4

Handcuffs in the Vatican

Cardinal Rambo Embarrasses the Curia

The Peter’s Pence was not the only black hole in the Vatican finances. There were others whose measure was difficult to take because of the limited, even patchy data returned to the Commission for Reference on the Administrative-Economic Structure of the Holy See. What little documentation did come in was tainted or hard to interpret. The Commission had hit a wall. Even its most astute and swift moves were immediately obstructed by an equally intelligent and unexpected countermove.

At the secret July 3, 2013, meeting, Cardinal Agostino Vallini had begged for the Holy Father’s indulgence, arguing that the irregularities in the Vatican finances were the result of ignorance rather than a deliberate cooking of the books. But there was nothing innocent about the misconduct of the men in charge of the Vatican finances. They suddenly turned into razor-sharp officials when it came to outwitting the Pope’s auditors. As a result, after more than six months since its inception the Commission was still unable to give the Pope a full and accurate picture of the Vatican’s financial health. There was no way he could know which funds he could earmark for charity, the missions, and all the actions to aid the poor that were the heart and soul of his pontificate. Paradoxical but true: in a theocracy like the Vatican, the Pope could not get his hands on basic information.

The Pontiff is often the last one to know and to be briefed, especially on money matters. It was still hard for him to know with any precision how much money was coming in and how much was going out. This made it almost impossible for Francis to bring the work of renewal that he was promoting tirelessly every day, inspiring Catholics around the world and filling them with hope. Everything was anesthetized, paralyzed. The smoke screen was obviously not accidental. It was meant to conceal superficiality, inertia, personal interests, and more. Without knowing the financial situation of the Vatican in detail, it was impossible to identify the problems and critical areas, and thus to propose solutions. And the idea of imposing the reforms was unthinkable.

But the Commission did not give up. Its investigation expanded from the Peter’s Pence and Congregation for Saints to new areas that often harbored surprises. One of its main targets was the Administration of the Patrimony of the Apostolic See, APSA, the administrative body that manages assets, stocks, and real estate, in addition to minting metal coins, headed by an Italian cardinal and Bertone loyalist: Domenico Calcagno.

Calcagno had been appointed President of APSA by Benedict XVI in July 2011. He made headlines after an investigative report for the popular Italian TV show Le Iene. The reporter Paolo Trincia found that between 2002 and 2003, Calcagno, as the Bishop of Savona, had ignored repeated instances of sexual violence against minors by a pedophile priest. The diocese of Savona had reportedly been aware of the priest’s strange behavior since 1980, when he was removed from a school in Valleggia, in the province of Savona, after fondling a boy. He was sent to Spotorno (only ten kilometers away), but he was still allowed to supervise a Boy Scout troop at the local Catholic youth center. Following new complaints, the new bishop of the diocese, Monsignor Dante Lanfranconi (currently the Bishop of Cremona) moved the priest to another parish. Once again he was sent to a place only a few kilometers away, in the town of Feglino, where he was allowed to open a community center for troubled youths.

Calcagno became the Bishop of Savona in 2002. Before dying, Father Carlo Rebagliati, former treasurer of the diocese, revealed that he had warned Calcagno about the pedophile priest and the danger to the minors with whom he was in daily contact. The Bishop’s response, according to Rebagliati, was evasive: “They might just be rumors,” he said. The Bishop had also been contacted by one of the victims of abuse, who testified that, “Calcagno … told me not to go to court, because the priest was a very fragile person who might commit suicide and then I would have that on my conscience.”

The Bishop did not address the problem until the following year. He wrote a letter to Cardinal Joseph Ratzinger, who was then the Prefect to the Congregation for the Doctrine of the Faith, asking for “advice on what approach to take.” Calcagno attached a file to the letter. It was an internal document of the Savona diocese, compiled by the Vicar General, Monsignor Andrea Giusto: a chart that summarized the behavior of the priest, going through every instance, from the first episode in 1980 until the most recent complaints twenty-two years later, by social workers from the area. The chart was a blatant admission, in black and white, in which the diocese revealed that it had moved the priest from one parish to another for almost a quarter of a century. But it concluded with a reassuring sentence: “Nothing has come out in the newspapers and no investigations are under way.”

