Merchants in the Temple (8 page)

Most Reverend Monsignor,

Among the tasks awaiting us in the short term there is also an inspection of the activity and the role that the Secretariat of State plays at the economic and administrative level. This was already mentioned to the Secretary of State at a recent meeting. [The former Secretary of State, Tarcisio Bertone, had retired after reaching the age limit. In his place Francis had appointed Cardinal Pietro Parolin, who took office on October 15, 2013.] Based on what came out at the meeting, we believe that an ad hoc action—formal, explicit and unequivocal—could help confirm the desires of the superior Authority.

The Commission feared that its investigation would continue to be paralyzed by inertia and resistance. Indeed, the letter did not produce the desired effect: the stalemate continued. On December 18, Filippo Sciorilli Borelli of McKinsey of Zurich, one of the Commission's outside consultants, made another attempt to gain clarity. He managed to schedule an appointment for the next day with Monsignor Alberto Perlasca, the man inside the Secretariat of State in charge of the Peter's Pence. To prevent yet another postponement, Borelli sent an advance email detailing point-by-point the information and documents he would be requesting on the bank accounts and the expense items for the fund. The email was sent from his computer at 2:09
P.M.
on December 18. At 2:16
P.M.
the prelate's response arrived in his inbox. It ran to a total of seventeen words:

Very good. Better at 9:30. With regard to your questions, we'll see if and how to respond. Regards.

The next day, December 19, the team of consultants—Ulrich Schlickewei of McKinsey, Claudia Ciocca of KPMG, and Carlo Comporti of Promontory—met with Monsignor Perlasca at the Vatican. They were expecting answers—finally—about where the offerings of the faithful had ended up. The meeting was cordial, and the three laypersons asked numerous questions, but the answers they received were unsatisfactory. When they left the room, the three of them looked at one another, shocked and aggrieved. They perceived a seemingly impenetrable brick wall. When they got back to the office, they decided to notify chairman Zahra.

Today we had a meeting with Monsignor Perlasca to obtain a better understanding of the use of the St. Peter's Pence. The meeting was cordial but we did not learn anything new. We were told that part of the money is used to pay the deficit of the Curia, while the other part is for the commitments of the Holy Father, but not for the setting up of reserves. When we requested more details, they refused to reveal anything more.

What was the reason behind all the mystery? Without the requested information the investigation into the Vatican finances was at risk of running aground—an investigation that had started at the express request of the Holy Father. The concerns mounted. Other complaints were made to chairman Zahra, always by the consultants:

One of the biggest gaps is the Peter's Pence, where they did not give us access to a complete vision of the collection and management of the funds (we're talking about at least 30–40 million euros, which is the net of the total revenue minus the financing of the Secretariat of State and APSA). A second gap is, to put it bluntly, “what they are not telling us.” We don't know whether other funds or assets, in addition to the Peter's Pence, are being kept off the books of the Secretariat of State.

What They Don't Want to Say

Five months had already gone by since its first letter to the Vatican's administrative bodies and the Commission was still at the starting point. There was still no way of knowing whether there were off-the-books funds that were not included in the consolidated financial reports. So the members decided to go straight to the top. On January 3, 2014, Monsignor Vallejo Balda, the coordinator of the Commission and the liaison with the Curia, wrote a firm letter to the new Secretary of State, Monsignor Pietro Parolin, with a request for clarification. In the letter he refers explicitly to the Pope's wishes twice in six lines:

Most Reverend Excellency,

For some time now, in fulfillment of the tasks assigned by the Holy Father to this Pontifical Commission, a large-scale audit
in loco
has been under way at the main Entities of the Holy See that conduct activities that are significant at the economic and administrative level. We were pleased to find, almost everywhere, a cordial reception and concrete collaboration, a sign of the profound awareness of and loyal adherence to the
desiderata
of His Holiness. This activity also involves necessarily the Entity that you direct. Pursuant to the dictates of the Pontifical Chirograph by which this Commission was established, I would therefore like to cordially request that you provide instructions for our operators to be provided with all the documentation, on paper and in digital format, pertaining to the attached list. As you well know, we are working on a very tight schedule; we therefore request that this documentation be made available by January 10. While remaining available for any needs you may have, and thanking you already for the cordial collaboration that we know will be forthcoming, I avail myself of these circumstances to confirm my utmost devotion to your most reverend Excellency.

Monsignor Vallejo Balda

Attached to the letter Parolin found a long list of twenty-five entities on which documentation was requested.
6
The Pope's task force was particularly interested in the last two points:

We have not yet received: the list of bank accounts, stocks and the like, held or managed by the Secretariat of State (or any other activity) and a full vision of the management of funds collected (expenditures, investments, etc.) of the Peter's Pence and other sources of revenue.

The Chairman of the Commission, Zahra, was well aware that the information provided was still insufficient. He waited impatiently for a reply from the Secretariat of State. Without that information it would be impossible to have a clear picture of the situation and propose a credible reform. After waiting in vain yet one more time, on January 16 he drafted an alarming letter to Francis:

Your Holiness,

I regret to inform you that your Commission is unable to complete the consolidated financial position of the Holy See due to the lack of fundamental information. We have requested from Monsignor Parolin a list of bank accounts held by the Secretariat of State, and of the investments made into bonds, funds and stock, as well as information on other accounts such as the Peter's Pence, but they never arrived. We realize that the Secretariat might wish to maintain confidentiality on some of these accounts, but it is not willing to make available financial information about any of them.

Without a complete picture of the financial situation of the Holy See, your Commission will not be able to evaluate the various risks present in the economic administration of the Vatican. This is a vital part of the work of the Commission and the members cannot complete their assignments if the evaluation of the risks for the Vatican is not taken into consideration. We would be most grateful if you could instruct us on this matter, since we do not wish to disappoint Your Holiness by not providing [analyses] of this important sector of our mission. We ask for your blessing.

