Merchants in the Temple (4 page)

In the opinion of the General Accountant of the Prefecture, Stefano Fralleoni, the crisis was caused by the fact that some administrations are, “completely uninformed of the criteria for compiling financial statements, which often do not reflect reality, with estimates that come out of nowhere.”
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The absurd dimensions of the problem became apparent when it was learned that the Prefecture itself—which is supposed to oversee the finances of the other departments—didn't even know all the departments it was supposed to supervise. “It would be necessary—the accountant underlines—to complete and update regularly the list of all the entities that constitute the Holy See: only in this manner, in fact, could the Prefecture carry out a complete inspection of all the different realities and their operations.”

During the auditors' inspection, they realized that the transparency and efficiency regulations introduced by Benedict XVI and Francis were being disregarded, from the smallest to the largest cases. Salvatore Colitta, the auditor from RB Audit Italia, gives the example of the price list for items being sold at the Vatican. “It hasn't budged in two years,” he asserts, “a pen costs 50 cents although its value today should be 1.20 euros. More than 70 percent of APSA's purchases do not follow required procedures but rather emergency procedures. The phenomenon is difficult to control.”

“Noncompliance with existing regulations”—Fralleoni goes back on the attack—“is another critical point, because of a practice that has never changed through a kind of inertia. Bookkeeping at the Holy See offices is not standardized, despite the existence of regulations for accounting principles approved by the Holy Father.” Another example? Recently a new accounting regulation was introduced for everyone but it was discovered that, “some offices keep their own private stash that they can manage on their own, and thus they don't declare all their revenue.” This is one of the points that the Pope will present to the cardinals as “satellite management,” because there are offices “that often operate independently although they belong to the same institution.”

When the Prefecture conducts an audit, there is always the risk that “it will be perceived as a form of interference.” But audits are fundamental. “A great deal of inefficiency could be ended,” Messemer concluded, “simply through more regular inspections.” Instead the situation was spiraling out of control. Just look at what is happening in the real estate sector. In addition to “outrageous delays in payment”—Colitta continues—“there are self-reductions in rent: the Conciliation Auditorium cuts its own rent by approximately 50,000 euros a month, while the Vatican is still paying taxes based on the old lease.” Or take the case of “strategic investments” that had actually led to major losses, such as the Governorate's purchase of stocks in an Italian bank, the Banca Popolare di Sondrio, which resulted in losses of 1,929,000 euros in a very short time.
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We Cannot Turn a Blind Eye

Josep Cullell from Barcelona delivered the harshest analysis:

It's true, the Prefecture can no longer afford to be so gullible, so naïve, but must set priorities and make sure the rules are followed … Our finances are unsustainable and completely chaotic. The Vatican has always been characterized by a kind of ambiguity, like the Kingdom of Taifa,
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in choosing a specific institution that would hold all the power, govern and establish priorities, and not only in terms of finances …

Both in Barcelona and on the outskirts of Rome there is widespread poverty, also afflicting children, and this is a troubling sign of recession. We cannot turn a blind eye to this and keep restoring monuments. I can't believe the data that has been given to me. The real economy could never allow a situation like this. There are even doubts about earnings from our financial investments.

There are various realities at the Vatican that are unsound: the Governorate, which didn't even bother to present an annual financial report last year;
L'Osservatore Romano
; the Vatican Radio, with losses that were temporarily concealed through “financial wizardry”; the IOR, which could easily be closed and replaced by APSA. The IOR has little to offer and could be replaced by another institution. Closing it would solve many problems for the Pope and for the Church of Rome.

Zahra, the economist from Malta, realized that Francis had to be warned. So he tried to speed up the clock:

After a long period of status quo, the time has come to change. We're at a crossroads: we need to make a decision. The tone we should take is the one suggested by the Pope, namely firmness and courage, and the goal is to achieve greater transparency, integrity and seriousness. We have to take advantage of the fact that the Pope himself is issuing these guidelines. We can't change attitudes overnight, but we can translate what the Pope is saying into concrete actions in order to gradually achieve the goals we have set.

