God's Bankers: A History of Money and Power at the Vatican
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In August, at a meeting of 125 top Catholic orders in Philadelphia, the delegates agreed that sexually abusive priests could not be stripped of their right to wear religious habits nor could they be expelled from their orders. The Reverend Canice Connors, a Franciscan priest who was the conference president, told the assembly that the media’s coverage of predator priests was slanted to create a “vengeful atmosphere” and he rejected calls by victims to adopt a zero tolerance policy for abusers. Zero tolerance, Connors said, was a “war slogan” that was not right for the Catholic Church (American bishops had approved such a policy a couple of months earlier, but it lacked any effective enforcement mechanism).52
No one then knew that the “transfer and don’t tell” policy adopted by Boston’s Cardinal Law was far more widespread than imagined.53 New York’s Cardinal Edward Egan startled even stalwart Catholics when he told reporters that the church would decide on its own if and when to pass along information about sex crimes to police and prosecutors. It was under no obligation to do so, Egan said.54 Despite much public outcry, the New York legislature failed to pass a law that would have added the church to a roster of professional groups, which included doctors and teachers, legally obligated to report all child abuse cases. The Catholic Church argued that such a law would be an undue state interference with its sovereign affairs and the sanctity of the confessional box.
America’s bishops in fact had ignored warnings about a sex abuse epidemic in the clergy for at least seventeen years. In 1985, two clerics had drafted a report about pedophiles in the priesthood—“The Problem of Sexual Molestation by Roman Catholic Clergy: Meeting the Problem in a Comprehensive and Responsible Manner”—and submitted it to the bishops.55 One of the authors was Father Thomas Doyle, a canonical lawyer at the Vatican’s embassy in Washington, D.C., who was considered on a fast track to becoming a bishop.56 Doyle was helped by Ray Mouton, the lawyer in the Gauthe case, and by Father Michael Peterson, an openly gay man who converted from Mormonism to Catholicism and founded a medical clinic with the sole mission to treat clerics with sexual compulsions and disorders.57 That ninety-three-page “eyes only” report warned that sexual abuse of minors by priests was “the single most serious and far-reaching problem facing our church today.” In a prescient warning, the authors said, “Those presumed to be guilty of sexual misconduct, especially if it involves child molestation, must never be transferred to another parish or post as the isolated remedy for the situation.”58
The authors predicted that even if the bishops acted with determination to address the problem, the church could still have to pay more than $1 billion in victims’ settlements. “If church leaders persist in cover-up rather than succoring the faithful, the world’s largest Christian institution would fall into a slough of financial and spiritual despair.”59 It urged that “clerics suspected of abuse” not be permitted to be parish priests in contact with children.
Not only did the American bishops dismiss that unsolicited report as alarmist, but it put a stop to Doyle’s promising career.60 He lost his position at Catholic University and was transferred from his embassy posting, first to the Grissom Air Force station in Indiana, and later to the remote Tully base in Greenland.61 (The Nuncio at the time who took the punitive action against Doyle was Archbishop Pio Laghi. Pope John Paul subsequently gave Laghi a red hat.) Peterson, meanwhile, was criticized for overhyping the report to drive more “business” to his medical clinic, where he treated priests with sexual addictions. By 1987, Peterson had died of AIDS.62
That there was such resistance to the report was evidence that the church’s top officials hoped to manage the problem rather than confront and root it out. Implementing what the report had suggested—it included a manual with guidelines for a national “crisis control team” to reach out to victims—would have meant admitting the seriousness of the crisis. Now, in the summer of 2002, and faced with an onslaught of media coverage, the bishops could no longer ignore it.63
Many victims who thought that the American bishops were responding too hesitantly looked to the Vatican and Pope John Paul for help. They found none. The Pope was quiet when accused pedophile priests threatened litigation against their bishops for violating their employment rights by defrocking them.64 And the Pontiff also did not respond publicly when a support group for sex abuse victims beseeched him to prevent priests from filing malicious defamation lawsuits against their accusers. John Paul was a bystander as the American church quietly approved an aggressive new legal strategy that included, as The Washington Post uncovered, “hiring high-powered law firms and private detectives to examine the personal lives of the church’s accusers, fighting to keep documents secret and engaging in new tactics to minimize settlements.”65
