Merchants in the Temple

The Pontifical Commission ran into another problem almost immediately: it had cast its net too wide. There were too many financial transactions to analyze, too many million-euro contracts to inspect. It would be impossible to complete the audit in a few short months and provide Pope Francis with the prompt, specific, and effective indications he would need to initiate his reforms.

The auditors were in a race against the clock and also against the odds, if past experience was any indication: in the last decades of the twentieth century, every previous attempt at reform had failed. The Curia is like a soft belly, absorbing and normalizing any attempt at change. Inertia is its default mode. “Popes may change, but we remain,” was a favorite saying of the cardinals who, while feigning an openness to change, would stop at nothing to delay or even derail the reform. But Francis remained firm in his response: “A cardinal enters the Church of Rome, not a royal court. May all of us avoid habits and ways of acting typical of a court: intrigue, gossip, favoritism and partiality.”1

In late 2013 COSEA found itself being stonewalled by the Governorate. Neither the President of the Governorate, Cardinal Giuseppe Bertello, nor the Secretary General, Monsignor Giuseppe Sacco, had satisfied COSEA’s preliminary request for documentation. In a letter of July 31, 2013, this is how they responded to the letter from the head of the Prefecture, Cardinal Versaldi:

… I hasten to inform you that for the exercise of its institutional purposes, the Governorate has for the current year issued 18,850 orders for the procurement of goods and/or services (some in fulfillment of existing contracts). The orders made in previous years and that, to date, have not yet been fully processed, amount to 4,649, for a total of 23,499 documents (60% of which concern the purchase of goods for resale). No documentation has been produced for these operations and indications in this regard are awaited.

Francis was so troubled by what he was hearing that he demanded more detailed information. It is the job of Monsignor Alfred Xuereb, his personal secretary, to shield the Holy Father from attempts at sabotage. Xuereb assessed the situation carefully, seeking the advice of others, in particular Monsignor Paolo Nicolini, the head of the Vatican museums. Nicolini represented the institutional memory of past reform initiatives, and he gave Xuereb a detailed account of the wasteful and faulty renewal processes that had taken place first under John Paul II and then under Benedict. Time and again, good ideas and high hopes had met the same bitter end: frustration and zero results.

At Xuereb’s request, Nicolini prepared a three-page document in January 2014 with the title “A Bit of History.” His informal report mentioned in particular a project to standardize administrative procedures from 1999, during the papacy of John Paul II. The new system was obsolete and lacking in transparency.* In a three-year period, the Cap Gemini Ernst & Young corporation was paid an astronomical fee: ten billion in old Italian liras (the equivalent of 5.6 million euros) for its consultancy on the Vatican accounting system. Although the initiative was needed, it was far too expensive and it did not solve the problems. In his report Nicolini described both the enthusiasm and the disappointments of that period:

It was a moment of great expense but also of great reflection for a structure that from an administrative and managerial point of view was approaching the threshold of the twenty-first century unprepared, outdated, and unable to provide responses in terms not only of efficiency but also and especially of justice and transparency.

Other more ambitious modernization projects would soon follow. In April 2008, during the papacy of Benedict XVI, Tarcisio Bertone initiated Project One (P1), which is still active today. The objective was to build a single digital platform for financial and administrative data: a system, in other words, that would provide one standardized accounting and management system for all the Vatican departments. Thanks to Project One, for example, the ticket office of the Vatican museums is completely online today.

But the system was already outdated at the start, and risked turning into a significant but idle investment.2 It failed to link the various dicasteries of the Holy See, from the Prefecture to APSA, the IOR, and the Secretariat of State. The goal of this exorbitantly expensive computer system was to provide a comprehensive picture of the administration of the Holy See, but not everyone was interested in a comprehensive vision, and there were those who sought to obstruct it, as the COSEA Commission found when it took up the situation of the Governorate.

