The HolyPhone Confessional Crisis

by Charles Brett

  “I sense that you are uncomfortable about some aspect here,” interrupted Conor. “Am I right? Would you like to elaborate?”

  “You are and again I’m not sure why. Prima facie, to use a little of the Latin that I remember, if the Vatican is getting a good deal that should be the end of it. Remember, however, that the number of failed transactions is much lower than exists in the commercial world. Failed transactions cost the credit card companies money and, in failed transactions, I am including not only those which cannot proceed because there is insufficient to pay but also those that initially fail for technical reasons where a connection is not available but which are then authorised later.”

  “If I get what you are saying it is that, given a much lower failure rate than generally occurs, you would expect the credit card processing companies to offer lower charges per transaction. Are you wondering whether this hides something? Would it be possible, for example, for someone to agree a tiny extra fee or percentage that would not be noticed?”

  “I’m not sure. I don’t know enough. Also, the VCCC operations people seemed just too comfortable that all was well.”

  “Intuition in such circumstances often pays off. I don’t have as much experience as you guys, but one of those who taught me in Canberra said it is always worth double checking anything that does not feel right, so long as there is nothing personal in it. It has worked for me too. My first significant success came in Perth when I followed up such an uneasy feeling.”

  “Right. To be noted and explored by me. Anything else, Davide?”

  “Yes. There is some more detail. The monies, once transferred into the acquiring bank account, become opaque. The VCCC Operations people know little in detail about what happens next. The Vatican takes over and makes its transfers. That said, some observations were made to me.

  “In the past, most monies collected by a church were at the parish level. These were passed up to the bishop who had control, except when some parish priests dipped their hands into the takings. Yes, there are documented cases of priestly theft from the Sunday contributions of the faithful.

  “While the bishops have to pay some proportion to the Vatican, what you might think of as a franchise fee, essentially the Vatican had to wait on the bishops to pay before it received any monies. This is why in 2011 the Vatican only made some 20 million euros, at least according to its publicly released figures. Most income stays in the country where the contributions are made where it is not at the Vatican’s outright disposition.

  “The Santofonino has upset all this. The payments for confession go from the acquiring organisations into bank accounts owned and controlled by the Vatican. These destination accounts have nothing to do with the Vatican Bank or IOR. This is deliberate policy. However, to prevent outright rebellion from the bishops — who have seen weekly takings fall drastically — the Vatican pays out large amounts to the bishops direct. But now most of their funding comes from the Vatican, which the non-Vatican bishops in the field apparently hate.”

  Caterina asked, “Have you asked José Antonio about this? It strikes me that whoever controls the payments from these accounts has some interesting possibilities. How many countries is the Santofonino working in? It is in ten significant ones? Let us say there are four main banks in each country, each with several accounts to embrace MasterCard, Visa, Amex, PayPal, etc. This looks good because the risks are spread across multiple approved banks in each country. But it does add another level of complexity that could hide bogus activities. Would that be a fair description?”

  “Yes,” replied Conor and Davide together.

  “Who controls all this?” asked Conor.

  “The VCCC Operations people were not sure. It’s outside their competence. My guess is that this question is for Nelson. I doubt whether José Antonio will know but we should ask anyway. Shall I call him and find out if he can join us for dinner?” Caterina and Conor nodded. “In any case, I need my break after talking all the time. Shall we stop for today to digest?

  “Before stopping, what about your reference to Foreign Exchange?” interposed Caterina. “I don’t wish to lose sight of this.”

  “Can we do it over dinner or least over a drink beforehand? I feel as if I’ve been exercising my tongue all day … And there is, thinking about it, Sin Analysis still to consider.”

  “That’s fine,” agreed Caterina. “Over a nice chilled Frascati will be good. I must remember to bring a device for taking notes.”

  Tuesday, Gianicolo, Rome

  “José Antonio suggested this place. He is coming here in about forty-five minutes, though he said that if he is running late we should start without him. He called ahead and we have a decent table that seems discreet. I guess, Caterina, you received my text message seeing that you have made it. I don’t know about Conor.”

  “I think he has a conference call finishing about now. Old business. Sorry, not for discussion.”

  Caterina did not appear at all apologetic that she could not discuss other matters with Davide. Indeed to him she was about as warm as an ice cube, however elegant. This evening she had bothered to make an effort for dinner, no longer wearing her normal jeans and simple top. This time it was a dress in darkest blue, complementing her hair, which she had tied up in something like a swirl that looked chic. There could be no doubt; she was a tough lady who knew how to look good when she wanted. No wonder, thought Davide, that Conor is less than cheerful in her company. She could probably freeze a confession out of a suspect at 10 metres where others would have to use invention or persuasion or even good old browbeating.

  Davide was relieved when Conor arrived. He turned to the waiter, who was dancing attendance as only a sixty-year-old Roman can do when facing a good-looking woman, no matter what age he or she was. He ordered the Frascati, well chilled.

  “This is what you wanted?”

  “Yes. Thank you for remembering.”

  “Ah ha. There you are,” said Conor, sitting opposite Davide. “I’ll have a beer, please; a big one,” he continued, addressing the waiter.