To the great dismay of victims’ rights groups, what did prompt the Pope and Vatican to intervene was when the American bishops were told that they did not have the authority to administratively remove a priest charged with sexual abuse. Instead, the Vatican decreed that canon law demanded a full church trial for accused priests.66
The previous December, John Paul had consolidated authority over the church’s often baffling and arcane rules that governed when and how a priest could be defrocked into the Congregation for the Doctrine of the Faith (the Supreme Sacred Congregation of the Roman and Universal Inquisition until it was given a less inflammatory name in 1965).67 German cardinal and canon law scholar Joseph Ratzinger—later Pope Benedict XVI—was the Congregation’s chief. American bishops had for years recognized that the cumbersome rules governing that office worked to the benefit of child molesters. Thirteen years earlier (1989), U.S. bishops had sent some canonical law scholars to the Vatican to argue in vain for a streamlined process. In any case, the byzantine rules of Ratzinger’s office only applied to defrocking ordinary priests. No one could touch bishops, so when Palm Beach’s Bishop Anthony O’Connell admitted he had molested a seminarian, the only recourse was to ask for his resignation.68
What was not evident to most outsiders was that the Vatican’s reactionary policy about sexual abuse by priests was driven largely by worries over financial ramifications. The Pope’s failure to apologize to victims was the direct result of fear that with thousands of lawsuits filed against dozens of dioceses around the world, plaintiffs would use a Pontifical mea culpa as an “admission against interests” by the church.69 The Vatican was also concerned that the church’s powerful American branch and its large payouts were setting a bad precedent that might soon have dire consequences for dioceses internationally.70
By the spring there were nearly a thousand lawsuits filed in the United States. Some of the dioceses had put aside tens of millions in contingency funds for settlements.71 It was evident to the church’s top moneymen like Caloia that the American parishes—the biggest contributor to Peter’s Pence—were going to be constrained for money between the litigation and settlement costs. They would be tapping their own parishioners for contributions to replenish those funds, and that would slash what they could send to Rome. The Vatican had to prepare for reduced income.
During intense backroom strategy sessions in 2002, the Vatican decided that no matter how the abuse scandal played out, it had to inoculate itself as much as possible against financial exposure. Although the Vatican controlled many aspects of local church life, even including the words used in liturgical prayers, it wanted to make certain that individual dioceses had the full responsibility for managing the sex abuse scandal.72 The church’s policy would last through all further shockwaves of sexual abuse in any country: each diocese was its own separate legal entity, responsible for its own liability. The financial problems in one diocese were insulated so they did not affect a wealthy neighboring diocese. Each was its own non-profit corporation, usually with trusts for its real estate holdings, so that any bills and judgments against it could not be collected against any other diocese, and particularly not from the Vatican itself. Some of the largest, like Chicago, had a long-established separate banking system
that added another layer of complexity to its financial relationship with Rome.73 To further insulate the individual dioceses, the American bishops had voted to double to $10 million how much a diocese could liquidate of its own assets without seeking Vatican approval (Rome approved the higher limit and even suggested the American church tie it to an inflation index so it automatically increased over time).74
Attorneys retained by the church double-checked to ensure that all 2,864 Catholic dioceses and 412,886 parishes worldwide—even Rome itself—were legally independent from the Vatican and that any financial fallout from the sex abuse litigation would not affect the city-state.75 Putting all the pressure on the individual dioceses had predictable consequences. After a large 1985 jury award, insurance companies in the United States began excluding coverage for sex abuse from their liability policies.76 That meant many dioceses had to self-insure when it came to the costs of litigating and settling abuse cases. The following year Boston paid $85 million to settle cases with 552 victims.77 Boston had about $14 billion in just property holdings, and $160 million worth of that property was unused.78 Still, since it was cash poor, it had to close schools to raise the settlement money, a move that embittered many loyal Catholics.79 Portland, Oregon, on the other hand, did not have any cushion. Facing a $53 million settlement, it was the first archdiocese to declare bankruptcy in 2004 (two religious orders and eleven other dioceses have since filed bankruptcy).80
