What Has Stalled Progress in Uprooting the Vatican’s Financial Corruption?

A range of sources agree that profound change is required to correct the flawed underlying mentality that continues to give rise to problems, and has allowed senior officials to escape taking responsibility.

Police patrol St. Peter's Square and the Vatican on March 25.
Police patrol St. Peter's Square and the Vatican on March 25. (photo: Register file photo/Edward Pentin)

VATICAN CITY — Cardinal George Pell, the former prefect of the Vatican’s Secretariat for the Economy which Pope Francis created six years ago to monitor and reform Vatican finances, delivered a pointed message on June 30 about the threat that financial corruption poses to the Church’s mission.

“Undoubtedly, money is one of God’s gifts, it is also a source of temptation,” Pell said in a video message delivered June 30 to the Global Institute of Church Management at the Pontifical University of the Holy Cross in Rome. “To say that the Church is not a business provides no justification for us to be inefficient much less for us to be corrupt.”

He recalled being surprised to learn that St. Teresa of Calcutta had said “for the clergy there are two great challenges: one touches on sexuality and another touched on money. And she thought that the danger from money was greater and stronger than that from errant sexuality.”

Cardinal Pell’s remarks were conspicuously well-timed, coming in the wake of the arrest last month of Italian financier Gianluigi Torzi on charges of “extortion, embezzlement, aggravated fraud and money laundering,” relating to a London property deal carried out by Vatican Secretariat of State officials that went sour.

The continuing controversy over the flawed transaction has focused attention on Vatican management practices that have allowed senior officials to duck their own responsibility and act with impunity, fostering both corruption and poor morale among some Vatican officials, according to a range of sources who spoke with the Register.

The cardinal’s video message also came just one day after companies owned by Italian businessman Raffaele Mincione, who was also connected with the London investment, filed lawsuits against the Secretariat of State and the holding company that owns the property.

The Vatican apprehended Torzi on June 5 and then granted him bail ten days later. Senior Vatican officials, meanwhile, claimed to have no knowledge of Torzi’s alleged crimes or preferred not to comment.

A two-year investigative report by the Financial Times, however, found evidence that the deal was “signed off by some of the most senior officials in the Catholic Church.” 

The documented evidence, the article added, “cast doubt on the Vatican’s official narrative” that the speculative London property deal that has burdened the Vatican with enormous financial losses “was the work of Torzi and a handful of junior administrators who have been suspended during the investigation.”

A former Vatican official told the Register it was “inconceivable” that senior curial officials knew nothing about the deal. “How does one single layman force the most powerful dicastery in the Roman Curia to do something like that?” the ex-official asked.


Eugenio Hasler’s Case 

Indeed, all the sources the Register contacted concurred that senior officials who issue instructions make the rules, which often makes them “untouchable.”  

One prominent example is the case of Eugenio Hasler, a former lay official who worked at the highest levels of the Governorate of Vatican City State, the Vatican’s principal administrative office. By all accounts a hard-working and morally upright employee, Hasler was dismissed by the Vatican in 2017 after more than a decade of service for no formal reason, and no administrative procedure was opened against him.

“He was a very good civil servant, someone who put a professional bet entirely on the system,” a former Vatican official told the Register. “It’s terrible what they did to him, a monstrous injustice.”

The son of a major in the Swiss Guard, Hasler broke his silence in April, writing on his Facebook page that he was the victim of letters written against him containing “absolutely untrue things.” In June 23 comments to the Register, he said it was “impossible” to compress his complex story into a few lines, but he recounted being summoned to speak with Pope Francis in Santa Marta. Afterwards he “never received formal accusations.”

“There was no possibility of defense, the investigations were also carried out in Italy without any formal authorization,” he explained. “I don’t have a letter of dismissal in my hand. I was basically thrown out from one day to the next on the basis of anonymous letters and accusations that I can fully deny (and which I did by writing to the Pope a few days after meeting him). I have never received a reply or a chance to defend myself.”

Former Vatican official Vik van Brantegem, who edits the website Korazym.org, has drawn attention to Hasler’s story, as has the Vaticanist Marco Tosatti.

Hasler’s position in the Governorate was highly significant “because the Vatican obtains all of its income for its operating budget from the Governorate’s operation of the Vatican Museums, the Vatican City’s ‘Annona’ supermarket, and sales at the Vatican Post Office,” noted Tosatti, who described the dismissal as  “another case of an honest, professionally prepared layman, generous in his service, thrown out because his work bothered some — or more — obscure and not very admissible interest of some prelate.”

According to Tosatti, the individual whose ambitions were responsible for Hasler’s dismissal was Msgr. Paolo Nicolini, a senior Governorate official “who controlled all of the administration of the Vatican Museums (the strongest source of income).”