The Governorate is the executive authority of the Vatican State. An organization with 1,900 employees, “it oversees general accounting procedures, the keeping of account books, the management of the State treasury and the preparation of budgets and financial statements, as well as audits,” according to the Vatican website. The Governorate manages and coordinates all the activities involved in the running of the State, including commercial and cultural activities, building maintenance, contracts, motor vehicles, and procurement of energy and telephones, tobacco and office computers. The structures that provide the largest cash flow to the Vatican—through the revenue from the shops, museums, and other commercial activities—are also controlled by the Governorate. Very few people are aware of this vast commercial network within the Vatican, which also boasts a supermarket, two of the seven Vatican-owned gas stations, a clothing store, a perfume shop, a tobacconist, and a store that sells consumer electronics.3

Already in 2009–2010, a confidential analysis by McKinsey into the Governorate’s books uncovered a disastrous situation. For various expense items, such as maintenance, the Vatican was paying as much as 200–400% more than the going market rates. The President of the Governorate, Cardinal Giovanni Lojolo, asked the banker Ettore Gotti Tedeschi to help him straighten out the finances. Gotti Tedeschi requested the financial statements of the discastery and received pro bono consultancy from McKinsey. The data he found was alarming—the Governorate was hemorrhaging money—and it was brought to the attention of Monsignor Viganò, whom Benedict XVI had appointed as part of his clean-up effort. Viganò got right down to work, but as soon as his investigation started to delve into the interests of companies and groups that were well-ensconced in the Vatican, he was subjected to a smear campaign in the media that convinced Ratzinger to transfer him to Washington. And at the Governorate it was back to business as usual for years to come.

The Governorate manages substantial sums of money, and the auditors were hard pressed to examine its many transactions, contracts, and inventory in the short time available. For the sake of swift and effective action, they brought in strategic analysts of Ernst & Young Spain—they were the only firm with the requisite expertise in this area—despite previous problems with the Italian branch of the corporation. On November 12 and 13, 2013, a team of twelve strategic analysts held a marathon meeting in Madrid. A few days later they moved to Rome to get started with their audit of all the financial reports, accounts, and affairs at the financial heart of the Vatican State.4 A fourth task force was thus formed to audit the Governorate, joining the commissions already established to examine the Vatican bank, the Peter’s Pence, and the Congregation for the Causes of Saints.

The auditors began to comb through the accounting books, department by department and office by office. They started with stock counts, to try to understand whether the warehouses actually had the merchandise indicated in the balance sheets. The results of their inquest were unbelievable. According to the confidential report to the cardinals, “No items were found during the stocktaking.”5 There was no trace of many goods that appeared, instead, in the balance sheets. This alarming situation applied to almost all of the Vatican’s commercial activities. The report went on to say that, “During the past two years, there have been 1.6 million euros in losses, on the basis of warehouse discrepancies.”

What had happened to the merchandise? Had it been simply miscounted during the inventory? Or had someone removed items from the warehouses? If so, this might mean that there was a black market where the stolen goods were sold. An even more troubling theory was circulating at the Vatican. Some people wondered whether the goods had ever been in the warehouses in the first place. The possibility of a simple counting error was immediately excluded. The inventory was checked and double-checked, and the results always matched the findings of the initial analysis. In particular, among the “losses due to inventory differences,” according to the COSEA report to which I had access, there was a gap of 700,000 euros at the supermarket, a 500,000 euros at the clothing warehouses, 300,000 at the pharmacy, and 100,000 at the tobacconist. Discrepancies were found at all the various commercial activities. A total of 1.6 million euros had mysteriously vanished into thin air. Either that or a fake inventory had been drawn up for goods that were never actually purchased.

The task force then widened its net to include the items sold at the many museum shops, such as gadgets, souvenirs, and books. Once again they found many, many discrepancies. According to their count, some ten thousand illustrated volumes were missing, and couldn’t be found in the shops, the warehouse, or the offices. The books were for the most part guidebooks to the art on display at the Vatican museums and in St. Peter’s basilica. The experts on the Commission wondered whether the books had been stolen by a dishonest employee or if their absence pointed to even more serious crimes—in particular, to massive financial fraud.

