Vatican City, Oct 24, 2019 / 04:00 am (CNA).- The head of the Vatican’s central bank appeared to admit this week to a transaction that could be a violation of European regulatory commitments, namely a loan of 50 million euros to finance the purchase of a struggling Italian hospital.
Sources say a controversial grant from the U.S.-based Papal Foundation was requested in order to balance the central bank’s books after the hospital was unable to repay the money.
In a statement Tuesday, Bishop Nunzio Galantino, head of the Administration of the Patrimony of the Apostolic See (APSA), acknowledged that the Vatican’s central bank loaned 50 million euros to finance the purchase of the Italian hospital, the Istituto Dermopatico dell’Immacolata (IDI), even though APSA is prohibited from making loans that finance commercial transactions, by policies put in place to exempt it from external oversight.
The loan was made in 2015 to the non-profit Fondazione Luigi Maria Monti, a partnership between the Vatican Secretariat of State and the Congregation of the Sons of the Immaculate Conception, the hospital’s previous owners, under whose management the hospital was driven to bankruptcy following a series of embezzlement scandals that led to multiple prosecutions and debts of more than 800 million euros.
The hospital was purchased by the foundation while it was in state-administered insolvency. When it became clear that the APSA loan could not be repaid by hospital income, Vatican efforts were made to secure a $25 million grant from the U.S.-based Papal Foundation to the IDI, which would be used to cover the hospital’s debt to APSA.
Although the grant was requested to ease a short-term cash shortage at the hospital, multiple sources in Rome and the United States told CNA that the money was actually intended to help replace the funds loaned to finance the acquisition, removing the loan from the APSA balance sheet and avoiding more attention on the deal.
Lay members of the Papal Foundation had reportedly raised issues with the conferral of the grant, largely because details about the use and final destination of the funds were scant. Approval of the grant was ultimately pushed through the foundation’s board, over the objections of lay members, but dispersal of the funds was slowgoing as conflict enveloped the foundation’s board.
In April, a spokesman for the Papal Foundation told First Things magazine that “As The Papal Foundation Board responded to the grant request, a variety of interpretations of the true financial condition of the IDI and its sponsoring entities were presented.”
“Among the elements of the discussion was the still unclear relationship of the religious congregation that originally sponsored IDI, the recently formed Fondazione Luigi Maria Monti, that was now considered responsible for what have been the properties of the religious congregation, and the IDI itself. Sorting out who was responsible for what part if any of the bankruptcy assessment was also a part of the Papal Foundation’s discussion. All of this discussion was made more difficult by conflicting interpretations.”
“At the December 2017 Board meeting, Cardinal [Donald] Wuerl presented the information made available to the public and that provided by the Holy See. Other interpretations were also offered. The Board voted to make the requested grant,” the spokesman said.
When the grant money stalled, APSA was forced to write off 30 million of the 50 million euro loan, wiping out APSA’s profits for the 2018 financial year.
Galantino was compelled to acknowledge the loan and the write-off following the Oct. 21 publication of a book that alleged that the Vatican was nearly insolvent.
The book, “Universal Judgment,” published by Italian journalist Gianluigi Nuzzi, claims to be based on more than 3,000 pages of leaked Vatican documents. It alleged that in 2018 APSA had failed to make a profit from the Holy See’s property and investment portfolio for the first time in its history.
Galantino, who has been president of APSA since June 2018, said the book did not reflect the real situation.
“In fact,” he said, “the ordinary management of the APSA in 2018 closed with a profit of over 22 million euros.”
He attributed reported losses on “an extraordinary intervention aimed at saving the operation of a Catholic hospital and the jobs of its employees,” in an apparent reference to the IDI loan and purchase.
While Galantino defended the project as an effort to preserve the hospital and save jobs, APSA’s involvement to underwrite a commercial acquisition appears to violate a 2012 commitment to stop acting as a private or commercial financial institution.
That commitment was the result of an on-site inspection by Moneyval, the Council of Europe’s Committee for combating money laundering and terrorist financing.
After the inspection, APSA agreed to stop providing services to individuals or taking part in commercial transactions, with these functions being transferred to the Institute for Religious Works (IOR), often referred to as the Vatican Bank, which maintains accounts for Vatican employees, individuals and religious groups. APSA was to be limited to administering the sovereign assets of the Holy See, meeting payroll and operational costs, and functioning as the national reserve bank of the Vatican.
In exchange for agreeing to step back from commercial activity, APSA was exempted from annual inspections by the Vatican’s Financial Intelligence Authority (AIF), whose efforts are assessed by Moneyval.
Following the changes to APSA’s remit, only the IOR, and not APSA, has been listed as a financial institution under the oversight of the Vatican’s Financial Intelligence Authority (AIF), whose efforts are assessed by Moneyval.
In 2014, Pope Francis issued new norms, transferring oversight and control of APSA’s remaining investment functions to the Prefecture for the Economy, then headed by Cardinal George Pell.
The AIF’s 2015 annual report concluded that since it is no longer an “entity that carries out financial activities on a professional basis,” “APSA stopped being a part of AIF’s jurisdiction at the end of 2015” – but in the same year APSA made the loan to purchase the IDI out of insolvency.
The 2015 AIF report which exempted APSA from further scrutiny said that “If APSA were to carry out financial activities on a professional basis, it would fall again under the jurisdiction of AIF which… must publish and update the list of subjects who must comply with the requirements set forth in [relevant law].”
The acknowledgement by Galantino that APSA was in 2015 engaged in prohibited lending activity casts doubt over reported progress in combating financial corruption in the Vatican, and suggests that it has been operating out of sight of Vatican and European financial watchdogs.
In 2016, Pope Francis partially reversed some of the 2014 reforms, returning control of its investment activity to APSA from the Prefecture for the Economy.
