Vatican City, Dec 16, 2019 / 03:40 pm (CNA).- On Oct. 1, Vatican police raided the usually quiet offices of the Vatican’s Secretariat of State. They packed up documents, computers, and files, and banned employees from entering the premises. Since then, security and financial officials have resigned their positions, the Vatican has been excised from an international intelligence organization, and the details of a series of investments involving shady figures and banks, violations of canon law, and myriad holding companies and investment funds have emerged.
Still, the Vatican’s unfolding financial scandal has not yet led to action at the Vatican. To understand why, it’s important to understand something about the scandal itself.
In fact, there are a few scandals.
The first involves the Vatican Secretariat of State’s 2015 role in the purchase of a bankrupt Italian hospital. That scandal includes Vatican funds borrowed illicitly and transferred from religious orders to holding companies, obtaining a $25 million grant under false or misleading pretenses, and a scheme to “repay” a portion of the grant by “crediting” the grantees against requests for money in the future.
The second scandal involves a London real estate development into which the Vatican’s Secretariat of State invested hundreds of millions of dollars. The affair involves borrowing money from a discredited Swiss bank, concealing loans on internal balance sheets, violating the canonical status of a London parish, and giving 60 million in management fees to a man who sold the property to the Vatican through several of his own companies.
That man, Italian Rafeal Mincione, is a long-time figure in Vatican finances. He previously had a “beneficial ownership” in a company specializing in high-risk options trading, which was sanctioned and fined by the SEC in 2015.
Other figures connected to the project have been investigated for financial corruption and money laundering, and seen their companies suspended by financial officials.
The third scandal involves a fund, Centurion Global, by which the Secretariat of State has invested tens of million of dollars into Hollywood films, energy projects, and European startups. That investment, which has lost money while its managers have recouped millions in fees, involves fund managers connected to a Swiss bank that ran afoul of regulators and was shuttered – the same bank that partially financed the London deal. The fund does its business with an unlikely pair of banks: both linked to a billion-dollar Venezuelan money laundering and bribery scandal.
As those details emerged, one U.S. Church official asked CNA, “Haven’t these guys heard of Goldman Sachs or JP Morgan? Why are they doing business with these shady characters?”
The question is a fair one. The Vatican’s financial partners are unusual choices for a sovereign state.
The scandals are serious, and the issues they raise are proven, not speculated. They represent more than a bad deal: They represent hundreds of millions in lost investments, and a story of Vatican officials willing to bend or ignore rules in financial dealings. In the aggregate, they also represent a pattern that several popes have tried to address, with little success.
Still, while causing major repercussions in the international financial security community, the scandals have not seemed to lead to any serious consequences for Vatican officials.
Investigations are underway, and Pope Francis has said the Oct. 1 raid is a sign that accountability protocols are having an effect. He’s asked for patience as that work continues. There could indeed be indictments in Vatican City courts, though they’re expected only to impact low-level Church bureaucrats.
Seasoned experts say they’re skeptical about accountability for high-ranking officials, because the scandals point to serious structural and systemic problems at the Vatican. Pope Francis, at the time of his election, recognized in the Vatican’s dicasteries a culture lacking policy compliance, mission integration, internal controls, accessible information, and external accountability.
The pope set Cardinal George Pell to the task of reforming some elements of that culture, but well before Pell returned to Australia in 2017 to face abuse charges, the cardinal’s efforts had begun to seem Sisyphean. Cabinet-level officials in the Vatican created workarounds and carve-outs to avoid Pell’s oversight, one had cancelled Pell’s planned PriceWaterhouseCoopers audit of Vatican finances, and the cardinal reportedly found papal support for his efforts to be inconsistent.
Since Pell’s departure, the financial management office he oversaw has wielded ever less influence over financial affairs, and is no longer considered likely to effectively change operational practices at the Vatican.
But to many observers, those structural and systemic problems are the scandal. Officials acting unilaterally are seemingly able to borrow and invest hundreds of millions without oversight or internal checks. Spending caps and thresholds are an ordinary part of financial control, and are even established by canon law for dioceses and religious orders, but seem to be functionally non-existent at the Vatican.