Ratzinger’s reply has never been found. The only thing we know for certain is that after the letter, the priest was moved to Portio Magnone (twelve kilometers away from Feglino), reappearing magically at another Boy Scout camp in the area. And once again, a youth at the camp reported him for sexual molestation. The man continued to be a priest until 2010, when, thirty years after the first reports of abuse, he wrote in his own hand a letter requesting his dismissal from the priesthood.

The television report, which included the testimony of five boys describing incidents of abuse they had suffered between 1980 and 2005, cast a shadow over Calcagno but did not interrupt his brilliant career. Only four days before becoming Pope, Cardinal Jorge Mario Bergoglio—hounded by journalists about Calcagno’s participation in the Conclave—preferred not to take any questions.

Calcagno had also appeared in the news recently because of a rather unique extravagance for a prelate: his passion for firearms. The journalist Mario Molinari of Savonanews reported on the cardinal’s rich private collection of revolvers, Smith & Wesson .357 caliber magnums, an Escort pump rifle, and many more, all duly registered and declared. There was a small arsenal of collector’s items and more modern pieces that the Cardinal used at the firing range, where he had been a member since 2003. When he was asked for an explanation, Calcagno is said to have replied with the comforting tones of a good country priest: “They are all kept safe in a vault under lock and key.”

Relations between Calcagno and Francis were only good on a formal level. The Argentine Pope distrusted the old guard and its shadowy management of the Curia’s books.

Few people realize that there are actually two active banks at the Vatican. In addition to the IOR, there is APSA, a little-known entity at the heart of the Vatican financial web that is recognized throughout the world as a full-fledged central bank. One of its two sections, the special section, performs a sensitive function: it handles investments in stocks and bonds, and manages bank accounts and deposits. In practice, it manages the cash flow of the Holy See. Until November 2013, the head of the special section of APSA was Paolo Mennini, the son of Luigi Mennini, the historic right-hand man of Monsignor Paul Marcinkus, the most controversial figure in Church history because of his role in the Banco Ambrosiano scandal culminating in the death of “God’s banker,” Roberto Calvi.1

APSA would be yet another source of serious problems for the pontificate of Francis.

The Incredible Case of Monsignor Scarano

In March 2013, before the election of the new Pontiff, the prosecutors’ offices in Salerno and in Rome had begun an investigation into the financial activities of Monsignor Nunzio Scarano, the chief accountant of the special section of APSA. According to the indictment, the evidence gathered, and various wiretaps—even during the tense, frenzied days of Benedict’s resignation and the preparations for the Conclave—instances emerged of money laundering and attempts to import large amounts of capital from abroad through illegal channels. In practice, according to the indictment, Scarano provided a simple system of laundering money through his account at the IOR: he offered cashier’s checks for hundreds of thousands of euros in exchange for suitcases stuffed with 500-euro bills, which earned him the nickname, “Monsieur 500.”

Scarano, originally from Salerno, had worked in a bank before becoming a priest at the age of twenty-six. A lover of luxury, he had always enjoyed rubbing shoulders with celebrities, and could count among his friends jet setters from the world of cinema and television. He befriended some of Italy’s most popular showgirls, like Michelle Hunziker. But his true passions had always been real estate and money. In Salerno he bought and remodeled a 700-square-meter house and started up various real estate companies. In Rome he lived in an apartment owned by APSA: 110 square meters, on Via Sant’ Agostino, a few blocks away from Piazza Navona and the Italian Senate. Unlike other illustrious cardinals over the age of eighty living in princely residences, Scarano had to pay the rent: 740 euros a month. Similar apartments in the same neighborhood were commanding rents as much as three times greater.