  That left José Antonio with the pleasure of facing the Ice Lolly (as he privately thought of Caterina). Good luck to José Antonio.

  “Foreign Exchange or Sin Analysis: which do you want first?”

  “Sin Analysis?” chose Caterina, while Conor predictably opted for Foreign Exchange.

  “I think Foreign Exchange is probably the better one for me to start with. When the money arrives at each acquiring bank from the credit card it is apparently converted into Vatican scudos. This is an artificial currency that the Vatican has reinvented, which is designed to protect it from international money market currency gyrations like those that have occurred over the past decade. For the banks this is not a big problem. Just as the euro was invented and incorporated, so the same model has been used for the scudo, except that no real currency is ever issued. The Vatican accounts for everything in scudos and when payments need to go out the scudo converts at whatever rate applies to the destination currency, say US dollars or euros or whatever.”

  “That is how the banks would also handle Bitcoins, if they decide to support them,” volunteered Caterina. “At the ACC there is a group looking at the legal and criminal implications of Australia accepting Bitcoins. No decision has been made yet. I doubt we will agree. Too much that is tax evading or simply illegal can be hidden.”

  “I agree, Caterina. Interpol also has its own group on this. But there’s another aspect to consider, namely that changing currencies is a wonderful way to hide problems.”

  Caterina and Davide looked at Conor questioningly.

  “Let me give you an example. Many years ago when I was doing my financial training I was working on auditing the accounts of a commercial vehicle dealer in Abu Dhabi. The firm was owned by a Palestinian who was close to a local Sheikh but who left the back office to a small group of Pakistanis who did all the accounting. I was working with a more experienced colleague, thank goodness. We were trying to a
ssemble the final accounts, which were only in part on computer. Each night the Pakistanis, who were delightful and always willing, prepared the latest trial balance. Miraculously this always balanced, which is what gave the clue to my colleague. He said that trial balances rarely balance early on; there are always errors. So we started asking questions. This was disconcerting because the answer was always, ‘Yes, Mr Conor’ or ‘Yes, Mr Jim.’

  “After a while we figured out two things. The first was that these guys always wanted to please. If you asked them if item A was a credit on Monday they would say ‘yes.’ If you asked whether exactly the same item was a debit the next day the answer would also be ‘yes.’ We had to dig deep to find out what was really happening.

  “This is where the FX account – sorry, the Foreign Exchange Profit and Loss account – became relevant to the trial balance. Any difference in the trial balance was being posted to the FX Profit and Loss account. FX accounts are always messy. Losing differences into this was a masterstroke, because it was hugely difficult to spot unless you knew what to look for.

  “What is the relevance to the Santofonino? What I learnt is that manipulating the FX dimension is a simple way to hide transactions. The Pakistanis in Abu Dhabi did not mean to mislead. All they wanted to do was keep us happy, not realising the consequences. If I wanted to hide some money diversion this is where I would start. Get me?”

  “All too well,” said Davide. “That accords with my understanding. I’ve come across the same sort of activity, though not in a criminal sense as you obviously have. This is another area for you and Caterina, though I suspect that disentangling anything will be tough with so many banks and FX conversions going on all the time.”

  “You’re probably right. But this is where Caterina can definitely assist with her systems, if we can get access to past records. Do you know how FX rates are set and who by?”

  “No. Another question for Nelson for I doubt José Antonio would have a clue. Anyway, before he arrives, let me clue you in about Sin Analysis. Boiled down, all the data on the sins confessed via the Santofonino are entered, using the SinCodes, into the VCCC system. This data is anonymous but the geographical location of the Santofonino used for confessing is known and there is a presumption that most sins occur close to where the Santofonino used for each confession is placed. The VCCC processes the accumulated data from the day before to create a now massive database of sins and demographics. This data is now being sold in raw format to governments and may yet be sold to large businesses like retailers, soft drink manufacturers or any organisation that is willing to pay. And there seem to be lots of these.”

  “How does the Vatican handle this?” asked Caterina. “Does it have priests being sales people? That wouldn’t seem very proper.”

  “No, the Curia ruled out that particular route even though many bishops were surprisingly keen on doing their own selling. Their rationale was that it kept them close to governments and they could have access to some of the money and control that they were otherwise losing. The Curia was unsympathetic, I was told. Instead the Vatican appointed three firms with the right to sell the sin data to approved organisations. These three organisations are essentially wholesaler middlemen who do not sell direct but use local companies in each country or region to make the sales. Thus a Coke, Pepsi, Carrefour or Tesco would buy the data from the local business, which will pay the wholesalers who pay the net receipts into a reputable bank account. And now we are back again into the FX dimension.”

  Caterina said, “Plus there is room for some additional fees along the way, I imagine. Do you know who the middlemen are?”

  “I don’t know and didn’t ask. The idea of having three middlemen is to foster competition, in the Vatican belief that if the market is transparent then the related financial dealings will be clean.”

  “What does selling Sin Analysis add up to?” asked Conor.