Even that first insolvency could not have prepared the church for the coming flood of litigation and criminal probes: more than $3 billion and still counting as of 2014 in settlements and awards just on American abuse cases; the ransacking of clergy pension and retirement funds; the shuttering of churches, schools, and in some instances entire parishes; and special assessments that have strained the purses of ordinary parishioners to keep some dioceses afloat.81 Sometimes the struggle for survival led to bitter fights when bishops relied on canon law to “suppress a parish”—the equivalent of a civil eminent domain action—and thereby gain control over the property and money.82,II
Even the parish bankruptcy filings got mired in millions of dollars of litigation. Portland’s archbishop, for instance, argued that he had “bare legal title” to the diocese’s assets and properties and therefore contended he could not sell anything to satisfy the claims of victims. Moreover, his lawyers cited the U.S. Constitution’s separation of church and state as a financial shield, saying it prevented any court from interfering with its church-granted powers.84 “Neither the bishop nor the diocese is the owner of parish property under Canon Law,” Nicholas Cafardi, the dean of Duquesne Law School and himself a canon law scholar, said in a sworn statement.85
Notwithstanding all its careful planning to keep a legal moat around the Vatican, in 2003 the church was caught by surprise when a Louisville, Kentucky, gun-slinging medical malpractice attorney, William McMurray, filed a federal class action and named the Holy See. Three Louisville men claimed they were abused by priests for decades and sought damages on behalf of all American victims of clerical abuse. McMurray based his suit on a 1962 document uncovered in the discovery of another case, signed by Pope John XXIII, directing that sex abuse complaints against priests should be “pursued in a most secretive way.”86 Top church officials were furious about the Kentucky suit and moved to dismiss it on well-established grounds that the Pope was immune as a foreign sovereign from civil litigation in U.S. courts. Secretary of State Sodano, in a meeting with Condoleezza Rice, his American counterpart, urged her to convince the administration of George W. Bush to intervene to get the case dismissed. According to WikiLeaks cables in which State Department officials recorded the back-and-forth between Sodano and Rice, he complained about “aggressive attorneys” and told her, “It is one thing for them to sue bishops but another thing entirely to sue the Holy See.”87 Secretary Rice explained that his request was impossible because of America’s separation of powers.88 Sodano believed that her failure to stop the litigation against the Pope demonstrated “a lack of respect for Vatican sovereignty.”89
Sodano’s extraordinary plea to Rice was evidence that Rome was very worried that the U.S. court system was unpredictable and that eventually a jury inflamed by the sordid details of an abuse case might decide to hold the church’s CEO—the Pope—responsible for the actions of his wayward priests and the connivance of cardinals and bishops in protecting the abusers.90 To the Vatican’s great frustration, not only did it fail to get a dismissal, but the Kentucky filing encouraged similar lawsuits against the Pope in other American jurisdictions.III
The full extent of the sex abuse scandal was made clear in a February 2004 145-page research report about the crisis undertaken by New York’s John Jay College of Criminal Justice.91 The U.S. Conference of Catholic Bishops had authorized the study.92 It concluded that 95 percent of American dioceses had at least one complaint of a sexual assault by a priest against a minor (the authors did not count incidents before 1950).93 During the five-plus decades, 4,392 priests had been accused of abusing 10,667 children, a figure that in some years was as high as 10 percent of all priests.94 At least 143 were serial molesters who carried out their attacks in multiple dioceses.95 Four out of five victims were minor boys.96
“Few incidents [less than 5 percent] were reported to the police,” the study concluded. The authors speculated it was because so many victims were children that they often did not report the crime until after the statute of limitations had passed. Even when the police were notified about abuse in a timely manner, only one in three priests were charged with a crime. Fewer than 3 percent of those served any prison time. And astonishingly, “the priests with many allegations of abuse were not more likely than other priests to be charged and serve prison sentences.”97