Immediately after Francis’s election, disturbing rumors were circulating at the Curia and in Casa Santa Marta about a criminal investigation into the Monsignor. The newly elected Pope realized that he had to move with extreme caution. The situation did not materialize until May 29, after the deposition of Father Luigi Noli, an old friend of Scarano. As an employee of a central office of the Holy See, the APSA accountant enjoyed a kind of diplomatic immunity guaranteed by the Lateran Pacts signed in 1929 by the Vatican Secretary of State, Pietro Gasparri, and Italian Prime Minister Benito Mussolini. The investigators had to pursue their leads with the utmost discretion, through the proper diplomatic channels, but they were able to formalize the arrest warrant.

The Pope was at a crossroads reminiscent of the dilemma faced by John Paul II in 1987, when the Italian Supreme Court rejected the arrest warrant that the Milanese prosecutors had issued against the President of the IOR, Paul Casimir Marcinkus, on the charge of fraudulent bankruptcy, and against Luigi Mennini and Pellegrino de Strobel. The Supreme Court’s ruling confirmed that the Italian court system had no jurisdiction over the actions of persons who report to the Vatican. The three men were found to be employees of a central office of a foreign state and therefore immune from prosecution without the authorization of senior Vatican officials, which would never be granted. After long discussions and negotiations, Marcinkus, Mennini, and de Strobel did not serve a single day in prison.

In the first weeks of Francis’s pontificate, the old nightmares resurfaced, starting with the Banco Ambrosiano scandal and the murder of its president, Roberto Calvi, whose body had been found hanging under the Blackfriars’ Bridge of London in 1982.

The Pope had to decide on the freedom of a man, of a priest, so he consulted his colleagues. Opinions were divided within the Secretariat of State and between cardinals strolling in conversation through the splendid gardens of the Vatican. Some felt that the warrant should be rejected, as had always been the case in the past. Allowing the arrest would set a disturbing precedent in the history of relations between Italy and the Vatican City, and future decisions would be held hostage to it. Francis listened in silence. Only later would everyone realize that his mind was already made up. The policy of a soft but decisive revolution prevailed: a tangible sign of his break with the past.

At dawn on June 28, 2013, Monsignor Scarano was placed in handcuffs and is currently facing two trials, one in Rome for corruption, and one in Salerno for money laundering. The Pope was not at the Vatican. He was on his way back from a trip to Brazil. When he was asked for a comment on the plane, his answer was unsparing: “Do you think Scarano ended up in jail because he was similar to the Blessed Imelda?” The Holy Father was citing, ironically, the fourteenth-century child from Bologna who had died in ecstasy after receiving Holy Communion. His reply signaled the growing unbridgeable distance between the allies of Francis and his adversaries in the world of intrigue that characterized the finances of the Curia.

Money Laundering at the IOR

The Scarano investigation and the ensuing scandal ended up in the headlines of newspapers and television news programs throughout the world. Until now we have had no idea about what really happened after the arrest behind closed doors in the Vatican. Tensions ran high between the old and the new guard. On July 3—only five days after Scarano’s arrest—at the meeting where Francis announced the establishment of the COSEA commission, Ernst von Freyberg, the new President of the IOR, explained to the cardinals and the Pope the irregularities he had found in certain accounts at the bank, and the risk that there might be more:

What kind of problem do we have? It is mainly a problem of physical persons who use their accounts for illegal transactions, money laundering in every sense. They can be members of the clergy, they can be lay persons, there is no rule as to where the risk is greatest.

This may have been the first time that the President of IOR admitted that money laundering occurred at the bank. Or rather, the first time that we have the means of knowing for certain that inside the Vatican they were perfectly aware of certain illegal activities. It was a clamorous statement that confirmed the many suspicions that had festered since the scandals of the 1980s—suspicions that were always denied in official press releases. For decades the Vatican would not even confirm that the IOR was a bank.

Von Freyberg was convinced that his words would never leave the room, as if the cardinals and senior executives in attendance were under the seal of the confessional. Instead his shocking words were leaked and I am making them public for the first time in this book. Von Freyberg went even further by intimating that it was not easy to hunt down the money launderers, who could be religious or lay account holders. Practically every account was suspicious.