A Tax Haven

The concerns of the experts stemmed from unique features of the Holy See. To make purchases outside the Vatican, the Governorate issues a little-known “personal exemption from sales tax.” This document allows Vatican citizens and employees to buy “goods and services” at steep discounts because they do not have to pay a Value Added Tax, the sales tax that exists in 63 countries of the world. But to make these duty-free purchases, the goods or services must be used “within the Vatican state or by Vatican residents.”

This tax exemption can also lend itself to fraud. Some people might claim to be buying goods at wholesale prices for the Vatican (tax free) in order to sell them at retail prices outside the Vatican, thereby pocketing sums that normally go to the tax authorities. This might explain the missing ten thousand books, but it might also represent a much more widespread practice, as a simple example illustrates. A gentleman with a “personal exemption” buys twenty computers wholesale that he claims will be used in Vatican offices, and so he doesn’t have to pay sales tax. Once he has purchased the items, rather than deliver them to the Vatican he turns around and sells them at full price in Italy or another European Union country, pocketing the 20 percent sales tax for himself, an act of fraud. There are suspicions that some individuals at the Vatican take further advantage, making these purchases only on paper.

The Pontifical Commission of Inquiry saw more than one danger here. “An individual could purchase the products”—according to the report to the cardinals—“and either use them outside the Vatican or even sell them in Italy without supervision, posing a significant risk to the reputation of the Holy See.”6 If the public were to discover this tax evasion one day, it would be extremely damaging to the Vatican’s image, but not “financially” damaging, of course, as the consultants working for the Commission wrote.

The fact that the report did not point to specific cases was no cause for optimism. On the contrary, this manner of buying and selling was taking place at the Vatican “without oversight,” as the Commission rightly noted. If there was no oversight, then it would be impossible to detect the illegal trafficking. And there were other suspicious dealings involving currency exchanges between Italy and the Vatican. In 2012, the Vatican registered 598 declarations of currency coming in and 1,782 declarations of currency going out, to Italy. During the same period, at the RomaUno customs office the parties involved presented only 13 declarations of incoming currency at the Vatican and 4 declarations for outgoing currency. These numbers warned of a massive tax evasion.

To continue down the road of no oversight could cause irreparable harm to the Vatican. The Commission indicated forcefully that the only “road to pursue”—according to the document in my possession—“is to improve the tax policies in order to minimize the risk related to the Vatican’s tax haven status quo.”7 In other words, as long as the Vatican City remains duty-free, it will always be seen as a possible tax haven. As was observed by the deputy prosecutor of Rome, Nello Rossi—who has run various investigations involving the IOR—there is no Italian customs office and not even the blandest form of control over what is imported into the Vatican. The closest customs office is probably the one at Fiumicino airport.

The introduction of “appropriate oversight measures on the issuing of tax exemptions,” was considered an urgent matter. The Commission had to ascertain who the beneficiaries were, what purchases were being made, and where the items were actually consumed or used. There was talk of a historic upheaval. For the first time in the history of the Holy See, the introduction of a system of taxation was contemplated. Reform of the sales tax had become an urgent matter, and it was imperative “to consider introducing a tax on commercial sales,” a watershed development.

The Curia responded to the proposal with little enthusiasm, if not outright contempt. To initiate systematic controls over the tax-free status and introduce a sales tax at the Vatican shops would of course negatively impact the beneficiaries of these questionable earnings. Francis was now making new enemies inside the Apostolic Palaces who were working behind the scenes to impede the Commission’s work and thwart its goals. For the moment, any thoughts on the matter were relegated to the back burner.

The “road map” indicated to the cardinals by the Commission was not followed. After I saw the documents and reconstructed the Commission’s initiatives, I had to ask myself the inevitable question: will the Pope have the strength to create a financial police force in the Vatican and to introduce a system of taxation on merchandise? Or is the Vatican destined to remain a kind of “offshore” state with no system of taxation?

