So now the question is whether the Vatican will default on its financial obligations.
When asked that question, the Vatican’s top financial officer replied, “No, I don’t think so.” That answer in itself does not inspire great confidence. But the more significant point is that the question of default has been raised—even by the Vatican’s own news service.
Father Juan Antonio Guerrero Alves acknowledged that the Vatican is “certainly facing difficult years.” The Jesuit priest, who succeeded Cardinal George Pell as the prefect of the Secretariat for the Economy, anticipates an enormous drop in revenues this year—at least 25%, perhaps 50%—at a time when the Vatican has already been running worrisome budget deficits. Father Guerrero expects that this year’s budget will run a deficit of somewhere between $65 million and $110 million. The veteran Vatican-watcher John Allen has heard more pessimistic forecasts, with the deficit approaching $160 million.
To put those numbers in context, the Vatican’s expenditures have been approximately $300 million a year. So unless there are dramatic budget cuts, at least one-fifth, and maybe as much as one-half of the Vatican budget will be written in red ink. Obviously this is unsustainable.
A significant part of the problem that faces Father Guerrero this year has been caused, or at least aggravated, by the CO19 epidemic and the shutdown of the world’s economies. Contributions to the Vatican will drop, along with contributions to the dioceses that send financial support to Rome. Another part of the problem is structural: the Vatican needs to trim costs. Father Guerrero promises work to “centralize financial investments, improve personnel management, improve procurement management.” But there is a third reason, which the Jesuit official did not address in his interview with Vatican News: a crisis of confidence.
When Cardinal Pell was named the first prefect of the Secretariat for the Economy, he promised the same sort of structural reforms that Father Guerrero now mentions. But Cardinal Pell’s campaign encountered stiff opposition within the Roman Curia. His plan for an outside audit was squelched. The Secretariat’s own auditor was fired and not replaced. When Cardinal Pell took a leave of absence in June 2017, his post remained vacant until last November, when Father Guerrero—who has neither Pell’s senior status nor his intimidating persona—was finally named.
Meanwhile the Vatican has been shaken by a series of financial scandals that continue to this month. Italian journalists have exposed the seamier side of the Vatican’s dollar dealings, and while their reports may not be entirely accurate, the Vatican itself has given no public explanation for embarrassing irregularities that culminated last October when the Vatican’s own police raided the offices of the Secretariat of State. As I observed earlier this week, there is a clear and obvious explanation for the drop in contributions to the Peter’s Pence collection, quite apart from the worldwide recession. Prudent donors are leery of sending high-dollar contributions to the financial equivalent of the Keystone Kops.
And now, according to John Allen (whose sources are usually reliable), there is a proposal to consolidate the Vatican’s financial assets under the control of the Administration of the Patrimony of the Apostolic See (APSA). If the report is true, that proposal is a breathtaking display of institutional arrogance. Because for the past several years, APSA has been at the very center of nearly every report of questionable financial dealings at the Vatican.
It was APSA that thwarted Cardinal Pell’s audit. It was APSA that was Pell’s prime suspect when he sought to ferret out information about $100 million in undisclosed funds. APSA was the office whose auditor, Msgr. Nunzio Scarano, earned the nickname “MSGR €500” because of his penchant for carrying around a wad of high-denomination bills. APSA was the office where Pope Francis lodged Bishop Gustavo Zanchetta, who was the subject of a police investigation in his native Argentina. APSA was the office that issued a €50 million loan to a troubled Italian hospital, despite regulations that barred APSA from making such transactions—and then pressured the Papal Foundation to make its own improper gift of $25 million to cover the loss.
APSA has been the Vatican office most adamantly resistant to calls for accountability and transparency. In 2016, when Pope Francis transferred several responsibilities from the Secretariat for the Economy to APSA, I rued the move as a setback for economic reforms. To make an even greater transfer of authority now would be more than a setback; it would be setting the fox to guard the henhouse.
Why would any sober Vatican official entertain such an outlandish suggestion? A cynic might wonder whether the real goal is not to uncover financial misconduct but to cover it up. The same cynic might note that although the Vatican has been investigating a certain speculative investment in London real estate for over a year, there has been no public explanation of the deal, nor any indication of who is being held responsible. Just as, on another front, months of alleged investigative activity have not yet produced any accounting for the McCarrick scandal.
(And the McCarrick case may have an important bearing on the financial imbroglio. Remember that McCarrick was a legendary fundraiser, who brought tens of millions of dollars in donations to Rome. Those tens of millions would come in awfully handy today. It is easy to see how the yawning budget deficit opens up a path to corruption.)
Will the Vatican ever prosecute the officials responsible for illicit investments? Ed Condon probed that question in an astute analysis for the Catholic News Agency, and his conclusions are not reassuring. Low-level clerics involved in those transactions might be willing to take the fall, and protect their superiors from scrutiny, Condon writes. But lay employees, who might lose their jobs and even face imprisonment, “could start talking.” To guard against that possibility, Condon expects that there will be pressure inside the Vatican to curtail the prosecution:
In short, there may be no trials at the end of the Vatican’s investigation. And those observing from outside Rome are likely to wonder why.
When Vatican News asked Father Guerrero when the Vatican would publish an official balance sheet, he did not reply directly. Instead he stressed that the Holy See does many good works. “It deserves trust,” he insisted.
Wrong. The Catholic Church deserves trust. Right now the Vatican doesn’t.
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