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Professor, real estate insider take down conservative Catholic “Dan Brown” reporting on Vatican financial “scandals”

A politics professor and a real estate industry insider have taken down the conservative Catholic “Dan Brown” reporting on recent Vatican financial “scandals”.

Driving the news

In an incisive piece in the University of Notre Dame’s Church Life Journal, Gladden Pappin, a University of Dallas assistant professor of politics, and ‘Edoardo Bueri’ (a pseudonym), a real estate investor familiar with the British property market, took aim at the “misperception” behind recent coverage of alleged Holy See corruption.

That “misperception” has blinded stories from, among other outlets, the conservative anti-Pope Francis EWTN-backed Catholic News Agency (CNA), which has been accused of ‘fake news’ reporting even by Vatican cardinal Angelo Becciu.

The big picture

Pappin and Bueri demolished CNA’s interpretation, in particular, of the Vatican Secretary of State’s acquisition of a property in the luxury London suburb of Chelsea.

“Taking this information at face value, it looks like certain officials of the Holy See bet on the London property market and got stuck with a lemon”, Pappin and Bueri admitted.

But the professor and the expert investor recalled that both in 2012 – when Italian financier Raffaele Mincione first approached Secretary of State officials about the London deal – and in 2014 – when the Secretary of State invested in the Chelsea building – “the London property market was roaring ahead, and most people were not expecting Brexit”.

“Any number of investors lined up to get a place on the merry-go-round, and any number of dealmakers stepped in to accommodate them”, Pappin and Bueri said, affirming that the Secretary of State deal could well have been seen at the time as business as usual.

Go deeper

“It certainly looks like the Holy See got the short end of the stick in the Sloane Square deal. But one can hardly call this a scandal”, Pappin and Bueri said.

A true scandal, the two authors hypothesised, would have been if a Vatican official had not done due diligence in the deal or had been bribed: both scenarios of which there has been no suggestion in the press.

The London Secretary of State deal was “made in full transparency with the investor and its advisers”, Mincione fund WRM told the Financial Times, which broke the story in October.

That WRM assertion led Pappin and Bueri to suggest that the whole Vatican-Chelsea affair “is at worst a case of mismanagement and likely a nonstory”, meriting perhaps only increased vigilance on the part of the Vatican and the reprimanding of employees found to have been negligent.

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“Beyond this, however, it is difficult to see why the story merits long-form articles in the Financial Times, still less lurid, suggestive pieces from Catholic news sources”, Pappin and Bueri argued.

“Perhaps further attention would be warranted if the media uncovered actual corruption, but until then the attention paid amounts to little more than leering”, the two experts said.

Why it matters

That the journalistic “leering” – Catholic or otherwise – is unwarranted is proven by the Vatican response so far to the suspicions over the Chelsea deal.

Vatican Secretary of State Cardinal Pietro Parolin admitted that the London property buy “was rather opaque and now we are trying to clear it up”. 

As the Pope recalled in a November 26 press conference returning to Rome from Japan, too, five Holy See employees have been suspended in the course of the Vatican police investigation of the Chelsea deal, including a director of the Vatican watchdog Financial Information Authority (AIF).

The investigation is proceeding apace, the Pope said, and depositions are soon to be taken of the five suspended Vatican workers.

“The Vatican administration now has the resources to shed light on the bad things that happen internally, like in this case”, Francis insisted, also adding: “[ …]it is not good for these things to be happening inside the Vatican. But they are being resolved by internal mechanisms that Pope Benedict XVI introduced, and that are beginning to work. I thank God for this”.

The Pope also said in that in-flight press conference that “‘putting money in a drawer’ is bad administration. What we need is good administration, good investments”.

“And yes, you can purchase a property, rent it out and then sell it, but always safely, taking all the necessary measures for the good of the people and of Peter’s Pence [donations said to have funded the London property purchase”, Francis explained.

