God's Bankers: A History of Money and Power at the Vatican

by Gerald Posner

  Frankel had promised the Vatican a $55 million contribution. The terms of the “contribution” meant that the Vatican would have kept only $5 million and the other $50 million would stay under Frankel’s control in a Vatican Bank–linked foundation.3 But Frankel never gave a cent. Prosecutors had trouble believing that no one at the bank spotted that the Frankel foundation had unrestricted use of a third-party IOR account through which millions in cash passed regularly. And their suspicions were heightened when they discovered that Colagiovanni had consulted with the Vatican’s third-ranking prelate, Cardinal Giovanni Battista Re, the Sostituto for General Affairs of the Secretariat of State, as well as the Papal Nuncio to the United States, Cardinal Pio Laghi.4 Soon questions led back to Gianfranco Piovano, the Vatican Bank’s chief prelate. Piovano, it turned out, had met several times with Colagiovanni, Jacobs, and their attorney, Tom Bolan, a former partner of legendary New York lawyer Roy Cohn.5

  The media loved the Frankel case. A search of his Greenwich home had uncovered an enormous stash of pornography, a Ouija board, and printed reminders to shred documents and to check on jurisdictions that did not have extradition treaties with the U.S.6 Still, the Vatican Bank ultimately deflected inquiries about its own civil liability. The IOR instead blamed any wrongdoing on the two American priests, claiming as Marcinkus had a decade earlier, that it was the unwitting victim of sophisticated con men. In one of its most impolitic defenses, Vatican spokesman Joaquín Navarro-Valls downplayed Colagiovanni’s status by saying he was merely a “pensioner” and dismissed Jacobs as an “ex-Jew.” Father Jacobs had a Jewish father, although his mother was Catholic; he converted to Catholicism in his twenties, was baptized, and ordained a priest in 1955.7 As for the wayward foundation, Navarro-Valls said it “does not have any relationship with it [the Vatican] whatsoever.”

  The Frankel probe was another reminder to Caloia that even after nine years he did not have full control of the bank’s numbered foundation accounts. It was the same issue that had frustrated him with Monsignor De Bonis and the Cardinal Francis Spellman Foundation. Whenever Caloia thought he had made improvements, something like the Frankel scandal mocked his lack of progress.

  Even though Caloia drilled down inside the IOR to find out what had gone wrong with Frankel, his focus in 1999 was on ensuring that the Pope appoint him for another five-year tenure. His term was set to expire that October, and his opponents were anxious to find a replacement.

  American Cardinal Casimir Szoka was no Caloia friend.8 Szoka carried weight inside the Curia. John Paul had picked him in 1990 to run the Prefecture for the Economic Affairs of the Holy See, and in 1997 he was appointed the President of the city-state’s Governorate, one of Marcinkus’s old posts. Before arriving at the Curia in 1990, Szoka was the treasurer of the American Bishop’s Conference as well as Detroit’s archbishop. During ten difficult years in Detroit, he oversaw that diocese’s considerable downsizing. Even his critics acknowledged he was a tough decision maker who ran a lean administration (he had to close thirty parishes due to lack of money).9 And, as the son of a Polish émigré who himself spoke fluent Polish, he had influence with John Paul.10 Szoka wanted Hans Tietmeyer, the outgoing president of Germany’s central bank, to be the IOR chief.11

  The anti-Caloia contingent even planted stories attributed to “Vatican sources” that the church was wooing Tietmeyer.12 While the German banker had an impressive résumé, his sponsors underestimated the enmity that John Paul and his private secretary, Stanislaw Dziwisz, had toward Germans due to what the Nazis had done to Poland.13 Although John Paul had no special affection for Caloia, the IOR chief’s gray countenance worked to his benefit: neither had he made an enemy of the Pontiff during nearly a decade of service. Ultimately, the Pope was not persuaded that Tietmeyer—who did not even speak Italian—was a better replacement. Not even Szoka could change John Paul’s mind. All the jockeying for power ended when the Pontiff vowed publicly, “As long as I’m alive, there will never be a German in charge of the Vatican’s finances.”14 The Pope confirmed Caloia for a third term.