The irregularities in the Vatican’s commercial activities are many and obvious. The Holy See appears to be brimming with shopaholics. Bishops and cardinals seem to have an overweening passion for the latest televisions and electronic gadgets. The anomaly did not escape the notice of the RB Audit Italia experts, who had prepared an informal preliminary report on October 9, 2013. The numbers speak for themselves.

“It is odd,” wrote the consultant Salvatore Colitta, “that in the consumer electronics sector there should be a sales volume of more than 4.8 million euros from a single supplier, and a local one, at that.” Why was there such a high volume from a single supplier? It would be better to stipulate “agreements directly with the manufacturers,” the report goes on to say, “which would allow more convenient purchasing conditions and consequently more competitive sales prices and better profit margins.”

To make matters worse, it was also discovered that the Vatican stores, which offer merchandise at cut-rate prices, were filled with customers who were not always entitled to shop there. Customers are supposed to have a special “buyer’s card” legally reserved for employees and inhabitants of the small state. The Vatican has 5,000 employees (many of them Italian citizens) and barely 836 inhabitants, which means that there should be about 6,000 buyer’s cards altogether. But the number of active buyer’s cards was actually much higher: 41,000 cards for as many customers, almost seven times the number of people who were entitled to them.

At the Vatican it was an open secret that almost none of the customers met the requirements, but no one was complaining. The customers purchased items at reduced prices, the shop employees had a steady sales volume, and the Governorate was reaping huge profits. The revenue for 2012 was 44.5 million euros: 15.3 million from the shops, 13.1 from fuel, 7.8 million from the sale of clothing, 4.8 million from electronics, and 3.5 million from the tobacconists. The analysts of Ernst & Young Spain found even more anomalies and petty favoritisms and listed them in a document that I was able to examine:

1. Supermarket: negative margin (revenue up by 9% but costs up by 17%); more than 17,00 products on a 900 m2 sales floor (reference point is about 10,000 products per 1,000 m2).

2. Fuel: 27,000 persons bought gas, and 550 of them exceeded the limit of 1,800 liters per year. 18% of sales registered to a “service card” (without specifying the cardholder’s name).

3. Clothing and Electronics: more than 16,000 customers; more than 22,700 products.

4. Tobacco: more than 11,000 customers, 278 of whom exceeded the limit of 80 cartons/year; 14% of sales registered to a “service card” (without specifying the cardholder).

5. Pharmacy and Perfume Shop: 17% drop in revenue; 30% of sales stem from fragrances and skin-care products; 1,900 customers a day.

“Close the Vatican Shops”

The auditors questioned whether these commercial activities were truly consistent with the pastoral mission of the Church and, for example, if the sale of fragrances was at odds with the spirit of the Gospel. They submitted these questions for a commercial opinion and strategic guidelines to the analysts of Ernst & Young Spain, whose conclusions can be summarized in a very clear outline. The sale of fragrances, electronics, tobacco, over-the-counter medication, and supermarket items were described as “no fit” transactions that made no real contribution to the evangelical mission and represented, in fact, a risk to the reputation and the image of the Church.

COSEA shared this assessment with Francis, adding its own criticism of all the “commercial activities that are inconsistent with the public image of the Holy See and harm its mission: tobacco, fragrances, clothing, electronics, gas.”8 The Commissioners took a tough and unequivocal position, proposing that radical steps be taken:

We have to examine the commercial and cultural activities to reduce the financial and reputational risk, and bring them into line with the mission of the Church … [and thus] cease all activities that damage the image of the Holy See.

