveness.”
Asked how he hopes his own case will be resolved, Milone said he doesn’t know how it will proceed, but that he has “always had faith in the justice systems anywhere in the world where I have worked, and therefore I hope that this will happen also in the Vatican.”