Those familiar with financial administration say that the Secretary of State arranging for a loan that runs contrary to international convention, or a second-tier official in his office establishing the mechanisms of large-scale investment and development, with no controls to subject his action to review, illustrate precisely the problem. Especially, experts say, when the Vatican’s business partners seem consistently disreputable, and themselves mired in scandal.
An American financial expert speculated to CNA that anywhere but the Vatican, “people would be in prison by now.” In the world of the Vatican, that is unlikely.
While some observers seem nonplussed by the financial scandals, characterizing coverage of them as conspiratorial and “lurid,” Pope Francis himself has emphasized their significance. Last month, the pope admitted corruption in the Vatican, called the London development issue a “scandal,” and said that officials “have done things that do not seem ‘clean.’”
The pope’s view, expressed frequently, has been that the problem of corruption, wherever it’s found, is not principally a problem of politics or economics, but of morality, and requires the will to do things differently than they’ve been done before.
The pope has also recognized what financial criminals, grifters, and regulatory agencies have already recognized: that the Vatican, absent internal controls, transparency, and accountability, and run by well-meaning figures trained in theology, not international business, is easily taken advantage of, and has, in fact, been frequently taken advantage of.
The long history of financial scandals involving the Vatican does not make for easy reading; even the Vatileaks cables, and the bond and bank scandals of the 1970 and 1980s are a sufficiently discouraging picture of the problems caused by the culture of internal fiefdoms and the lack of internal controls at the Apostolic See.
Commentators, even those without practical Vatican experience, need only review the history of recent decades to understand why Pope Francis has repeatedly called for transparency and accountability, and why there seems to be so much difficulty getting there.
The pope also seems to recognize the effect that ongoing financial scandals have on the faith of Catholics, and on the morale of those practicing Catholics already discouraged by the 2018 sexual abuse scandal.
The reformers who have tried to clean up Vatican finances have mostly resigned or been defeated. They’ve been thwarted by cultural sclerosis, but also by a cultural tolerance for financial mismanagement that enables bad decisions to become worse ones. The Church’s teaching is clear: the stewardship of ecclesiastical goods is a sacred trust; the Church’s money is not hers, but the Lord’s.
Still, the moral obligations of financial stewards seem not to deter some Vatican officials, and some, including high-level officials, have made the excuse that as long as money is serving good purposes, how it is managed hardly matters.
The pope may yet be able to accomplish some policy changes that lead to greater financial accountability. It seems unlikely that lay Catholics will effectively call the Church to account for financial mismanagement, or effectively insist on the importance of acting with integrity with God’s resources. This means that change, regrettably, is only likely to come through European banking regulators, financial crimes investigators, and lawsuits. It will be a pity if that is the only way things move forward, but it will not be a surprise.
While the recent past has been characterized as “opaque,” the Church seems unlikely to learn about transparency, until she learns the hard way.
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Pope Leo and everyone else just need to relax. It was an accident. If you doubt that, you’re an anti-Semite.
If you doubt such sarcasm is antisemitic, you’re antisemitic.
WOW, 🤯 that was blunt!!! It’s possible to love the Jews but condemn the State of Israel! And many Jews do it!
Tony W. Arn’t you open to a dissenting opinion?
Because we know that shrapnel never causes collateral damage…
I can assure you that I am not an antisemite and having a missile strike a Catholic church full of innocent people is not acceptable. What kind of people have we become when we can shrug off this type of collateral damage as “an accident.”
Shrapnel does not a missile make.
How many churches were damaged by the allies during WW2? War is heck.
So Netanyahu called Pope Leo, eh?
Would it be too much trouble to let us know what Netanyahu said to him?
Yes, bineyman, it’s reported that a call was made but then tells us nothing of substance. A waste of precious ink.
I wonder why Leo XIV doesn’t ask Netanyahu to send his foreign minister to Castelgondolfo for a meeting with the leader of Hamas to end the ighting? Leo should invite the leader of Hamas.
