In theory, every official of the Roman Curia serves at the pleasure of the Holy Father and has no authority except as a representative of the pope’s will. In practice, however, generations of Vatican officials have been able to build up their own fiefdoms within the bureaucracy. Americans, accustomed to the notion that any official should be held accountable for his actions and decisions, often find it difficult to fathom that the Vatican operates on a much older, more personalized European system. Just as kings allowed noblemen wide latitude for conducting affairs within their own estates, pontiffs gave curial cardinals discretion over their offices. It was considered unseemly to ask a nobleman, or a cardinal of the holy Church, to justify his decisions—much less to account for his spending.
In the past this system of Vatican governance bred gross corruption: nepotism, influence-peddling, and simony. In the modern era such blatant scandals have been rare. But the potential for corruption of a subtler sort is enormous. Vatican officials routinely do favors for friends. There are lavish dinners, no-bid contracts, and expensive trips abroad. In extreme cases, this approach can give rise to the appearance, at least, of serious improprieties.
In other cases, the potential for corruption takes the form of patronage. Money—spending power—animates any bureaucracy. Officials can use discretionary spending to pursue their own ends as well as those of the institution. A powerful curial cardinal can cultivate a base of support among the bishops and religious orders that he favors.
The power to spend money is not the only source of temptation. The opportunity to receive favors or funds—gifts from wealthy individuals or institutions—can also sway a prelate’s judgment. It might be too much to suggest that Vatican cardinals are venal enough to accept bribes, but some free-will gifts are unquestionably more innocent than others. Father Maciel survived for years at the helm of the Legion of Christ as investigations into his misconduct were stymied by prelates who had benefitted from his legendary fundraising.
Transparency is the enemy of corruption, real or imagined. So by imposing standard accounting procedures on every Vatican office, the Secretariat for the Economy was hoping to bring the Roman Curia into an era of accountability.
By 2015, as Cardinal Pell began his campaign for transparency, the Vatican bank was only beginning to emerge from months of turmoil prompted by complaints that the institution was providing opportunities for money laundering. The bank’s obvious vulnerability—due to a lack of clear financial standards—was enough to worry Italian regulators.
“Monsignor €500”
In 2014 a financial scandal opened on another front when Msgr. Nunzio Scarano, the former director of accounting for APSA who had been suspended during a money laundering investigation, was arrested on additional money laundering charges involving an alleged plot to bring twenty million euros in cash into Italy illegally. As the case developed, prosecutors said that Scarano had offered financial services for wealthy friends: “totally private, illegal activity which was also aimed at serving outsiders.” He had also reportedly solicited funds for charity from unsuspecting donors and used those funds to purchase his own luxury condominium.
Police had already taken an interest in what they described as Scarano’s “enormous” financial assets. He had provoked suspicions by withdrawing €560,000 (more than $600,000) from his personal account at the Vatican bank and for asking friends to accept cash and repay him with funds that he could deposit in an Italian bank. Those transactions had triggered the initial investigation into possible violation of Italian money laundering regulations.
Scarano responded that his activities—including his special favors for wealthy clients—had all been approved by his Vatican superiors. “I never laundered dirty money, I never stole,” the accused cleric insisted in a letter to the Holy Father. “I tried to help someone who asked for help.” Scarano asserted that he had enough documentation to prove his innocence.
More dramatically, the monsignor charged that while working as an accountant in APSA, he had sought to curb financial misconduct by his own lay superiors in that office. His efforts were thwarted, he said, because certain cardinals were “blackmailed” and covered up the abuses.
Scarano said that he had brought the financial misconduct to the attention of Cardinal Stanisław Dziwisz, the archbishop of Krakow and former secretary to Pope John Paul II. He also said that he had contacted Cardinal Angelo Sodano, the dean of the College of Cardinals and former secretary of state. Neither prelate helped him, he said.
These claims, while obviously self-serving, were not completely implausible. How could APSA officials have failed to notice Scarano’s outside activities or his lavish spending? Among friends he was known as “Monsignor €500” because of his habit of carrying wads of large-denomination bills. How could he have acquired that nickname without arousing suspicion among his colleagues at the Vatican? Before he was suspended, Scarano held a key office supervising Vatican financial accounts. If the head accountant in any corporation began showing signs of fabulous wealth, wouldn’t other executives start asking questions? A Forbes magazine report on his case made the obvious point: “Sure, it’s possible he was a rogue cleric. But Monsignor Scarano worked for two decades as a senior accountant at the Vatican, which has weathered some recent storms.” It is probably not true that his superiors approved of his extracurricular activities. But it does seem clear that either his superiors were terribly negligent or that he enjoyed some sort of protection.
The Audit Suspended
The opposition to Cardinal Pell’s program for financial reforms became evident in February 2015 when the world’s cardinals met in a consistory to discuss the plans. “Heated arguments” reportedly erupted after the Australian outlined his proposal for the work of the new office, and several influential cardinals immediately suggested measures to scale back the authority of the secretariat. The opposition turned nasty when the first Vatileaks II documents became public, obviously designed to embarrass Pell and damage his standing. But those leaks also put Francis in an awkward position. If he wavered now in his support for Pell, he might give the leakers reason to believe that his entire program of reform could be derailed.