  During his first decade, Caloia had discovered that the religious community often had a terrible view of the Vatican Bank. “There was a wall of distrust,” Caloia said, “at least not much enthusiasm. For them, the IOR was intent on ‘profiteering’ and ‘speculation.’ ” Many clerics were conflicted about money. They realized it was necessary to run the parishes and dispense help to the needy, but at the same time, “Holy monks consider money the shit of the devil.”15 As far as Caloia was concerned, “the challenge is if money is the devil’s shit, then we Christians must be able to turn it into a good fertilizer.”16

  By 2000 Caloia had come to see his role as that of a “financial advisor” who had “customers” with different needs and wants. Some were rich religious orders “with custodians who speak ten languages and play the stock market.” Others were poor and only worried about not losing money in a swindle or fraud. And he tended to those differences in ways Marcinkus and Nogara had never contemplated. Under his guidance there were only a few clerics left inside the IOR. The bank had three times as many employees as just twenty years earlier. His easy-going stewardship meant morale had lifted.17

  On the cusp of his third term, the seasoned Caloia knew that unforeseen crises from some hidden shadows in the bank might prevent him from accomplishing his informal to-do list. “The Devil is always lurking, multifaceted, and treacherous,” he told friend and author Giancarlo Galli.18 He could not then have imagined that just as the all-consuming fight over Holocaust restitution had distracted top clerics from focusing on his reform proposals, a shocking problem—priests and child sex abuse—would derail his efforts this time around. The sex abuse scandal had captured the interest of inquisitive Vaticanologists, diverting their attention from the IOR. It soon centered on money issues as billions of dollars were paid out for decades of crimes of pedophilic priests. It meant that Caloia’s substantive plans for remaking the bank got lost in a deluge of sordid crimes and disturbing charges of cover-up at the highest levels of the church.

  • • •

  For decades, the Vatican and dioceses dismissed occasional cases of sexual abuse of minors by clergy as aberrations unique to the individual priest accused of wrongdoing. Among clerics, just as in the general population, it was expected that there might be some sexual deviancy. There were, according to the church, few such cases. But some insiders knew that was a lie. The first published report indicating there might be a pervasive problem, at least in the American church, was by journalist Jason Berry. A priest assigned to a rural Louisiana parish, Gilbert Gauthe, was arrested in 1984 on multiple counts of forced sex on boys as young as seven. When parents discovered that Gauthe had a predatory history and that instead of alerting civil authorities his superiors had transferred him around to different parishes, they sued.19 In reviewing that court file Berry came across the deposition of a local bishop who admitted that he then knew about a second pedophile in his parish. But he refused to identify him to the lawyers for the parents.20

  While Berry started a month of reporting he also pitched his article to national outlets. Vanity Fair, Rolling Stone, Mother Jones, The Nation, and The New York Times Magazine all passed. Berry’s groundbreaking three-part investigation ran in May 1985 in a free Louisiana alternative newsweekly, The Times of Acadiana.21 The editors, in a preface to Berry’s first part, noted “incest and molestation by caretakers of young people are on the rise. It is also a problem of the Catholic Church outside of Louisiana. Other cases involving priests who molested youngsters in California, Oregon, Idaho and Wisconsin have recently been reported.”22

  Berry’s investigation was a searing indictment of how church officials in Louisiana buried reports of sexual abuse of minors and did their best to pay off victims to keep them silent. By the time his story ran, the tiny Lafayette diocese in which Gauthe had committed his crimes was deeply in the red from $4.2 million in confidential settlements to the families of nine
victims, and $114 million in pending claims in another eleven lawsuits.

  The Times of Acadiana had a circulation of 25,000. The National Catholic Reporter ran a condensed version of Berry’s series in June. In an editorial note to a companion piece, NCR publisher Thomas Fox wrote, “In cases throughout the nation, the Catholic Church is facing scandals and being forced to pay millions of dollars in claims to families whose sons have been molested by Catholic priests.” But the national press still did not pick up on the story. “There was no popular sense back then that sexual child abuse in the church was an issue,” Berry later said.23 (Berry won a Catholic Press Association Award for his work.)