The cigarette, electronics, fragrance, and clothing stores should be closed while the commercial businesses should be converted for the purpose of “improving all the activities that strengthen the mission of the Church: museums, philately [the collection and study of postage stamps], numismatics [the study or collection of coins, paper currency, and medals] and activities for pilgrims.” The Pope and his trusted men believed strongly in a change of direction aimed at enhancing the museums, since they represented a huge source of income. Their argument found support in the figures provided by Ernst & Young:

Vatican Museums: 6% increase in revenue, while costs have grown by 9%; 84% of income is generated from ticket sales, and the other 16% is from food services, souvenir and bookshops, and audio guides to the collections (outsourcing activities). The Museums department is currently the body within the Governorate that employs the most people (approximately 700) and generates the highest economic returns (an estimated total income of 105 million for 2013). In 2006 the museums took in approximately 62 million. Profits from 2006 to 2012 went from 33 to 54 million. In 2012 the museum’s total costs were about 24 million (mostly due to personnel costs). There were an estimated 5.5 million visitors in 2013: the number of visitors can fluctuate from 10,000 to 22–25,000 per day.

Regarding ticket sales:

Tickets purchased online include a four euro service charge. In 2013 the service charge will generate approximately 10 million euros. In 2013 it is expected that online ticket sales will account for 70% of all tickets sold. Most of the revenue generated by the museums comes from ticket sales (approximately 90% of the total). The rest comes from the six food sales points (from 3.7 million in 2006 to 5.2 million in 2012). The outside company that handles food services gives 25.5% of its proceeds to the Vatican. According to the terms of the current contract, the outside company purchases the raw materials used for food services from the Vatican City.9

The first figure to come under consideration was the number of employees, approximately 700. The internal analysis found that a good turnover rate would optimize the output of the available human resources. The most viable idea would be to keep the museums open for the whole weekend, which would increase receipts by 30 percent.

But no one at the Apostolic Palaces seemed very receptive to these possibilities, although Ernst & Young’s proposals had reached Francis’s inner circle:

The museums should be considered one of the pillars of the Vatican’s economic development. [They could only grow] comparing the key performance indicators with the development of potential growth strategy proposals, including extending the hours every day and to certain days of the week (for example, staying open on Sunday), expanding the exhibition area, raising ticket prices, and exploiting the “brand” to increase the sale of merchandise.10

A Secret Unsigned Contract with Philip Morris

According to the statistics of the World Health Organization, tobacco smoke is the second-leading cause of death in the world and the leading cause of preventable death. Given the obvious health risks, COSEA considered the sale of tobacco the most negative commercial activity at the Vatican. To support or even simply tolerate smoking could not be condoned by Francis’s pontificate. Selling cigarettes is the activity most alien to the Church’s mission and the most threatening to its image and reputation in both theoretical and practical terms. This was made quite clear in the late afternoon of November 18, 2013, at a two-hour presentation on the Holy See’s various commercial activities.

The presentation was given by two laymen of the Curia, Sabatino Napolitano of the Governorate’s Department of Economic Services and Enrico Bartelucci of the General Accounting Office. The two men assured the auditors that “the Vatican City”—as can be read in the report written immediately after the meeting—“does not engage in promotional activities for tobacco.” This meant there was no advertising, no promotion of smoking, and no push to sell cigarettes. Their policy was to safeguard health and to condemn those who profit from tobacco sales. Their actions, unfortunately, told a different story. The Vatican, like any other state, had a strong interest in selling as many packs of cigarettes as it can. There could be no clearer proof than a letter of February 2013, which the Commission would examine a few months later.

The letter was written during the last days of the pontificate of Benedict XVI. On February 11, 2013, the Pope announced his resignation, to the shock and dismay of the faithful throughout the world. In the same period, business proposals arrived in the Curia that were not quite consistent with the message of the Holy Gospel. On February 21, one of the Vatican’s cigarette suppliers sent an email to the Governorate management on the subject of the “2013 Agreements.” The text listed all the benefits that would accrue by reaching a certain sales threshold:

Dear Sirs,

Pursuant to our telephone conversation, I wish to confirm the following:

1. Bonus target

• Annual sales volume of 1.7 million	12 thousand euros
• Annual sales volume of 1.8 million	14 thousand euros

2. Contribution for Introduction

We take note of your agreement to the introduction of the 2 Winstons (Winston One and Winston Silver) and confirm our special contribution of 4,000 euros (2,000 euros as a reference)

3. Danneman Cigarettes

We have no budget available, but since we believe this product could be interesting to you, we are ready to provide you with a contribution of 1,000 euros to introduce it.