At the end of the meeting, Zahra, Messemer, Cullell, Kyle, and Prato came to an agreement: it was essential to warn the Pope immediately. They were the ones who signed the shocking letter to the Holy Father.

Five days later, on June 23, the Spanish Cardinal Santos Abril y Castelló entered the scene. A close friend of Francis and one of his few confidants, he was the archpriest of Santa Maria Maggiore, the majestic basilica where Jorge Bergoglio used to pray during his visits to Rome as a cardinal. Abril y Castelló was a reserved, serious, and honest cardinal, far from the scheming characters of the Curia. He had slowly won the Pope's trust by reporting deficits, irregularities and power games, starting with alleged irregularities in the restoration of the basilica where he is an archpriest.
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It was Abril y Castelló who forwarded to the Pope the concerns of the auditors. They didn't want the Holy Father to misunderstand them or put them in a bind, as had happened so many times in the past.

But not this time. This time, the fuse was lit.

 

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The Saints' Factory

An Unprecedented Change

Pope Francis was not unaware of the Curia's attempts to scuttle his reforms, and he knew he would have to fight to prevent his hopes from being crushed by the interests of the few and the inertia of the many at the Vatican. These hopes were also shared by nuns, brothers, priests, and all the humble servants of the Church, who on March 13, 2013, after the appearance of the white smoke, had waited with joy—but also apprehension—to hear the name of the new Pontiff. When Jorge Mario Bergoglio first stepped on to the balcony overlooking St. Peter's Square, he wore no frills or ornaments. He uttered a simple sentence that warmed the hearts of the millions of faithful: “Good evening … pray for me,” he exhorted them.

On July 18, 2013—only a couple of weeks after his dramatic meeting with the cardinals in the Sala Bologna—the Pope appointed a new commission of inquiry into the Vatican finances: the Commission for Reference on the Organization of the Economic-Administrative Structure of the Holy See (COSEA). Its job was to collect all of the information on the financial management of the Curia, and the Commission would report directly to Francis. It was a brand-new body that would not diminish the authority of the Special Council of fifteen cardinals, chaired by Secretary of State Bertone, but would still present an open challenge to the powers that be. The day of reckoning was near. Francis's move was an implicit reprimand to the men who had managed the Holy See during the pontificate of Benedict XVI and, prior to him, of John Paul II.

The members of the Commission selected by the Pope were vetted and briefed by the Substitute of the Secretary of State, Peter Wells.
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The chairmanship of the new Commission was assigned to Joseph Zahra of Malta, one of the international auditors who in late June had signed the letter to the Pope alerting him to the impending financial crisis at the Holy See.
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He was the right man at the right time. In addition to his close relations with the leaders of multinational corporations and international finance, he was trustworthy, a paramount concern for Francis. The selection of Zahra marked the start of a new era and sent a warning signal to the Curia: the Pope prized and was ready to reward those who had the courage to denounce the wrongdoing and opaque interests inimical to the pastoral mission of the Holy Roman Church.

Francis's attitude represented a radical shift from the papacy of his predecessor. Under Benedict XVI, Monsignor Carlo Maria Viganò, Secretary of the Governorate, reported to the Pontiff outrageous expenditures such as a Christmas tree in St. Peter's Square that cost 500,000 euros. As his reward, he was discredited at the Vatican and exiled to the United States as the Apostolic Nunzio (a permanent diplomatic representative of the Holy See) to Washington, a lower-level position. The dramatic expulsion of Viganò was one of the reasons why Benedict XVI's butler, Paolo Gabriele, contacted me and decided to trust me with the thick file of correspondence between Viganò, Bertone, and the Holy Father. (These letters documented waste, corruption, and injustice at the Vatican and were the basis of my previous book,
His Holiness
.)