On January 30, an answer finally arrived, either thanks to the direct intercession of Francis or the pressures of Xuereb on Parolin. The Secretariat of State delivered a twenty-nine page dossier bearing the grandiloquent title: “The Venerated Financial Report.” In the first confidential document that I was able to read, it emphasized that

the Peter's Pence consists of the traditional gathering of offerings collected on the feast day of Saints Peter and Paul at all the dioceses of the world and of all the offerings delivered during the celebrations to the direct collaborators of the Holy Father or his envoys. It is entrusted to a special office of the general affairs division of the Secretariat of State that is in charge of managing the collection of offerings for the charitable works of the Holy Father and for the Holy See.

The Secretariat of State then went on to specify that this information was protected by the utmost secrecy:

While on the one hand an analytical report on the revenue relative to the Peter's Pence is published annually, on the other absolute confidentiality has been maintained to date, in compliance with Superior instructions, on how the report is used, since it is excluded from the consolidated financial report of the Holy See.

In practice, to date, the offerings for the poor are still a black hole: absolute secrecy on how the money is spent and only an “itemizing” of how much is taken in, thereby sidestepping the requirement of accounting in the official financial reports. A decision dictated by “superior instructions,” in other words, by the Secretary of State or the previous Pope. Why all the secrecy? What was done with the money? Here is the response, vague but illuminating:

The collection is used for charitable initiatives and/or specific projects indicated by the Holy Father (14.1 million), for the transmission of offerings with specific targets (6.9 million) and for the maintenance of the Roman Curia (28.9 million). Plus the setting aside of 6.3 million from the Peter's Pence fund.
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This means that more than half of the offerings that arrive from the faithful throughout the world and that should go to the needy ends up instead in the coffers of the Curia: to be exact, 58 percent, not counting the sum that was set aside. If we do an item-by-item check of the “donations of the Holy Father,” what clearly emerges from the Secretariat's unpublished document, is that the Curia largely used that 14.1 million to balance the shaky finances of the Holy See rather than for charitable works: 5.5 million euros went to the printers, 1 million to the library, and 309,000 euros to the foundations. In other words, of the 53.2 million taken in through the Peter's Pence (2012)—to which we should add the three million in interest payments—a good 35.7 million (67 percent) was spent on the Curia and another 6.3 million (12.4 percent) was not used, set aside as reserves of the Peter's Pence fund.

In the Red

For every euro that finds its way to the Holy Father, barely 20 cents end up in actual projects to help the poor. This situation is enabled by a lack of financial oversight in the Apostolic Palaces. Almost every department in which former Secretary of State Bertone convinced Benedict XVI to appoint his Italian loyalists is showing a deficit or other problems, as the confidential file shows:

From the summary outlines of the financial situation, it appears that 2012 ended with a financial deficit of 28.9 million euros, based on the difference between the 92.8 million in revenue and 121.7 in expenditures. The expenditures consist of the 66 million deficit of APSA [real estate management], the 25 million deficit of Vatican Radio, 25.4 million for the operation of the pontifical nunciatures and 5.3 million for the operation and direct expenses of the Secretariat of State. Given the above-mentioned revenue, the Secretariat of State recalculates in advance the deficit of APSA and, in a broader sense, of the Roman Curia, which is unable to achieve the desired balanced budget through its own resources.

Therefore, every year the Secretariat of State is forced to come up with huge sums of money that it withdraws directly from the offerings of the faithful to the Holy Father.

The Secretariat of State is thus forced every year to dip into the resources of the Peter's Pence, removing a sizeable amount for the maintenance of the Roman Curia, especially to cover the costs of personnel employed there, which is the largest single budget item … Over the years the Secretariat of State has de facto and by necessity taken on the role of a financing agency through the “improper” use of the Pence, collecting other resources through the pontifical nunciatures that are the liaison between the Holy See and the bishops' conferences and dioceses of the world.

This was the worst possible news for a Pope who had humbly chosen the name of the saint of the poor.

If these sums of money were not being spent, then why weren't they invested in order to make them more profitable? I was able to ascertain that the 377.9 million total of the Peter's Pence reserves is divided up into bank accounts in twelve different banks: the largest sums are deposited in the IOR (89.5 million) and Fineco of Unicredit (78.5 million). Fifty-eight million euros are sitting in the vaults of the Merrill Lynch commercial bank. At Credit Suisse 46.5 million is held. Between 2011 and 2012, all this money has guaranteed truly modest interests: only 2,979,015 euros, not even one percent, a ridiculously low rate. Why? And above all, why are the set-aside euros not used?

Thirteen Unanswered Questions

Francis's men were left speechless by the financial report. By carefully examining the information they had received, the financial consultants working for the Commission found numerous irregularities, rather obvious mistakes, and various discrepancies. After reviewing it for a few days, in the late afternoon of February 10, 2014, Filippo Sciorilli Borrelli of McKinsey decided to make his move. He sent Zahra thirteen questions about the finances of the Secretariat of State. Precise questions regarding deposits, expenses, and the actual management of the Pence. The first question concerned the interest rates, which were too low. How was this possible? His findings left no uncertainties:

In the document it is stated that the average annual interest rate recognized by the IOR for the Peter's Pence Fund [generated] three million euros in 2012. In 2012 89.5 million euros were deposited at the IOR. Does this mean that the interest rate was three percent? Is this statement true or false?

If true—and there was no reason to doubt that it was—then it is not clear, “what to make of the interests on the other known deposits (for example, the 58 million at Merrill Lynch). If the above statement is false, then how do you explain that the overall interest rate is barely one percent of the total funds invested (in 2012, three million in interest on a base of 377.9 million euros)?”