  There were some exceptions. Berry’s hard-nosed reporting motivated Carl Cannon at the San Jose Mercury News and Karen Henderson at the Cleveland Plain Dealer to start their own investigations.24 A small group of American victims formed Survivors Network of Those Abused by Priests (SNAP) in 1988.25 That same year Berry told the National Law Journal, “There is a whole string of little sexual Watergates laced out across the map of America.”26 And Berry and Cannon discussed it on the Phil Donahue Show. A few in the clergy’s hierarchy realized there was a serious problem. Canadian bishops issued guidelines in 1992 for better screening of abusive priests after sordid revelations about abuse at a Newfoundland orphanage emerged.27 But that stirred little interest in America media. That same year, 1992, Berry published Lead Us Not into Temptation: Catholic Priests and the Sexual Abuse of Children, a seminal book about the American clergy and the hidden problem of child sex abuse (despite Berry’s high profile, more than a dozen publishers passed on that book before his agent got a yes on the finished manuscript from a former seminarian who was the religious editor at Doubleday).28

  Despite the book’s critically sound reception, the topic of sex abuse and the clergy largely remained off the front pages.29 As Frank Bruni wrote a decade later in The New York Times, “Catholic leaders insisted that child sexual abuse by priests was an aberrant horror, expertly quelling any significant protest among American Catholics and containing a debate about the need to reform church traditions. Cases of priests’ preying on children came and went, and though some of them badly embarrassed the church, none ultimately shook it.”30 That was true until the beginning of 2002 when the issue exploded in the United States.31 Pedophilia revelations and lawsuits over several months broke in Dallas; Pittsburgh; Manchester, New Hampshire; Boston; Tucson; and Philadelphia.32 In the wake of a criminal conviction of a defrocked priest, John Geoghan, for molesting a ten-year-old boy, The Boston Globe sued for the release of sealed church files. The documents revealed that the Boston diocese had ignored dozens of horrific abuse reports over thirty years, tried unsuccessfully to rehabilitate Geoghan, and when that failed began transferring him from parish to parish. Cardinal Bernard Law, then America’s senior prelate, had approved some of the transfers, as well as authorizing $15 million in confidential settlements to victims and their families. The files documented sexual abuse charges against eighty other Boston-area priests, some dating back to the 1960s.33

  By January 2002, the Catholic Church in Ireland settled abuse claims that extended back twenty years with a then record payment of $175 million. By then, priest sex abuse cases had been reported from Australia to France to England.34

  When Pope John Paul spoke out the first time that March, it was to say that the sexual abuse charges were casting a “dark shadow of suspicion” over all clergy. “As priests,” he said, “we are personally and profoundly afflicted by the sins of some of our brothers who have betrayed the grace of ordination in succumbing even to the most grievous forms of the mystery of evil at work in the world.”35

  That fell far short of the language for which many had hoped. John Paul did not apologize to the victims. He did not order all bishops to contact local police in instances in which sex abuse was uncovered. The Pope thought it was the responsibility of the dioceses, instead of the Vatican, to rid the priesthood of abusers. That is because in appreciating the extent to which sexual abuse of minors was a church-wide cancer, there was in the Vatican a sense that the problem was confined to a few Western countries, particularly America. John L. Allen, Jr., the National Catholic Reporter’s chief Vatican correspondent, told the Boston Globe that inside the Vatican, top clerics did not believe that “sexual abuse of kids is unique to the States, but they do think that the reporting on it is uniquely American, fueled by anti-Catholicism and shyster lawyers hustling to tap the deep pockets of the church. And that thinking is tied to the larger perception about American culture, which is that there is a hysteria when it comes to anything sexual, and an incomprehension of the Catholic Church.”36 Secretary of State Sodano later told reporters that “the [sex abuse] scandals in the United States received disproportionate attention from the media. . . . It is fair to condemn evil, but one must keep it in proportion.”37 The Pope made it clear he did not think Rome had to intervene.