Zahra was not expecting this assignment but he shifted into high gear immediately. The first item of business was a trip back to his beautiful home in Balzan, a small town of four thousand people in the heart of Malta, where he closed his pending case files. From the office of his financial consultancy on the first floor of the Fino Building, on Notabile Road in Mriehel, Malta, his assistant, Marthese Spiteri-Gonzi, was handling all the details of his move to Casa Santa Marta. To prepare for his new assignment, Zahra set about rereading the minutes of the biannual meetings of the international auditors. After all the warnings that had gone unheeded under Benedict XVI, now it appeared that Francis was willing to hear the truth about financial irregularities and appreciated the individuals who had the courage to report them. In addition to Zahra's appointment as Chair, another auditor, the German Jochen Messemer, also entered the pontifical commission.
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The papal decree establishing the Commission, known formally as a chirograph, was signed on July 18. The functions of the new structure were summarized in the seven points of the chirograph. In point 3 the Pontiff was clear: “the administrative bodies concerned … are required to collaborate readily with the Commission. The official secret and any other restrictions established by judicial norms do not impede or limit the Commission's access to documents, data and information necessary for the execution of the tasks assigned to it.” In other words, the commission would have complete autonomy and access in its investigation. Its every question had to be answered, and confidentiality could not be used as an excuse.

Zahra would work with seven other members: the coordinator and six advisors, “all appointed by the Supreme Pontiff”—according to the chirograph—“experts in the juridical, economic, financial, and organizational matters dealt with by the Commission.” Coordination and relations with the ecclesiastical world would be handled by the Secretary of the Prefecture, Monsignor Lucio Ángel Vallejo Balda, an Opus Dei member who had earned the trust of Francis.
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The Pontiff knew that he was playing a dangerous game in attacking the entrenched centers of power. “The situation is of an unimaginable gravity,” he would say to his closest collaborators. Many anomalies within the Church structures “are rooted in solipsism, a kind of theological narcissism.” The basic problem is that a solipsistic Church “falls ill.”
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All the Commission's Men

The members of the Commission were almost all European, with the exception of George Yeo, an expert in economics and finance who for years had held ministerial positions in his native Singapore.
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Well-known and respected in the East, he had also been Chief of the General Staff of the Air Force. At the Vatican, Yeo had an important admirer: the Australian cardinal George Pell, who was carefully following the Pope's every move in order to earn a position for himself in the renewal of the Curia.
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The youngest member of the Commission, and the only Italian, was a woman: Francesca Chaouqui, thirty years old, born in a small town in the province of Cosenza to an Italian mother and a French father of Moroccan origin. She had worked previously at Ernst & Young, in the field of public relations and communications, prior to which she had learned the ropes at the influential law firm Orrick, Herrington & Sutcliffe Italia. She was married to an IT specialist who had worked with the Vatican for many years. It would be her job to create the new department in charge of Vatican communications, from the press room to the daily newspaper
Osservatore Romano
.

Another member of the Commission was Jean-Baptiste de Franssu, a French manager from the field of strategic consultancy. Cardinal Bertone had brought him to the Vatican and appointed him to various posts: in his first year at the Vatican, he had quickly risen through the ranks.
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A Spanish member of the Commission, Enrique Llanos, formerly of KPMG, was a personal friend of John Scott, vice president of KPMG Worldwide, a leading accounting and management consultancy firm.

The most senior advisor was from France. Jean Videlain-Sevestre was also an expert in consultancy and investments, a businessman with significant experience at Citroën and Michelin. He immediately established the approach that his colleagues should take to the investigation: “Our Committee has to be beyond reproach, independent, and competent,” he wrote on the eve of the much-awaited first meeting of the group. Its job was to help the Holy Father achieve the objective he had first indicated as the Archbishop of Buenos Aires: “The new Pope must be able to clean up the Roman Curia,” he had told a religious group from the Schoenstatt movement.
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