  “It is only now beginning to take off. This year’s revenues from Sin Analysis alone will match what the Vatican originally hoped for from the Santofonino confessions in total. Not huge, but big enough.”

  “Buona sera, Caterina, Conor e Davide. Am I interrupting at a bad moment? You seem intensely involved.”

  “No, Father,” responded Conor, unable to prevent his upbringing’s innate respect for a clergyman from emerging. “We have had a long day and your arrival is an excellent moment to pause and order. Please. Sit down with us.”

  Tuesday, Gianicolo, Rome

  José Antonio made himself comfortable, not at all unhappy to face Caterina.

  “What will you drink, Father?” enquired the waiter, finally presented with an opportunity to interrupt after hovering but to no avail while Caterina, Conor and Davide talked.

  “Is that Frascati? That will do very nicely.”

  Conor picked up the bottle and waved it at the waiter for more. “And bring some menus.”

  Soon after the extra wine and the menus appeared.

  As before, the three turned to José Antonio, saying they would follow his choices as he should know. He ordered a large dish of paglia e fieno for all to share, a mixed salad to follow and then a mix of ossobuco and saltimbocca alla romana, both of which he said were usually excellent here. The waiter departed, disappointed that he was unable to ogle Caterina further, not that she seemed to notice or care about his leering.

  “Have you been able to make any progress?” enquired José Antonio. “Nelson called me earlier today though, as he admitted, it is a little early for results. Was the Confessional Call Centre visit yesterday useful?”

  “It was indeed. If you get a chance, please thank the staff there. They made me very welcome and put up with a whole host of questions, most of which I hoped sounded ignorant. They were also amused when I filled them in about my original blog and the connection to you. I did not mention Nelson. If they knew, they said nothing of him.

  “As for progress, I think we have made some today — and certainly identified some avenues for deeper examination. In fact today has mostly been bringing these reprobates” — he indicated Caterina and Conor — “up to speed with what I learnt yesterday and describing the systems. We will not go into the latter for you. Don’t worry, we do not wish to give you a headache.”

  “I already have one, thank you,” muttered Conor. “Just hearing you and Caterina gabble away about blades, servers, Linux, operating systems and IP connections is enough to make any sane man go in search of pain relief. You don’t know what you are being spared, Father — José Antonio, I mean.”

  “Bah, humbug to you, Conor!” replied Caterina. “You were drinking it in. He just pretends he is an old fart and he does a pretty good impression, I must admit. But the underpinning of his skills requires him to understand more than he will ever admit. I think he is one of those professional charlatans who likes to seem not to understand in order that he can learn and observe. He is probably frightening when he is questioning someone.”

  “A compliment from the lady at last. What is happening to me? I simply don’t believe it is possible from an Aussie.”

  “Oh, shut up and eat your pasta!”

  This had just been put in front of them. They ate and ordered some Chianti.

  Davide returned to the subject matter: “We have some questions for you, José Antonio, in the hope that you might help us understand better. Essentially there are three because you have already told me you don’t know why the Vatican scudo was introduced.”

  “That’s true. Try me on the others.”

  “The first relates to the exchange rates for the scudo. Do you know who controls this or how decisions are taken? The second relates to what has happened since the Santofonino started passing money to the Vatican directly rather than to bishops. Has this affected you in any way? The third concerns control of the various bank accounts into which Santofonino monies are paid. Can you shed any light there?”

  “On the first, I know nothing. The whole concept of a non-currency currency is beyond m
y imagination as well as understanding. For that you will need to talk with Nelson and probably with Monsignor Severino. Father Federico says that he is now back in Rome and is seeing Nelson later this week.

  “The same is fairly true of the third. I know a little more because Nelson has mentioned that all transfers must go through his office. He has a small staff of three who cover for each other. They review all transfers out of the Santofonino accounts. These are lay people with financial experience who make up and recommend a daily authorisation order, which, if I remember rightly, Nelson signs and Monsignor Severino executes. That is about all I can remember here.

  “Your middle question affects me more directly, so I know more, but from a parish priest viewpoint. The truth is it has always irked many parish priests that the money their congregation give each week at Mass goes directly to the bishop. You have probably heard of priests misdirecting money from these collections. While some of this is undoubtedly for personal gain, I’m ashamed to say, I would argue that the majority do it to support their parishes in ways they do not expect their bishop to approve. This is dangerous because bishops have virtually absolute power over parish priests, including their stipend, accommodation and even pensions. Ah, I see from your expressions that you have heard some of this before. That saves me time.”

  Caterina interjected: “You mean like the Bishop of Bling in Germany, the one who apparently spent millions on his episcopal palace? That story even made it to Sydney. I remember it well.”

  “Oh. That is what we would prefer you did not remember, Caterina. But you’re essentially right. Furthermore, seeing that we seem to be washing dirty linen here, there is often genuine enmity between some bishops and their parishes. This happens less in Rome, thank the Lord, probably because our bishop is the Holy Father himself. But I know of parishes in Spain and here where there is a real feeling of unhappiness with the over-lordly habits of some bishops, especially from those who actually raise the money.