  Meanwhile a survey commissioned by the American bishops had revealed that sex abuse was a bigger problem among U.S. priests than had been thought (the first report in 2002 identified 850 priests that had been accused since the 1960s, with 350 of those having been defrocked). Victims’ groups contended the number was much larger. The likelihood they were right was buttressed later that year when Australian church records revealed that one in ten priests there had been accused at some point of sexual abuse of a minor.38 (It was not then widely known that some clerics had returned to their priestly duties after serving prison sentences for sex crimes with minors.)

  The Pope summoned twelve American cardinals and two senior bishops to Rome for an emergency meeting in April 2002.39 In prepared remarks he thanked them for keeping him “informed regarding the complex and difficult situation which has arisen in your country in recent months.” That caused much consternation since it again cast clerical sex abuse as if it were a recent American phenomenon. While he condemned sexual abuse of minors by priests as “an appalling sin in the eyes of God,” he also seemed to absolve the failure of some bishops to root out the predators. He claimed they had come up short because of “a generalized lack of knowledge of the nature of the problem and also at times the advice of clinical experts.” Instead of apologizing to the victims, the Pope said only, “I express my profound sense of solidarity and concern.” And he infuriated many by seemingly dismissing the overall impact of the crisis and its effect on the priesthood: “A great work of art may be blemished, but its beauty remains.”40

  Before returning to the United States, the American cardinals issued their own statement. It called for better training in seminaries as well as a national day of repentance and prayer but fell short of promising the expulsion of abusive clerics or providing a framework by which sex abuse crimes could be reported to civil authorities.41 The cardinals did not address whether to inform local police about abusers. They also refused to embrace a “one strike and you’re out” standard.42 As for defrocking priests, they would act only against those clerics who had become “notorious and [are] guilty of the serial predatory sexual abuse of minors.” In cases that were not notorious, the bishops said that individual dioceses would handle them.43

  Los Angeles’ Cardinal Roger Mahoney expounded on the collective statement to reporters. When it came to priests guilty of sexually abusing minors, but the incidents were decades old and there were no recent complaints, he said they should be left alone. What purpose was there in punishing them after so many years, asked Mahoney.44

  The cardinals were not long back in the United States when Archbishop Julián Herranz Casado, the president of the prestigious Pontifical Council for Legislative Texts, gave a talk at the Catholic University of Milan. Herranz Casado castigated the U.S. media for “sully[ing] the image of the church and the Catholic priesthood.” He condemned large financial settlements as “unwarranted” and accused the American bishops of falling prey to a climate of “exaggeration, financial exploitation, and nervousness.” The records of sexually abusive
priests should not be turned over to civil authorities, he warned, lest the church’s sovereignty be weakened. Finally, Herranz Casado noted that to the extent there was any sexual abuse crisis, it was a result of gay men who had become priests. Child abuse, said Herranz, was a “concrete form of homosexuality.”45,I

  The following month, one of the Vatican’s most influential canon lawyers, Father Gianfranco Ghirlanda, dean of the canon law faculty at Rome’s Gregorian University, weighed in. In a Vatican-approved article for La Civiltà Cattolica, he wrote, “From a canonical point of view, the bishop or religious superior is neither morally nor legally responsible for a criminal act committed by one of his clerics.” Moreover, Ghirlanda, widely reported to be passing along the private feelings of the Pope, said that any priest transferred to another parish after being “treated because of a history of sexual abuse” should not have any “good reputation” ruined by having his sexual misconduct against minors revealed to his new parish.47

  The U.S. Conference of Bishops tackled the subject directly in a three-day heated conference in Dallas that June. They voted 239 to 13 for what most of them considered a beefed-up policy on clerical molesters. The bishops vowed to administratively remove sex offenders from any job where they were in regular contact with children but not to defrock them.48 “From this day forward, no one known to have sexually abused a child will work in the Catholic Church,” confidently predicted the conference chair, Illinois Bishop Wilton D. Gregory.49

  Not everyone agreed the new rules were tough enough. Victims’ advocates thought they were riddled with loopholes that allowed abuse to go unpunished.50 “It isn’t zero tolerance,” said Peter Isely, a member of SNAP. “It is simply not what Catholics wanted.”51