“Fragments of a projectile”? Looks like a direct hit. The Church is completely destroyed. Well they’ve been itching to get rid of it since the war started. Never mind, There’s probably somebody sheltering there who might say something rude about Tel Aviv in the future. Prevention is better than cure, eh? Come to think of it, there’s probably people in Tierra del Fuego or Timbuctu who might also say rude things. Perhaps they need a few bombs too. Words are so hard to bear. Oh dear.
Yes, it was a direct hit from an explosive (i.e. shrapnel-filled) tank shell.
Israel is employing its usual diabolical sophistry (“the unaimed shrapnel did it!”) to excuse itself.
Diabolical?
If the problem that developed in Nigeria is because of a direct deliberate withholding of intelligence by Israelis, noticing it as it becomes apparent would not be from “hating Israel” or from being a “hate Israel firster”. If the US also has been withholding it doesn’t mean reacting against that is being hateful of the US.
I am skeptical of Israel’s explanation of the attack being an “accident”. They gave the same excuse, when they deliberately and intentionally attacked the USS Liberty and killed our sailors.
Why does the American media give so little coverage to these all
too frequent “mistakes” by the Israeli military forces”?
The Judophobia is strong in this comment section.
Pius XII did say we were all spiritual Semites, but he rejected Zionism, and Tel Aviv’s jurisdiction over Jerusalem, which remain the Church’s positions to this day. The Church began diplomatic relations with Tel Aviv a few decades ago (as did the Palestinians), but only as recognition of a political situation on the ground, not as a Jewish state per se. Catholics (unlike certain evangelical groups) ought to keep to the Church’s official, constant position on this issue; it’s based on faith, not politics. The Church has supported a two state solution (outside Jerusalem) ever since it became an option. The continuation of the war in Gaza for years after Gaza’s foray outside itself was defeated, has only one purpose – to make a two state solution impossible. But a just war does not entitle even an aggrieved party to annihilate another nation by ethnic cleansing.
But the main question the Christian West should be asking is: what about our sacred places? What about the Christians in Palestine? That should be the focus of our tears and anger.
I do not particularly care to embrace the political positions of any pontiff, as they are far outside the realm of his infallibility and are frequently outside the realm of good sense.
(Incidentally, you are thinking of Pius XI, not XII, as the pontiff of “spiritually we are all Semites”.)
In a word, “the Church’s” (really “the Vatican’s”) position on Zionism and the two-state solution and jurisdiction over Jerusalem is not authoritative for Catholics and enjoys all the sense of the Vatican’s position on the United Nations. A two-state solution was feasible eighty years ago and was rejected by the Arabs. The idea that it will work now is pure geopolitical folly. Israel has a better historical claim to Judea and Samaria than it does to the Mediterranean coast, and any Palestinian state would unquestionably be either a state sponsor of terror or ineffective in stopping it.
You parrot the common blood libel of “ethnic cleansing” (and it is blood libel), blissfully ignorant of the requirements of urban warfare and apparently of the large Arab Israeli population.
The war in Gaza is to destroy one of the most notorious terror organizations in the world. It is every bit as jest as the Allied crusade against Nazism or Japanese militarism.
It is furthermore fallacious to claim that the war in Gaza has or will make a two-state solution impossible. Hamas made it impossible by showing what a Palestinian state would do.
Thank you Spiritual Semite for stating the facts of the matter with brevity and clarity. Hamas, by their shocking actions over many years now have clearly demonstrated with hideous clarity that the ‘2 state solution’ is an absolute impossibility. A lot of contributors to this thread need to ask themselves why it is that to this day no Arab state has taken in a single refugee from Gaza.
Good post, Mr. Cervantes, an excellent summary.
There is no ethnic cleansing taking place, and it’s inappropriate to make that false accusation. The Palestinians have consistently rejected a two state solution, so their situation is largely their own doing.
It almost never fails.
Let’s not call it a phobia, but what it is: hatred.