Archbishop Carlo Viganò, who as the general secretary of the Governorate was Hasler’s superior around the year 2010, described him to the Register as “very honest” and the “only official able to confront” Msgr. Nicolini.


Similar Incidents

Other similar but high-profile cases of dismissal without reason or due process, and where the individual also received no compensation, include Ettore Gotti Tedeschi, the former president of the Vatican Bank under Benedict XVI, suddenly dismissed in 2012 as he was trying to increase transparency by implementing new anti-money laundering rules.

Despite Rome judges acquitting Gotti Tedeschi in 2015 of money laundering allegations and ruling that he was serving the good of the Church, the Italian financier said the Church remained “indifferent” to his situation. 

A more recent case is that of the Vatican’s first auditor general Libero Milone, who in 2017 said he was framed, unlawfully dismissed, and then had charges dropped against him a year later by the Vatican. Milone, who believes he was forced out because he was venturing into areas of corruption, remains without work despite an illustrious and unblemished career as an auditor and management consultant.

And most recently among a long list of similar cases was the firing in April of five officials connected with the dubious London property deal without waiting for the conclusion of their trials.    

The Register asked the Holy See Press Office if any of these former officials had received compensation or any form of restitution following their dismissals, but did not receive a reply prior to publication of this article.

The Register also asked the Vatican Secretary of State, Cardinal Pietro Parolin, for his views on criticisms of management and financial practices in the Vatican, and whether he was in favor of establishing some kind of independent personnel directorate to help protect employees’ rights, but he said he did not wish to answer.


What Is Needed?

The creation of such a personnel directorate — a mainstay of most corporations but absent in the Vatican — is often a solution proposed by officials and ex-officials to defend their rights as employees.

In March, the Vatican announced it had created a personnel office, only for the news to be retracted three days later, perhaps pointing to how disruptive and contentious such a department would be to longstanding management practices.

But even if such an office were put in place, not everyone is convinced it would help remove or minimize financial corruption.

“The Curia doesn’t need an adversarial employment tribunal to solve things,” said Matthew O’Brien, a Philadelphia-based Catholic analyst who advocates for financial reform in the Church. “Financial reform is not complicated.”

What is needed, O’Brien believes, is a full independent audit by the Vatican’s auditor general (a post that has been filled only temporarily since Milone’s ouster in 2017), and the “internationalization of curial staff” in the Vatican’s financial departments most susceptible to malpractice, “drawn from faithful, experienced, accomplished lay professionals.” 

Another possible reform is to remove money-managing from clergy who often have little idea of finance. “Financial management is one area where the involvement of expert, experienced, and independent laymen should be central to the Church’s practice,” O’Brien said, adding that while it is correct the Church is not a business, that argument should not be used to “rationalize an insular clericalist culture that operates without accountability, transparency, or competence.”

Pope Francis recently implemented a reform of one area of concern: how external contracts are awarded. The papal decree, issued June 1, aims to increase “transparency, control and competition” and centralize the contracting process as well as instituting rules to prevent nepotism.

Following the decree, on June 30 the Pope sought to clean up the Fabric of St. Peter, an office responsible for the conservation and maintenance of St. Peter’s basilica.

The June 1 motu proprio, widely welcomed as signaling an end to a key area of corrupt practices that were also central to the Vatileaks scandal, could mark a turning point, according to some observers, but critics say the rules could still be flouted and what is really needed is a change in personnel. They also point out that the new document only applies to the area of finance, and not management practices in general.


Character, Candor and Transparency

Papal biographer George Weigel told the Register that patronage cultures, including clerical patronage cultures such as the one that exists within the Curia, “too often lead to financial and other forms of corruption.” The key to any reform, he said, is not structural change even though that can “build some protections against corruption,” but rather “the character of the people chosen for positions in the Roman Curia.”

Weigel believes “no one should have anything to do with Holy See finance who has not previously demonstrated both capability and probity in dealing with money.”

Russell Shaw, a former spokesman for the U.S. bishops’ conference, said that those responsible for Vatican finances “have to understand that their first responsibility is to God” and “their second responsibility is to the Church — the people of God.” That second responsibility, he said, “absolutely requires candor and transparency on their part.”

“Like many people, I find it deeply disappointing that after promise upon promise of reform in this matter of Vatican finances, we have incident after incident suggesting that something is seriously, fundamentally wrong,” said Shaw. “I fully agree that more institutional reforms are needed. But more than that, I believe, what is most needed is a deep-rooted change of attitude — a conversion, if you will.”  

Shaw predicted that, without the transparency that derives from such conversion of attitudes, “the scandals will continue, even with the best of institutional safeguards in place.”

Edward Pentin is the Register’s Rome correspondent.

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