The study determined that significant numbers of abusive priests had themselves been abused as children, and as clerics they often battled substance abuse problems—overwhelmingly alcohol—or untreated mental illness. Yet, only a quarter were ever referred for any treatment by their clerical superiors.98 To try to cure offenders of their sexual compulsion, they were often sent to “spiritual counseling.”99 And to the church’s embarrassment, it had spent more on attorney fees in defending the abuse litigation ($38.4 million) than it did on treating all its problem priests over fifty years ($33.3 million).100 Only much later was it discovered that millions more had been spent on attorneys who lobbied state legislatures to block efforts to extend the statute of limitations when it came to child sex abuse claims.101
Many victims and their families felt betrayed by their own church. So did many ordinary Catholics who sensed the church only reacted when there was another story or lawsuit. Author Jason Berry wrote that Pope John Paul II “responded to continuing allegations of clergy abuse with denial and inertia.” Berry noted that the Pontiff was “a commanding figure” in dealing with major international and political issues, but that when it came to “the greatest internal crisis facing the church, the pope failed, time and again, to take decisive action in response to clear evidence of a criminal underground in the priesthood, a subculture that sexually traumatized tens of thousands of youngsters.”102
Father Richard McBrien, a Notre Dame theology professor, called the clerical sexual abuse scandal “the greatest crisis to confront the Catholic Church since the Reformation of the 16th century.” Regarding rooting out the abusers, McBrien later concluded that John Paul “had a terrible record, full of denial and foot-dragging.”103 In one of the highest-profile cases, John Paul had sent out a dreadful message to the highest echelons of the church. He had failed even to consider the evidence of sexual abuse charged by nine respected seminarians against Marcial Maciel Degollado, the powerful Mexican priest who founded the Legion of Christ and Regnum Christi movements.104 Maciel shared the Pontiff’s ultraconservative political philosophy and was, according to Jason Berry, “the greatest fundraiser of the modern church.”105 Maciel spread his money around to build good will for his order, everything fr
om grand parties for Secretary of State Sodano to cash gifts to the Vatican. In 1999, the Pope intervened to close an internal case in which two of the abused seminarians sought Maciel’s excommunication in a proceeding before the Congregation of the Doctrine of the Faith.106 When Father Rafael Moreno, Maciel’s personal assistant for nearly two decades, tried warning the Pontiff in 2003, John Paul “didn’t listen, didn’t believe.” When Moreno tried getting an audience with the Secretary of State, Sodano refused to meet him.107
Maciel was ultimately unmasked for having not only abused boys, but for having sexual relationships with at least two women, and fathered up to six children. One of the boys Maciel had fathered with a domestic servant thirty-seven years his junior claimed that the bishop repeatedly had raped him.108 When news became public of John Paul’s protection of the influential insider, it seemed to represent on a larger scale what had happened with many far less powerful and well-known child-molesting priests in local parishes.109
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I. Archbishop Herranz repeated the view of other top Vatican officials who had publicly linked clerical sexual abuse of minors only to homosexuality. That is demonstrably false. In society as a whole, most pedophiles are heterosexual. That is not surprising since heterosexuals are the large majority of the population. But it was different in the all-male priesthood, where 80 percent of the abuse cases were men to boys. Cardinal Joseph Ratzinger had written a much cited October 1, 1986, letter to all bishops “on the pastoral care of homosexual persons.” In it, Ratzinger wrote that “homosexual persons . . . [have] a disordered sexual inclination which is essentially self-indulgent.” Simply being gay exhibited a “strong tendency ordered towards an intrinsic moral evil.” Ratzinger’s conclusion—that the “practice of homosexuality [that] may seriously threaten the lives and well-being of a large number of people”—was often cited by traditionalists for the facile argument that the church’s sex abuse problems resulted simply from too many gay priests. Such gay bashing only hastened a public debate that played out in the media about “how widespread is homosexuality among priests?” A report that studied death certificates from the mid-1980s concluded that “The death rate of priests from AIDS is at least four times that of the general population.” As late as 2011, Bill Donahue, president of the influential Catholic League for Religious and Civil Rights, continued to dismiss the sex abuse crisis as caused primarily by gay priests. In the National Catholic Reporter, Donahue wrote, “While it is true that most homosexual priests are not molesters, most of the molesters have been priests who are homosexual,” and that abuse cases among priests had increased because “there was an exodus of heterosexual priests after Vatican II. . . . And there was a surge in homosexuals in the seminaries.”46