I think there are not so many cases. I myself checked on the computer the ones reported in the press on the first day, and they weren’t there … What is true is that Scarano’s account was present, an account that, to look at it today, had not been right for ten years, but he’s a real professional in money laundering … this was not good … Our problem is this: we are living in a triangle of true facts, like the Ambrosiano, like Scarano; of false rumors, like Osama Bin Laden and all the others; and of total silence on our part.

These were strong and shocking assertions, considering that until a few weeks earlier the Monsignor had played a major role at the Vatican. They raise the question of how Scarano had been able to act with such impunity for so many years, and who his enablers had been. For ten years Scarano had cultivated his personal business interests, apparently without attracting any notice. His individual culpability would be ascertained at the trial, but at the same time someone must have been protecting him.

Mennini Father & Son

At APSA, the freewheeling monsignor’s superior was not just any banker. He was Paolo Mennini, the son of Luigi Mennini, the right-hand man of Marcinkus, who had narrowly avoided arrest in 1987. The sins of the father are not necessarily visited on the sons. Mennini was not even questioned during the investigation, but the coincidence that both he and his father should be linked to financial wrongdoing at the Vatican was still quite striking. This became particularly noticeable after Scarano’s arrest, and it caught the eye of the new cardinals who had been chosen by Francis, who were still relatively innocent of the dynamics and the most recent financial shenanigans in the holy circles.

Since 2002, Mennini had been the head of the special section of APSA, which manages the cash flow of the Holy See. He was a powerful man. He lived in a 174-square-meter apartment, in a beautiful building on Via di Porta Angelica, a stone’s throw from Saint Anne’s Gate, one of the main entrances to the Vatican City. He, too, had a very affordable below-market rent, paying only 843 euros a month for his spacious apartment. He played a crucial role at the heart of the Holy See’s financial web, coordinating the bank accounts and all the foreign real estate agencies—which manage a total of 591 million euros in assets.

The Commission wanted to get a clear idea of what was going on in Mennini’s department, where 102 positions were operative. After an audit by Moneyval—the European Council body that assesses compliance with money-laundering regulations—APSA had closed 31 savings accounts held by persons, entities, or companies that were hard to identify or that were not entitled to bank privileges at the Vatican. This reduced the number of positions to 71, all of whose holders had been identified. Six of them were entities: the Saints Peter and Paul Association, the Circle of St. Peter, the Equestrian Order of the Holy Sepulcher, the Baby Jesus Hospital, the Féderation Internazionale des Associations de Médecins Catholiques, and the International Association of Catholic Hospitals. Two were affiliated companies that deal with buildings in France and Switzerland: the realtor Sopridex SA of Paris and the Profima SA Societé Immobilière et de Participations of Geneva. Finally, there was personal account of Cardinal Giovanni Lajolo, former President of the Governorate, and other accounts that remained secret.

But there were more surprises to come. On November 18, 2013, at the COSEA meeting in Paris, Jean-Baptiste de Franssu described what he had found in his analysis of APSA accounts:

Eighty-nine accounts have been identified, for in addition to the 74 initial accounts another 15 accounts have been identified because APSA was involved in their imminent closing. Of these, 43 are institutional because their consolidated funds are at the Holy See, while 46 are non-institutional (the remaining accounts). There is also an account held by the S.O. [APSA’s ordinary section], which has to be analyzed to understand its nature.

Relations were tense between Francis, his collaborators, and Mennini Jr. and matters weren’t helped by rumors about the investigation that had been leaked. On July 8, 2013, Monsignor Scarano was questioned by the Italian prosecutors. His explosive revelations on that occasion were reported four months later in an article by Maria Antonietta Calabrò for Corriere della Sera:

In the transcript, which was classified in October, Scarano spoke at length about Mennini and the way Finnat Banking Group stocks were always handled, according to him. So much that the prosecutors questioning him asked if he realized that he might be implicating Mennini in the manipulation of stocks of an Italian bank. The son of Paolo Mennini, Luigi (after his grandfather) is the managing director of Finnat. Scarano’s statements also concerned Cardinal Attilio Nicora, his successor Domenico Calcagno, and the office chief of APSA.2