By approving the statutes of the new office in March of that year with only a few minor modifications, the pope signaled his support for Pell. But even as the plans moved forward, some Vatican officials, speaking anonymously, were at pains to remind reporters that the pope had not given Pell everything that he wanted. The secretariat would not oversee the Vatican’s real estate holdings, for example, and there would be three auditors rather than one. But these were minor details in the context of the authority given to the secretariat. On balance the pope’s decision was a clear victory for Pell.
But that victory was called into question a year later when the Vatican suddenly announced that a thorough audit by PricewaterhouseCoopers—the first outside audit of Vatican finances in history—had been suspended. Significantly, the announcement came not from the Secretariat for the Economy but from the Secretariat of State. The audit had begun in December 2015 after a preliminary inquiry uncovered the serious undervaluation of assets, unsupervised spending, and an atmosphere of mismanagement and corruption. Pressing energetically for regular audits and uniform financial controls, Pell faced resistance from other offices of the Roman Curia, and with the suspension of the PricewaterhouseCoopers audit he appeared to suffer a serious setback.
There was at first no explanation for the decision to suspend the audit. For that matter there was not any official announcement of the decision, which came to light only when the National Catholic Register reported on a memorandum issued on June 10, 2016, to offices of the Roman Curia by the Secretariat of State. Even Pell, who was (at least theoretically) the Vatican’s top financial official, told the Register that he was “a bit surprised” by the decision. He expected the audit to “resume shortly,” he said, but he could not make that prediction with any degree of confidence, since he did not yet know why
it had been suspended.
After the audit was blocked, the Secretariat of State offered a murky explanation, suggesting that certain clauses in the auditors’ contracts required further clarification and hinting that once these details were resolved, the audit could proceed. But the audit never did proceed.
By 2016 the Vatican bank was under entirely new management and well on its way to compliance with European banking regulations. Dozens of questionable accounts had been closed, new controls had been instituted, and its staff of lay professionals appeared fully committed to transparency. Unfortunately the offices of the Roman Curia were not ready to make the same commitment. Francis, who had supported the Secretariat for the Economy at first, now backed away. Visiting the offices of the new secretariat, he advised the staff to be discreet: “full accountability, yes; but let’s keep our problems in-house.”
The Secretariat of State now announced that an internal audit would move forward, while the services of PricewaterhouseCoopers “will also be available to those dicasteries that wish to avail themselves of its support and consulting services.” In other words, those being audited would determine how far the external auditors should delve into their records.
The Secretariat of State seems to have suspended the external audit out of fear of compromising the sovereignty of the Vatican city-state—the same fear that shaped its response to the sex-abuse scandal. For the past several years a capable American lawyer, Jeffrey Lena, had been fighting off lawsuits against the Holy See by sexual-abuse victims by invoking “sovereign immunity.” A sovereign state does not have to respond to private plaintiffs in a court of law. And a sovereign state—as the June 10 announcement reminded us—does not open its books to an external auditor.
But there was a price to be paid for sovereign immunity. Did the Holy See wish to be seen by the world primarily as a sovereign state or as a spiritual stronghold? While Francis spoke frequently about a “Church that is poor,” about reforming the Curia and dismantling its fiefdoms, and about his willingness to “make a mess,” would the institutional prerogatives of the Vatican bureaucracy take precedence over the Church’s evangelizing mission?
A Turf Battle between Financial Agencies
By a motu proprio (an executive order of the pope “on his own initiative”) later that year, the pope returned the responsibility for the Vatican’s financial assets to the Administration of the Patrimony of the Apostolic See. The Secretariat for the Economy would exercise oversight: establishing procedures for financial transactions and ensuring that those procedures were followed. Francis explained that he wanted to separate administration from financial oversight. “It is of the utmost importance that bodies responsible for vigilance are separated from those that are being overseen,” he wrote. But the motu proprio put financial management back in the hands of the agency whose top accountant had been “Monsignor €500.” It was a major victory for the officials who argued that Cardinal Pell was asserting too much control in his bid to ensure financial accountability.
The turf battle between the Secretariat for the Economy and APSA would continue. APSA evidently decided to proceed with an audit on its own terms, effectively denying the supervisory role of the Secretariat for the Economy. Msgr. Mauro Rivella, the secretary of APSA, instructed dicasteries to provide data to PricewaterhouseCoopers, saying that the accounting firm was conducting an audit of Vatican finances. In May 2017, Pell complained that APSA had overstepped its authority, and he quickly wrote to all the same offices, telling them that APSA had “no authority, nor prerogative,” to issue such instructions. The cardinal’s letter—also signed by Libero Milone, the Vatican’s auditor general—told Vatican officials “with deep regret” that they should not comply with the APSA directive. Pell pointed out that the external audit by PricewaterhouseCoopers had been suspended more than a year earlier, and “there is no ongoing audit” by outside accountants.
