Vatican Finances and Opus Dei

Last week the Wall Street Journal published an article with interviews of Vatican staff who are familiar with the current financial situation there. (Quotes below, since there's a paywall)

As we've talked about on here before, the Vatican's poor financial situation makes it vulnerable to bribes from wealthy religious groups/orders/personal prelatures. (It's pretty well known that bribes were regularly given by the Legionaries of Christ during the pontificate of JP2, for example; although JP2 at the time seemed genuinely to believe LC was good and to disbelieve the sex abuse allegations against Maciel which had been made to the CDF.)

The WSJ article also obliquely alludes to the fact that Vatican needed to be 'bailed out' when the Banco Ambrosiano failed in 1982. $ 250 million (at the time). This is the same year that JP2 declared Opus Dei a personal prelature with the bull Ut Sit (which was swiftly rendered moot by the Code of Canon Law 1983 canon 294, but I digress).

The WSJ obliquely references this when it mentions Roberto Calvi, the chairman of Banco Ambrosiano. Calvi's wife said in interview after he died that the Vatican (under JP2) had put her husband in charge of negotiating with Opus Dei to get them to come up with the money.

The bulk of it came from a very wealthy supernumerary man in Argentina, according to that supernumerary's wife, who was interviewed in the Argentine press (it was in an interview done by, I think, Paula Bistagnino; but the original article seems to have been taken down from the internet, there is only a shorter version that excises it). I think Calvi's son was also cited by Gore in his recent book Opus.

Calvi was later murdered. Nobody thinks that Opus people or Vatican staff were involved in the murder of Calvi (at least I don't). The case is still unsolved.

Anyway, returning to present-day, Leo 14 is inheriting a financially strapped Vatican that runs at a deficit and cannot afford to pay the pensions that are due to its retiring employees "in the midterm" years to come. Excerpts from the long WSJ article:

"... For over a decade, Francis had struggled to bring some transparency to the Vatican’s shadowy balance sheet. Now, in the final weeks of his life, advisers were filtering in and out of his austere reception room, presenting the details of a microstate awash in priceless treasures but tumbling deeper into debt. The budget deficit had tripled since the Argentine took office, and the pension fund faced up to 2 billion euros in liabilities it wouldn’t be able to fund. ...

To understand the combination of deficit spending and mismanagement that is driving the Vatican into unsustainable debt, Wall Street Journal reporters met officials from the Vatican’s bank, pension fund and regulatory institutions and with cardinals attending this week’s conclave. Several met in secret, in locations arranged over Signal, citing an atmosphere of suspicion as the Vatican’s balance sheet deteriorates and blame circulates. ...

The first concern, they said, was a culture of financial malpractice that Francis was unable to defeat before his death. Shortly before the pope died, one of the banks managing assets for the Institute for the Works of Religion, or IOR, as the Vatican Bank is also known, cut ties—a sign of dwindling confidence in the Curia’s anti-money-laundering practices.

The deeper concern is the unforgiving math of running a cash-strapped country of tremendous wealth. Vatican museum walls are lined with the masterpieces of Michelangelo, Caravaggio and Leonardo. More than 1 million old and rare books are stored under the vaulted, frescoed ceilings of the Vatican Library, including some of the earliest extant Greek-language manuscripts of the Old and New Testaments. But the Vatican has no intention of ever selling off its inheritance. It lists many priceless works of art, including the Sistine Chapel, on its books at a nominal value of one euro each, as a way of indicating it prizes their religious and artistic significance over their financial worth. And yet the upkeep and insurance are burdensome. ...

With a population made up primarily of priests, nuns and church workers, it didn’t have much of a tax base. But the Vatican eventually realized it could leverage its tax-exempt status to become a financial hub, and its newly created bank over time took sizable shares in Italian and European companies.

The Vatican developed a reputation for murky financial practices, and the Vatican Bank was plagued by scandals, including allegations of money smuggling and laundering, for decades. The bank in the early 1980s became embroiled in the collapse of Italian lender Banco Ambrosiano, whose chairman, Roberto Calvi, was found dead with bricks in his pockets, hanging under London’s Blackfriars Bridge. The Vatican Bank agreed to pay almost $250 million to settle claims by the Italian bank’s creditors. But the question of how to finance a tax-free theocratic city-state lingered. 

When Pope Benedict XVI was elected in 2005, the rolling scandals were evolving into a financial crisis. One of the Vatican’s most lucrative income sources by then was a two-pump gasoline station located about 50 yards south of St. Peter’s, serving cars lined up to fill their tanks with gas that cost up to 30% less than in Italy. The German pontiff established a unit to combat money laundering and asked Moneyval, Europe’s financial crimes watchdog, to look into accounts. For the first time, the Vatican Bank started releasing annual reports.

But by July 2012, Moneyval said the Vatican was still failing in almost half of its 16 key areas of financial standards and called on the Vatican to strengthen measures to prevent money laundering and terrorist financing.

In January 2013, Italy’s central bank lost patience and blocked all electronic payments to Vatican City, leaving tourists unable to take money from ATMs or to use their bank cards. Priests had problems executing payments. Within a month, Benedict announced he would resign, the first Pope to do so since Gregory XII in 1415. ...

Francis, who had witnessed the cost of financial mismanagement in his homeland of Argentina, established a new secretariat for the economy to run the Vatican’s finances. The group, made up of prelates and external financial experts, was led by Australian Cardinal George Pell. Jean-Baptiste de Franssu, a former chief executive of Invesco Europe, was tapped to run the Vatican Bank, which closed thousands of accounts, purging clients suspected of using the Vatican to evade taxes.

Shortly after, in spring 2015, the Vatican hired Libero Milone, a former Deloitte executive who had worked at the accounting firm for more than 30 years, to become the Vatican’s in-house auditor. Pell asked him to look into the accounts of the doctrinal office, which was late in delivering its budget. ...

Milone questioned the doctrinal office’s [DDF's] treasurer. He eventually discovered that more than $500,000 was missing from the doctrinal office’s Vatican Bank account—later found in a shopping bag and in the account under Muller’s name [Muller=head of CDF]. ...

Milone said he met with Muller and the money was returned to the congregation’s account. Muller said that the handling of the funds was “a little bit strange or not modern” but that keeping access to the funds was vital for maintaining the congregation’s operations, whether it was hosting an international commission of theologians or buying office supplies. Getting funds from the Vatican’s treasury—known as the Administration of the Patrimony of the Apostolic See, or APSA—could take a year, he said. ...

Soon, Milone himself was in a power struggle with APSA, which functions as the Vatican’s Central Bank and clears Vatican transactions. After the auditor questioned APSA’s accounting practices, APSA began scrutinizing Milone’s own expense reports, asking why he and his team purchased items as minor as coffee outside the Vatican City borders. Milone pleaded with APSA that the coffee in Rome was cheaper and tastier than what was available in the Vatican. As that fight broiled on, efforts to reform the pension plan stalled. ...

In September 2015, Milone discovered his office had been broken into. He arrived on a Monday to find the bottom of his computer was unscrewed, with a spring missing, he said. Francis, instead of pressing for an investigation, proposed installing security cameras outside the office. ..."

And on and on. The stuff that happened after that is well known (just search Becciu).