Mennini did not seem daunted by the suspicions surrounding him. Late in the evening of October 24, 2013, for example, he expressed his satisfaction with his superior, Cardinal Calcagno, at having found the right channel for purchasing 20–25 million dollars in foreign currency, a circumstance that stand in this never-before-published letter:

Most Reverend Eminence,

I am pleased to confirm that it was possible to arrange with our Swiss correspondent the provision of banknotes in foreign currency, also for significant amounts (20–25 million USD). The first price quoted was 0.05% of the amount requested, all inclusive (transportation, delivery to our offices and insurance coverage). I have succeeded, for the moment, in lowering the rate to 0.04%, and in the negotiations I will try to get it even lower. Considering that the costs of transportation will take a sizeable cut, it would be advisable to execute operations only for very large amounts. I remain at your disposal and send my kind and most devoted regards.

Paolo Mennini would leave his post on November 11, 2013, when his second five-year term expired. But Zahra interpreted his actions during his final days as a declaration of war. It all started with a note that Mennini left on Cardinal Calcagno’s desk on November 13, after a telephone conversation with Timothy Fogarty, “senior vice president—CBIAS—of Federal Reserve, New York,” as Mennini indicated in the document. In the one-and-a-half page note, Mennini emphasized that, to supply the cash, Fogarty would prefer to deal directly with APSA and not have to go through the Promontory consultants, who were working with the Vatican central bank in that period:

Mr. Fogarty was happy to be able to speak with me. He confirmed receipt of the Swift message sent to him by APSA on November 5, 2013. With regard to the provision of hard foreign currency, he confirmed that the Federal Reserve usually provides banknotes to central banks, but prefers to guarantee this service only when it is difficult to find availability through commercial banks and financial institutions. He would like to be considered as a last resort. He told me that he would prefer to speak about this subject directly with APSA and, in addition, that he does not understand the exact role and need of Promontory’s mediation in this specific instance. This is because he considers APSA a central bank with a clear consolidated relationship with them … Going back to the issue of banknotes, Mr. Fogarty … told me that he will inform Ms. McCaul [Elizabeth McCaul of Promontory] by telephone that he would prefer to deal directly with APSA to arrange this type of service. He also specified that the banknotes would be delivered physically in their vault, so it will be up to APSA to arrange for transportation to the Vatican City. [He is] definitely able to provide APSA with the right contact required for this need. At the end of the conversation Mr. Fogarty mentioned with pleasure his visit to Rome a few years ago and in particular his visit to the Vatican museum and gardens.

Paolo Mennini

From the documentation in my possession, I am able to reconstruct that Zahra interpreted this note as a clear attempt to jeopardize the reform of APSA, and to discredit both the COSEA Commission and the activities of Promontory. He wrote to the coordinator of the Commission, Monsignor Vallejo Balda:

Dear Father Lucio,

Mennini is waging war … let’s speak about this later today. But he has to be replaced immediately.

Joe

The same policy was taken by another member of the Commission, Jean-Baptiste de Franssu, who wrote to the analyst Elizabeth McCaul and to Zahra:

This is not a very satisfactory situation and I imagine that we should expect more and more of this type of “Scud missile” from Mennini as long as he is around. The sooner we are dealing with his replacement, the better. What should we do over there, Joe, to speed up the process [of change]? Of the two questions raised, I imagine we should not change in the least the strategy we have developed vis-à-vis the Fed, you, and Promontory.

All the while Mennini continued to report to the office. On November 20 the McKinsey consultants, including Ulrich Schlickewei, remarked on his presence to Zahra:

In the past few days, Mennini has continued to come to the office regularly for the transfer of his duties to Monsignor Mistò. For the moment no official successor has been appointed, but a date should be set for the final exit of Mr. Mennini.