It’s a disorder I believe. Scapegoats provide a rationalization for our failures. It’s easier to blame others for life’s disappointments and our own weaknesses.
I had a family member who ended up like that. Everything wrong with the world became the fault of Jews and immigrants. It’s sad.
I really hope the pope will also urge the release of Israeli civilian hostages.
I stand corrected. Saying a two-state solution is impossible because of the regime in the smaller part of Palestine, Gaza, is Luke saying that a German star was forever impossible because of the Nazi regime. Hamas was defeated is conventional warfare a few weeks into the conflict. That it is still able to conduct guerilla warfare is no teaspn the ethnically cleanse Gaza. If you affirm this, then you affirm that the English would have been right to ethnically cleanse the Irish, who continued for many generations to conduct rather deadly guerilla campaigns against the occupation and its local allies. These campaigns repeatedly killed far more than the 400 civilians and 300 soldiers Hamas did three years ago, and which you seem to consider a kind of Year Zero.
The Catholic Church’s position on Zionism and Zionism’s jurisdiction over Jerusalem isn’t politics, as you claim. Catholicism can’t identify the OT people with a Mitteleuropan political movement based on secular nationalism. Nor would it identify the OT state with contemporary Orthodox Judaism. The only claim Tel Aviv can have is its might is right notion, which the Vatican accommodates with its support for a two-state solution. This solution is politics, yes, and leaves untouched the Church’s position on Zionism and jurisdiction over Jerusalem.
Your second paragraph is risible bunk. The Church has no authority whatever to declaim on a geopolitical solution to the Zionist question. If anything, she can only affirm the special relationship of the Jewish nation to its land.
Your first paragraph repeats again the malicious lie that Israel is interested in “ethnically cleansing” Gaza, then compounds this with the military nonsense that counterinsurgency must under my view necessitate or justify such “cleansing.” This is preposterous. Military operations can and do, however, often necessitate urban warfare to uproot an entrenched enemy. You ought to familiarize yourself with military history.
“Catholicism can’t identify the OT people with a Mitteleuropan political movement based on secular nationalism. Nor would it identify the OT state with contemporary Orthodox Judaism. ”
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I don’t think Israelis are over-concerned about what some Catholics may believe about this. Attempting to assimilate & placate the prevailing class is what doomed many German Jews. It was a fool’s errand. Jews have always been the perfect scapegoat & Israel has been the only place they can feel relatively safe. Even there they still have to watch their backs.
The discussion with the other writer only concerned Catholic views on the issue. We are allowed to have views and discuss them? Thanks there.
The Vatican is a sovereign state which recognise other states if it chooses.The Church can and must try to intervene in secular affairs when higher principles are seriously violated by civil societies. It always has.
Netanyahoo’s Deight at Trump’s proposal to deport Gaza’s population only confirmed what his policies on the ground are doing. Do you agree that the removal of Gaza’s population to other countries would be immoral?
I can’t tell who your question is addressed to Mr Cervantes, but I personally believe Gaza should be completely evacuated. It’s unsafe for human habitation. To keep civilians there in harm’s way is immoral. But every civilian death scores Hamas propaganda points so they have no incentive to encourage the people to leave.
It’s unlikely any people would consent to being ethnically cleansed. The bravery of the Palestinians is incredible.
Jews have survived a very long history of attempts to exterminate and “ethnically cleanse ” them. They’ve know the reality of those words. Not the political invention.
Gaza needs to be evacuated ASAP and the hostages released. But Hamas has no incentive to do that because their sources of revenue would dry up.
The incredibly brave Palestinians of Gaza don’t need to be ethnically cleansed.
To call the Palestinians “brave” is, in the main, a despicable misuse of the word. The true bravery lies with the Israeli people and their righteous war.
The voluntary emigration of Palestinians from Gaza is certainly not immoral and would be excellent politics.
If you seriously believe their exit would be voluntary, there’s little point discussing the issue. But do you believe the removal of Gaza’s population to other countries would be moral? Last chance to give a straight answer.