In his book released Monday, Nuzzi also claimed that, despite the 2012 commitment to Moneyval, APSA still has private numbered accounts for individuals on deposit. Such accounts at APSA have been linked to previous money laundering accusations and scandals in the Vatican, and their elimination was crucial to its exemption from AIF oversight.
Galantino denied these claims, saying that no funds were held, managed or invested for anyone or any body except Vatican departments and the Vatican City State.
“APSA has no secret or encrypted accounts” Galantino insisted on Tuesday, “anyone is welcome to prove the contrary.”
Definitive proof is unlikely to emerge, barring a decision by the AIF to reapply Moneyval’s anti-money laundering regulations and inspections to APSA – something which is itself highly unlikely in the current climate.
Three weeks ago, Tomasso Di Ruzza, head of the AIF, was himself suspended following raids carried out by Vatican police. On Oct. 23, the AIF issued a statement announcing his return to duty and insisting that an internal investigation had been conducted following the raid and that no wrongdoing had been discovered.
“Neither the Director nor any other employee of AIF improperly exercised his authority or engaged in any other wrongdoing,” the statement said.
“Accordingly, the Board of Directors reaffirms its full faith and trust in the professional competence and honorability of its Director and, moreover, commends him for the institutional work carried out in the handling of this particular case.”
The statement concluded by saying the AIF hoped any “potential misapprehensions” to the contrary would “soon be clarified.”
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With respect to migrants, given that the majority are Muslim, why don’t they go to those countries where their faith members live in great wealth : Saudi Arabia, UAE?
I assume this is a rhetorical question?
They don’t go because their Muslim “faith members” don’t want them and because Saudi Arabia and UAE are sand kingdoms run by psychopathic thugs.
Impressionistic wisdom of the moment, regardless if it contradicts what he said last week or yesterday or one hour ago. Never any coherent thought or understanding of anything about civilizational and economic interdependence or how improved efficiencies are dependent on economic productivity and independence from central planning. The only thing he needs to care about, his narcissism will not allow him to care about, a morally guided soul that only the Catholic truth he ridicules can provide.
But never a mention of Humanae Vitae.
Then maybe Pope Francis shouldn’t make off the cuff comments about how we’re not meant to breed like rabbits. What’s next? Pope Francis expresses concern for priestly vocations among the young? This guy went from the Vicar of Christ to quasi leader of an NGO to the head of the the mean girls cliche in high school after his treatment of Bishops Strickland and Burke. How much longer will God chastise us for Benedict’s weakness?
As much of the industrialized world is at zero population growth. Not good. I’ve got my video games and a couple pets good enough?
Elon Musk recently was analyzed on this site; I believe he recently said to the effect that the USA will end up being a nation of old folks in diapers
Perhaps refraining from giving the Eucharist to abortion-promoting world leaders would go a long way toward giving us some confidence in his statement about concern for the lack of population growth.
First of all, it is absolutely nobody’s place to make demands of how unrelated people spend their time and money. If they don’t want to have children that is THEIR business. Not YOURS.
Don’t people have free will? I find it entirely despicable when other people think it is their place to start making demands of couples in the realm of marriage and children. You are concerned about the falling birthrate? Fine. YOU have children if that’s what you want to do.You don’t get to make demands on how other people live. You don’t get to spend the money that other people work for. And you definitely have no right to lay claim to any of their time.
Maybe all of the busybodies who spend all of their time disparaging young people for the same old tropes of owning pets and playing video games needto get a real hobby and stop trying to subject innocent people to their very evil and disturbing control issues.
Says the embittered poster who is telling everyone what to think 🤔. A little self-awareness goes a long way.
OK, I get the sarcasm! You are being satirical? Right? Unless you are one of the “new Catholics” who never had a shred of exposure to actual Catholicism, so bankrupt in thought, that there is not even a capacity for sufficient imagination to conceive of a social ethos and all the factors that affect a social ethos, which would include, obviously, the effects of personal commitments of living a self-sacrificing life of virtue, as Our Lord asks of us.
This, obviously, would not involve a life committed to such things like an adolescent misinterpretation of freedom as personal willfulness rather than the opportunity to do what is right.
The government tells us more and more what to spend our money on.
Who will support older folks?
My comments are actually mostly facts and not judgment one way or another.
Who are you to say whether or not you procreate? Don’t you want human life to continue after you’re gone?
First of all, it is absolutely nobody’s place to make demands of how unrelated people spend their time and money. If they don’t want to have children that is THEIR business. Not YOURS.
Don’t people have free will? I find it entirely despicable when other people think it is their place to start making demands of couples in the realm of marriage and children. You are concerned about the falling birthrate? Fine. YOU have children if that’s what you want to do.You don’t get to make demands on how other people live. You don’t get to spend the money that other people work for. And you definitely have no right to lay claim to any of their time.
Maybe all of the busybodies who spend all of their time disparaging young people for the same old tropes of owning pets and playing video games need to get a real job and stop trying to subject innocent people to their very evil and disturbing control issues.
As usual pope Francis is not a leader on this issue but an observer only.
It sounds like this Pope wants to have his cake and eat it too. He thrashes the US for attempting to stem the flow of migrants ( who commit crime and bring in drugs. The jury is still out on terrorism but label it probable). Italy is now full of Muslims who are changing the culture and other things in a way Italians dont like. Possibly there are changes to the degree that young Italians dont see a future with children there?? Its probably why Italian young people do not want babies. I dont think it will prevent Francis from adovcating for open borders.
Italy is a beautiful country blessed with industrious people, awesome architecture, marvelous singers, high culinary culture renowned for delicious pizzas, and pastas. May Italy, the land and her people, be blessed.