On November 22 the relations with the Federal Reserve were suspended. Calcagno wrote to Vice President Fogarty to indicate that Mennini was no longer an APSA official. In his immediate reply, the American banker tried to put this case and the embarrassment behind them:

For more than seventy years the Federal Reserve Bank of New York has enjoyed a productive relationship with APSA, and in particular I have had the pleasure of working with Mr. Giorgio Stoppa as well as with Mr. Mennini on questions related to your account with us. I can’t wait to maintain and improve the relations between our two institutions, and I can’t wait to develop effective working relations with the deputies during this transitional period for APSA … I hope that my conversation with him during this transitional period will not be a cause of difficulty for you, Cardinal, or for APSA. I am preparing a note with APSA on the provision of banknotes in US dollars, and I would be happy to know to whom you would prefer that I address it at APSA.

In the next few months Mennini’s activities would continue to be monitored discreetly. He still had important posts with the APSA real estate agents in Europe, which led de Franssu, in a letter of January 22, 2014, to ask Cardinal Calcagno to quickly have Mennini removed from the various boards of the companies associated with APSA, “considering the risks to our reputation we believe that this matter has to be addressed with a certain sense of urgency.”3

Sample Audits: 94 Million in Off-the-Books Accounts

The Commission continued to comb through the books of the administrative bodies of the Holy See. The international banking community and the institutional oversight bodies, starting with Moneyval (the Council of Europe’s Committee of Experts on Anti-Money Laundering Measures), had always viewed Vatican banking with a certain skepticism. In its first mutual evaluation report of the Holy See in July 2012, Moneyval had already identified various gaps in the financial statements. The Vatican had long resisted the anti-money-laundering regulations adopted in modern countries. The proponents of greater transparency at the Vatican tended to be punished rather than rewarded, like Monsignor Viganò, who was banished to Washington, and former IOR President Ettore Gotti Tedeschi, who was ousted from the bank on May 24, 2012 after being subjected to a smear campaign.

During the first year of Francis’s papacy, Vatican bookkeeping was found noncompliant with common modern and transparent accounting standards. When COSEA started to sift through the accounts, the situation the examiners found was even worse than they had expected. According to a document in my possession submitted to the cardinals in February 2014, “There are significant amounts of money, properties and other assets that are not recorded in the annual financial reports of the Holy See.”4 In other words, “there is an unidentified amount of money in the bank accounts that is not recorded.”

This was a denunciation of a system that had been in place since the times of Marcinkus and the IOR scandals. During critical moments it was kept quiet. To prevent reforms, it came out again forcefully as soon as the crisis was over. Large sums of money were being held in bank accounts listed to nonexistent charitable foundations. Hidden assets were kept off the books. Securities were not included in the normal bookkeeping so that they could be used for obscure purposes. The international auditors had repeatedly expressed their alarm, reporting the existence of “slush funds,” enabled by a kind of double-entry bookkeeping practiced by some departments. But the Pope did not ignore the reports, and he requested further exploration and verification. The size and the extent of the problem becomes even more disturbing when we read the confidential internal documents:

An analysis of the four sample entities reveals an amount of at least 94 million that is not recorded in the annual financial statements of the Holy See as of December 31, 2012. With 43 million to the Congregation for Asian Churches, 37 to the Nunciatures, 13 to Propaganda Fide and 1 to the Congregation for Saints.5 This is caused by the lack of preventive oversight whereby the various congregations and councils … have no information about how much they are allowed to spend or the type of expenditures they are allowed to make. It is estimated that considerable assets are managed by the Secretariat of State that do not appear in any financial statements, and that have not been examined by outside auditors. [By the same token] no transparency exists on the management of the residuals of the Peter’s Pence.