The tensions between APSA and the Secretariat for the Economy had been aggravated, Edward Pentin of the National Catholic Register reported, because APSA had not complied with requests for information from the secretariat. Pell remarked that the conflict had provoked a “moment of truth” for the cause of Vatican economic reform. The campaign for transparency had lost momentum, and in an atmosphere still marked by intramural battles and unassailable private fiefdoms, it seemed only a matter of time before some new financial scandal would emerge.
In yet another setback for the cause of financial reform, the Vatican’s auditor general, Libero Milone, resigned in June, just a few weeks after the struggle between APSA and the Secretariat for the Economy became public. The terse announcement of his departure, with no explanation offered, and the notice that a search for Milone’s replacement would begin “as soon as possible” suggested that his resignation was not planned in advance. Italian media reported that he had recently been offered a post as director of the Italian broadcasting network but had turned it down, saying that he wanted to focus on his responsibilities at the Vatican.
Several weeks after Milone’s departure, in September 2017, he disclosed to reporters that he had been forced to resign after he probed into evidence of financial misconduct by an important Vatican official, whom Milone, bound by a confidentiality agreement, declined to identify. The assistant secretary of state, Archbishop Giovanni Becciu, called this charge “false and unjustified,” yet the archbishop confirmed that he had given Milone a choice between resigning quietly and facing criminal charges for “spying on the private lives of his superior and staff.”
If Milone was “spying” on other Vatican officials, he may have had good reason to do so. Suspecting that his office had been bugged and its computers hacked, he brought in an outside contractor to investigate. When the contractor confirmed that a computer in the auditor’s office had been compromised, Milone instructed him to broaden his investigation and identify the culprit. In other words, having learned that he was under surveillance, he indulged in a bit of counter-surveillance.
Responding to Milone’s disclosures, an official Vatican statement charged that the auditor general had “illegally engaged an external company to conduct investigative activities on the private life of Holy See personnel.” The key word here is “illegally.” Had Milone exceeded his authority, violating the statutes that governed his role? A Reuters report offered an interesting observation:
It was not clear which statutes were said to have been violated. Article two of the statutes says the auditor-general has “full autonomy and independence,” including to “receive and investigate any reports on anomalous activities” of Vatican entities.
As I write, three months after Milone’s departure, the office of the auditor general remains unoccupied. In theory the auditor general would work under the prefect of the Secretariat for the Economy. But Cardinal Pell’s indefinite leave of absence to defend himself against sexual abuse charges in Australia leaves that office empty too. If no one at the highest levels of the Vatican feels an urgent need to fill these positions, even with temporary administrators, then the campaign for financial accountability seems to have been suspended.
Coping with the Sex-Abuse Scandal
Vatican insiders may see financial transparency as the key to more responsible stewardship within the Roman Curia, but from the outside, it appears that the most urgently needed reforms are those involving the handling of sexual abuse accusations.
The tightening of disciplinary procedures for clerics accused of sexual misconduct began with the American hierarchy in 2002 and accelerated through the pontificate of Benedict XVI. But two related problems remain unaddressed. First, the Vatican has not yet ensured that the same “zero-tolerance” policy will be in force, and that abuse complaints will be promptly addressed, in every ecclesiastical jurisdiction throughout the world. Some bishops have lagged in their responses to the crisis.
Second, and more important, the Vatican has not yet established an effective policy for dealing with bishops who neglect their respon
sibility to deal with predatory priests. As I explained in my book The Faithful Departed, the negligence of many Catholic bishops—and worse, their deliberate efforts to mislead the faithful by covering up evidence of abuse—was more damaging to the credibility of the Church than the abuse itself. The sexual abuse of young people is a crime and a terrible sin, but the Church has a long acquaintance with individuals’ sins. It was Church leaders’ siding with the predators at the expense of their victims and lying to protect the criminals that shook confidence in the entire institution. If bishops would lie about such things, how could they be trusted on other subjects? And if the bishops were not trustworthy, how could we know that we were receiving the true Faith, passed down from the apostles?
During Francis’s pontificate, the Vatican has been confronted by accusations of sexual abuse against two prominent prelates. Neither case has yet produced a clear result—although not through any lack of diligence on the part of the Vatican.
The first case involves Józef Wesołowski, a Polish archbishop and Vatican diplomat who in 2013 was accused of molesting boys while serving as the papal nuncio to the Dominican Republic. Recalled to the Vatican, Wesołowski was laicized in the first stage of canonical proceedings. Prosecutors in the Dominican Republic and Poland had expressed interest in bringing criminal charges against him, but the Holy See chose to continue its own proceedings with a criminal trial, reasoning that the former nuncio was immediately subject to Vatican law. The criminal trial was postponed, however, when Wesołowski—who was under house arrest at the Vatican—fell ill. He died in August 2015 before the trial could resume.
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