At your disposal for any further information you may require, Paolucci & C. International, SpA11

In their reply the only point that the Governorate managers objected to was the clause regarding Danneman cigarettes, which was immediately rejected. Napolitano wrote, “Not possible. OK only under the same conditions.”

I have no way of knowing if and according to what terms the proposal was accepted. But I do know that there were negotiations with the titans of the tobacco industry to receive a bigger cut of the profits a few weeks later, in March, in the midst of the Conclave. The cardinals had arrived from all over the world to elect the new Pontiff. On the evening of March 13, on the fifth ballot, a majority of cardinals voted for Jorge Mario Bergoglio. In the meantime, the Vatican’s commercial activities continued unabated. Business is business. On that same date, a document arrived on the letterhead of Philip Morris, the powerful tobacco holding company. It appears to be a commercial contract valid for one year, indicating parties, terms, and fees. The letter’s contents are jaw-dropping:

The Governorate agrees to conduct merchandising activity on behalf of Philip Morris International (PMI) brand cigarettes. For the conduct of these services, Philip Morris International Services Ltd. Rome branch will pay the Governorate a fee in accordance with the terms and conditions of the present agreement. The Governorate will provide the following information on a monthly basis:

• The volume of purchases (COT) for each brand at the Duty Free Shop of the Vatican State.

• Competitive promotional campaigns under way and/or already conducted, product launches and initiatives relative to the retail sales price.

• Information received from the Governorate will be kept confidential and reserved solely for internal use, except when Philip Morris Rome has a different need to divulge said information …

For the provision of these services, PMIS-Rome will pay the Governorate a fee of 12,500 euros … The invoice should be sent to the PMI Service Center Europe Sp Z.o.o at Al.Jana Pawla II 196 Krakow, Poland. The payment will be credited to the bank account in Germany held by the Governorate.

The contract is unsigned and should be considered a draft for an agreement that would become more nuanced. In the accounting analyses being conducted by Francis’s men, however, it could have been worse. Unsigned agreements were examined to understand whether approval was pending. Incredible, but true.

There was more. Contracts were also found with sums indicated that were reduced by half in an addendum bearing either the same date or the date of the next day. This meant that if a supervisor asked to review a contract with a friendly company, he would see the official version without the amendments that had magically reduced the amount that was to be paid to the Holy See. This practice of outright deception occurred repeatedly in leases. The contracts would indicate one amount while in the files an addendum would cut the amount in half.

These two documents were not submitted anonymously to the COSEA commissioners. The man who believed that the Pontifical Commission needed to evaluate the email with the sales incentives was Francesco Bassetti, a layman who had worked at the Vatican since 1999 as an account auditor. He had the courage to bring these seemingly inexplicable papers to his superiors.

“Do not obstruct the mission of Francis”

Under the pontificate of Francis, the atmosphere had definitely changed: the draft contracts with the powerful multinational tobacco corporations were carefully evaluated, where in the past they had looked the other way. As we have seen, however, the Pope’s will would not always prevail in the Apostolic Palaces. Indeed, that would rarely be the case. As discussed earlier, John Paul I, the so-called Pope of Change, had wanted to reform a Curia that had been infiltrated by a group of senior prelates with ties to the Freemasons. He died mysteriously after only thirty-three days of his pontificate. While Pope John Paul II was deeply committed to fighting Communist regimes, he didn’t seem to realize that the IOR was involved in money laundering. When Benedict XVI was confronted by the strife within the Curia, corruption, and the evangelical problems of the Church in the world, he made the historic decision to hand over the helm of St. Peter’s Bark to a new leader.