Despite new controversies over Vatican investments in everything from “lifestyle products” to Elton John and Men in Black movies, Vatican cardinal Peter Turkson affirmed in late October that the Holy See is presently working on a guide to unify and clean up its investments to bring them up to better ethical standards.

The point, for Pappin and Bueri, is that “were [the Vatican Chelsea building purchase] the investment of an ordinary sovereign wealth fund, few people would have any reason to bat an eye”.

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“But since the investment is the Holy See’s, commentators instinctively switch to a mode of analysis that shares more with the novels of Dan Brown than a fair analysis of the situation.

“The press – both secular and, sadly, particularly the American Catholic media – assume that everything having to do with the Holy See and money is, at root, some deep and dark scandal.

“The notion that a bad property deal might just be a bad property deal is anathema to this mindset. It must be the tip of a dark conspiratorial iceberg”.

Between the lines

The “misperception” Pappin and Bueri identified as driving the reporting of the CNA, the Financial Times and more recently an explosive Wall Street Journal piece with the headline “Vatican Uses Donations for the Poor to Plug Its Budget Deficit” is nothing more and nothing less than “public confusion about the nature of the Holy See”.

“Like any other sovereign entity, the Holy See must manage its wealth through a variety of different investments”, Pappin and Bueri argued.

“Whether administrative expenses paid out of Peter’s Pence are accounted as ‘plugging the deficit’ is simply a matter of the overall health of the [Vatican] budget”, they continued, criticising the “inaccurate” news stories that “simply aggravate the problem by causing confusion among the faithful and a decline in contributions”.

“In any event, only a portion of Peter’s Pence receipts would be spent directly without investment”, Pappin and Bueri sustained, holding that “the same is true for most other funds raised for charitable and related administrative purposes”.

Where it stands

The take-away of Pappin and Bueri’s article is that, since the Latern Treaty of 1929 abolishing the Papal States, “the Holy See has little alternative but for its patrimony to consist of property investments as well as financial assets”.

Were the Vatican still to possess those Papal States – territory that today covers modern Lazio, Marche, Umbra, Romagna and parts of Emilia – it could count on a regional GDP of about $400 billion a year.

But without that land and associated income, the Holy See is limited to holding nonrevenue properties for office space and the accommodation of personnel and to making speculative investments.

But that’s precisely the situation that leads the Vatican to a double bind, as Vatican patrimony head Bishop Nunzio Galantino admitted in an October 22 interview.

“When the Holy See keeps nonrevenue properties on its books, it is attacked for being an inefficient manager. When the Holy See makes an investment – profiting off which would be good for the Church – it is attacked as corrupt if anything goes wrong”, Pappin and Bueri lamented.

For the record

“What popular analysts call lack of transparency is in many cases for the Holy See simply a lack of territory where visible investments could be made”, Pappin and Bueri concluded.

“Without significant territory in which to invest its assets for the good of residents, the Holy See has to engage in the normal investing operations that other sovereign states do”, the experts said.

“Demanding full transparency from a sovereign investment process… – the default suggestion of American journalists in particular – will not necessarily lead to an improvement in [Vatican] financial operations”, the two experts warned.

“On the contrary, a media environment that fosters leaks and suspicion will likely simply result in a quagmire”.

“At bottom, the problem afflicting the Holy See’s investments is a political one”, Pappin and Bueri asserted, lamenting that some journalists, and liberal politics, “cannot conceive of the Church being a sovereign political entity with financial needs and goals like any other”.

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In other words, “austerity through transparency” is not the answer for Vatican finances, the experts said, counselling Holy See authorities to continue to navigate the turbulent journalistic and political waters as best they can, knowing that they are in the right with their investments.

“Transparency has its own set of costs, which can include more hostile criticism rather than less. Sometimes it’s better just to proceed as normal & put up with a degree of ambient criticism. We should expect better analysis from CNA & other Catholic news sources, in any case”, Pappin tweeted after the publication of his piece.

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