The Risks of Those Ten Billion in Investments

Francis wanted to know more about the management of the immense sums of money held in the vaults, derived from revenue, offerings, and the Peter’s Pence. Were these assets being used to generate income? Where and according to what criteria? Investments represent one of the largest sources of earnings for Vatican accounts: they guarantee interests that can help pay the high expenses of the Curia and facilitate the evangelical action. But the investments were also exposed to extremely high risks that were being uncovered in many departments. Starting with APSA:

Various Vatican institutions manage assets that belong to institutions of the Holy See, for a value of four billion euros, and assets held by third parties, for another six billion, for a total of ten billion euros. Of these, nine are invested in stocks and one in real estate. Major gaps have been identified in governance, in the process of investment and distribution of the same. One example is from the diversification of the financial portfolio of APSA for 1.1 billion euros starting in September 2013. The investments of 60% of the APSA clients are concentrated on four or fewer stocks. Of 60 APSA clients, with a current portfolio of 1.1 billion, 35 are exposed to an extremely high risk in their portfolios, a risk of loss of value due to the lack of diversification.

Another specific example is the concentration of APSA Certificates of Deposit (CDs) at issuing banks. Of 255 million invested, 80% is invested at [a single credit institute], Banca Prossima, creating high exposure to financial risk. APSA is a hybrid entity that conducts too many functions: from the management of holdings to pay service similar to those of a commercial bank, to the emergency cash procurement, to the providing of support services (human resources, information technology, procurement) to other entities of the Holy See.

In the event of a sharp downturn in the market, it was incredibly risky to concentrate as much as 80 percent of investments in a single credit institution or on just a few stocks. There is no explanation in the documents I have seen as to why the prelates of the Curia chose Banca Prossima, but this choice certainly placed the client—in this case the Vatican—in a high-risk situation. At APSA, the inspection by the Promontory Financial Group also found 92 dysfunctions connected to various “typologies of risk.” Here are the most significant:

1. Reputation: some bank accounts identified with suspicious activities [were] handed over to AIF [the internal audit organ];

2. Loss of income: weak procedures for the management of real estate holdings, insufficient performance by the stocks;

3. Holdings management: the Investment Committee is ineffective;

4. Operative level: use of paper orders. Not addressing the risks identified could lead to potential major financial losses for the Holy See, the inability to spot suspicious transactions and to continue to procure liquidity at the Holy See.

Faced with this situation, Francis’s revolution stepped up its pace, moving toward precise goals and following specific strategies: to prevent scandals and an uproar, the cardinals of the old guard were not fired but effectively “put into receivership,” like Versaldi at the Prefecture, with the monitoring oversight of the COSEA coordinator, Vallejo Balda, or Calcagno at APSA, in a kind of protective quarantine.

In the meantime, Francis was preparing his next revolution. The whole economic structure of the Holy See was being redesigned, cutting the Secretariat of State in half to reduce its enormous power. Cardinal Parolin and his deputy, Giovanni Angelo Becciu, would continue to manage diplomatic activities and internal affairs. But on financial matters, Francis studied the rules and regulations to create a new body that would effectively “void” the power centers that he had not been able to destabilize.

In February 2014, the Pope issued a motu proprio (a decree of his own initiative), ordering “a new coordination for economic and administrative affairs,” a kind of Vatican superministry for the Economy. The organization would be divided into two parts: a Secretariat for the Economy, led by Cardinal George Pell, and a Council for the Economy, consisting of eight cardinals and seven laypeople, of various nationalities and with financial expertise and recognized professionalism, to which a General Auditor was added, appointed directly by the Holy Father. The new auditor would act as a watchdog over the powers that be. The message was delivered by the Holy Father’s spokesman, Federico Lombardi, in the calm and collected tone of official communiqués: “The Prefecture for Economic Affairs, currently led by Cardinal Giuseppe Versaldi, will work closely with the auditor.”

The normal functions of APSA would also be downsized: all of the activity pertaining to real estate management and personnel would become the competence of a new body. In the next chapters I will describe this revolutionary reform, which was decided, “pursuant to the recommendations of the COSEA Commission,” according to the official press release. The Pope’s agenda would continue to be unrelenting and intolerant of delays.

Other problems and critical areas would arrive from a new source, the Governorate, the body that manages all the commercial activities (from the museums to the shops), procurement (from energy to the telephones), construction projects, and contracts. A torrent of money is involved there, too. But Francis would not retreat. With his loyalists he moved inside and outside the walls to seek new allies and break with the past once and for all.