Today, almost three years since the beginning of Francis’s pontificate, his reform of the Governorate has still not taken effect. The shops alien to the Church’s mission are still open, churning out profits and serving thousands of customers who can make purchases there by exhibiting a buyer’s card to which they are not entitled. The museums have not extended their hours, ignoring the proposals of Ernst & Young. They remain closed on Sundays, except for the last Sunday of the month, when admission is free from 9 to 12:30, and the doors close at 2:00 P.M.12

At the November 17, 2013, meeting in the Palace of the Governorate, clear guidelines had been given for the reform, based on the instructions of the Holy Father. On one side of the table were the analysts of Ernst & Young with Andrées Gomes, senior manager of EY Spain; on the other, the commissioners, from the coordinator, Monsignor Vallejo Balda, to Enrique Llano and Filippo Sciorilli. Vallejo Balda was very clear that the reform of the Governorate had to follow four cardinal points:

1. Independence of the Pope (in the sense of freedom of action and a means for performing his work, not as an end in itself).

2. Integrate the activity of the Governorate into the mission of His Holiness and make it consistent with the mission of the Universal Church.

3. Structure and associated risks (economic and reputational).

4. Sustainability / economic contribution.

As my reconstruction of the events illustrates, there has still not been any movement on these four strategic principles requested by Francis and outlined by Ernst & Young.

The situation is complicated, even Kafkaesque. One man who knew a thing or two about it was a member of the new guard, Cardinal George Pell, who would soon be chosen by Francis as the Prefect of the Secretariat of the Economy. Pell started to comb through the account books. He demanded transparency and shared Francis’s policy for a Church without privileges and on the side of the poor and needy.

On March 26, 2014, the new Secretary of the Governorate, Father Fernando Vergez Alzaga, decided to address to Pell his heartfelt congratulation on his becoming the Minister Plenipotentiary of the Pontiff’s finances. He wrote a letter that deserves to be read in its entirety, from the first to the last illuminating word:

My reverend Eminence:

I ask first of all you please accept my warmest congratulations on your appointment as Prefect of the Secretariat of the Economy. At the same time, I am pleased to inform your Eminence that the following arrangements have been made on behalf of the most Eminent Cardinals:

• The purchase of food, in amounts compatible with family needs, at the Annona commissary or the Community Warehouse at a 15% discount.

• A 20% discount off the list price limited to a total of 200 packs of cigarettes per month.

• A 20% discount off the list price for clothing.

• A 400 liter a month supply of fuel at special prices subdivided as follows:

a) Voucher for 100 liters.

b) Special price vouchers (15% discount off the going price) for 300 liters.

• To be requested with cardinal vouchers (white) to be used at the internal facilities of the Holy See.

• and/or vouchers for use outside of Rome at gas stations that do not belong to the AGIP-Eni group, exclusively for motor vehicles with Vatican City and Diplomatic license plates. To get these arrangements under way, it would be useful for a member of your staff to contact the fuel office of the Economic Services Department of the Governorate.

While remaining at your disposal for any further clarification you may require, I avail myself willingly of this opportunity to renew the assurances of my humble regard for Your Most Reverend Eminence.

Your devoted servant, Fernando Vergez Alzaga

Perks and preferential treatment were still being offered under Francis and promised to the Curia nomenclature and even the new Pope’s trusted men. The letter left a bitter taste with Cardinal Pell, who filed it away. The following October someone from inside the Apostolic Palaces leaked it to a reporter who covers the Vatican for the newspaper la Repubblica, Marco Ansaldo. The journalist remarks that he has almost never seen a cardinal smoking. So who are all those cigarette cartons going to? In his article Ansaldo does not exclude the possibility that they are resold by someone who is pocketing the difference between the discount and the resale price: “There are even nasty rumors that the person who receives the cartons turns around and sells them on eBay.”