Pope Francis can clean up the Vatican financial mess wielding his authority, firing uncooperative employees, ensuring an unlimited budget for outside auditors and giving officials the freedom to speak openly to the press, leading Church observer Thomas J. Reese SJ has said.
Driving the news
The Vatican financial system has been in total disarray since Monday, when Swiss lawyer and former head Liechtenstein’s financial intelligence unit, René Brülhart, left his post as president of the Vatican financial crimes watchdog, the Financial Information Authority (AIF).
A Vatican statement said Brülhart was leaving at the end of a fixed term in office, but Brülhart himself told Reuters that he had resigned.
Brülhart’s resignation was followed late Monday by the departure of AIF board member Marc Odendall, a Swiss-German retired banker and philanthropist.
Odendall told the AP he was leaving the AIF in protest at Brülhart’s removal.
But Odendall also said another reason behind his resignation was the farce of the Vatican raids last October 1 on the AIF and the Secretariat of State, which he said had been “completely managed by the Holy Father from A to Z”.
The raids saw Vatican police seize confidential documents, computers and mobile phones from the AIF in connection, allegedly, with a suspicious Secretariat of State property deal in London.
The raids were also followed in short order by explosive claims from a journalist that the Vatican was near defaulting on its debts, and by the admission of a senior Vatican official that his department, the Administration of the Patrimony of the Apostolic See (APSA), had written off 30 million euros of a 50 million euro loan extended to a failing Vatican hospital in 2014 but which caused the APSA in 2018 to fail to register a profit for the first time in its history.
But the October 1 Vatican sweep raised alarms in the Egmont Group, a network of financial information agencies in over 160 countries whose members are required to keep the intelligence they receive strictly confidential.
On Tuesday, the Egmont Group suspended the Vatican’s access to its web system over the police breach, thus denying the Holy See access to its information on money laundering, terrorism financing, tax fraud and other financial crimes around the world.
“We cannot access information and we cannot share information”, Odendall said after the Vatican’s suspension.
“There is no point in staying on the board of an empty shell”.
To fully under Brülhart and Odendall’s departures, it helps to go back to what prompted the Vatican October 1 raids.
In 2012, the Secretariat of State sank 150 million euros into the purchase of a portion of a luxury apartment building in Chelsea using a network of off-shore funds.
The mortgage on the property turned out to be excessive and the asset declined in value due to Brexit fears, all while middlemen pockets millions on the deal.
In 2018 the Secretariat of State sought a loan of another 150 million euros to buy the Chelsea building outright.
It turned for that loan to the Institute for Religious Works, or IOR – known as the ‘Vatican bank’ – which in turn regarded the Secretariat of State deal as suspicious and raised the alarm with the Vatican prosecutor’s office.
But it seems no coincidence that the raids on the AIF organised by the IOR and the Vatican prosecutor came at the same time the AIF was investigating the bank and criticising the prosecutor for not following through with sufficient zeal on the prosecution of Vatican financial crimes.
The coincidence has led observers to conclude there is a “turf war” in the Vatican between the AIF and Secretariat of State, on the one side, and the IOR, on the other, over the IOR’s dwindling coffers and the Secretariat of State’s sizeable assets, which are kept off the Vatican’s balance sheets.
Brülhart and Odendall – who have actually done much to bring Vatican finances in line with international standards – are the latest victims in a war which threatens Pope Francis’ much-touted commitment to Vatican financial transparency.
The opponents of the Pope’s financial reforms, in other words, appear to have the upper hand at the moment, after the two AIF directors’ resignations.
But what can the Pope do to stop the rot?
The Vatican confirmed Monday after Brülhart’s resignation that Francis has already appointed “a figure of high professional profile and accredited competence at international level” as the new president of the AIF.
That person will begin working after the Pope returns from Thailand and Japan, on November 26, in order to “ensure the continuity of the AIF’s institutional action at this time of particular commitments at internal and international levels”.
But apart from in that new AIF president, the Pope’s other great hope is the new President of the Vatican Secretariat for the Economy he named last week, Spanish Jesuit Juan Antonio Guerrero.
Guerrero will have authority over the financial activities of the Roman Curia and the Vatican City State administration, and has already expressed his desire to “contribute to the economic transparency of the Holy See”.
Why it matters
But what does Guerrero need to actually succeed in his new post?
Jesuit Reese, a former editor-in-chief of the respected Jesuit journal America and now senior analyst at Religion News Service, laid out four things Guerrero needs but which “the pope will probably not give him”:
“First, absolute authority to set financial policy and enforce it everywhere in the Vatican. What is the point in having a monarchy if you can’t boss people around? Papal backing of his authority is especially important because, at the request of the Jesuits, he will remain a priest and not become a bishop and cardinal like his predecessor Cardinal Pell.
“Second, he needs the authority to fire anyone who does not cooperate with the financial cleanup. The Vatican, like any bureaucracy, is good at undermining reforms by ignoring instructions. A few firings would send the signal that cooperation is mandatory.
“But this pope is reluctant to fire anyone, even those who work against his agenda. In addition, Italian labor law, which the Vatican tends to follow, makes it very difficult to fire anyone.
“Third, Guerrero will need an unlimited budget to hire auditors, accountants and consultants. Cleaning up the Vatican bank cost millions; cleaning up the rest of the Vatican will cost even more. But Francis is a penny pincher and hates spending money.
“Fourth, Guerrero must have the authority to speak honestly to the press, even if that means identifying people in the Vatican who are not cooperating or have been involved in corruption. Transparency is essential to restoring trust”.
But is it really so certain that the Pope won’t give his new Prefect this authority to set policy and to fire people, and this unlimited budget and total trust to talk to the press?
The situation is desperate: the Vatican is losing financial authority by the minute, and could end up a pariah in the eyes of international financial institutions.
Let’s hope these two simple Jesuits – Francis and Guerrero – are the unlikely heroes to bring Vatican finances back on track.
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