The Immense Real Estate Holdings of the Vatican
The Roman Catholic Church has immense real estate holdings, ones that are internationally unique. No one knows their true extent and value, however—not even the Curia. Some data is registered in its financial statements, but the COSEA Commission soon discovered that those statements were unreliable. APSA’s holdings—ranging from commercial and residential properties to institutional buildings—turned out to be worth seven times the amount recorded in the account books. The market value of APSA is 2.7 billion euros, a figure that the Commission was able to document accurately the first time that they investigated the holdings.
The rentals in question were managed with both carelessness and cunning. This practice applied not only to apartments granted to Vatican higher-ups—the princely residences provided free of charge to some cardinals, described in Chapter 3—but also to homes leased to many outside collaborators or friends. I had exclusive access to all of APSA’s rental records. Of about five thousand properties, mostly in the center of Rome and in the Vatican City, the monthly rent is less than 1,000 euros. Hundreds of documents were classified as A0 (Affitto 0), which stands for “zero rent.” Other tenants pay less than 100 euros per year: that’s right, per year. One particularly lucky tenant—whose apartment is located in the heart of Rome—pays 20 euros a year. In the Curia, the home is a status symbol, the proof of how much its inhabitant counts.
Favoritism and opportunism are the order of business for APSA. The Commission discovered that one of Italy’s largest banks, Banca Intesa, had paid a security deposit of only 1,864 euros for an office it was renting from the Vatican. These vulgar, paradoxical circumstances are particularly intolerable by comparison to the situations of ordinary citizens. I was able to document this through my access to the papers reserved for Francis’s trusted men.
A little background will help the reader to understand the climate and the characters that Francis and his men were confronting. One example of a grasp for power is illustrated in this story focusing on Monsignor Giuseppe Sciacca. Born in 1955 in Aci Catena, Sicily, a small municipality in the Province of Catania, His Eminence apparently had a weakness for comfortable and—above all—spacious living. He loved to throw cocktail parties and dinners for friends, but he apparently considered his beautiful apartment in the Palazzo San Carlo too modest (for which he paid no rent, of course).
On September 3, 2011, Sciacca was appointed Secretary General of the Governorate. Benedict XVI’s loyal friend, Tarcisio Bertone, had convinced him to entrust the Monsignor with the delicate role of number two man at the Governorate, taking the place of Monsignor Carlo Maria Viganò. As I related in His Holiness, Viganò had attempted to straighten out the finances of the Governorate, denouncing the inflated contracts, excessive spending, and even episodes of outright theft. Rather than be rewarded for his efforts, he was exiled to Washington as Apostolic Nuncio, after a vigorous mano a mano with Bertone. He had encroached on too many interests, making enemies along the way, and the Curia doesn’t forgive.1
Viganò had lost his position after a vigorous standoff with Secretary of State Bertone. Sciacca, on the other hand, posed no threat to the status quo. He would serve under the President of the Governorate, Cardinal Giuseppe Bertello, another Italian and a Bertone loyalist, like most of the heads of the various dicasteries that control the Church’s finances. Bertone’s influence in the Curia was at its peak in the fall of 2011. He had managed to create a power block by putting Italian cardinals and bishops that he trusted into the most strategic positions: a block that Francis inherited from Ratzinger, and with which he engaged immediately in a pitched war.
Less than one year into his prestigious appointment, Monsignor Sciacca was itching to do something about his “modest” home. He wanted another apartment, more spacious and accommodating, but he didn’t know how to go about getting it. The only solution was to wait for the right opportunity, and the right opportunity came knocking one fateful morning. All he needed was a little cynicism and cunning and the deal would be done. With the speed of a jackal, the Monsignor devised a plan that was so brazen that it seems unbelievable even today.
Sciacca’s target was his neighbor, an elderly mild-mannered priest in declining health who lived with a nun and who had stopped going out some time ago. He was no longer seen taking walks around the Vatican. The Monsignor inquired after him and learned that in recent months the poor priest had been under constant care and medical supervision. At the moment, he was in the hospital receiving emergency specialized care. Rumors about his health started to spread: many wrote him off as dying while others doubted he would ever return to his apartment.
The time had come to act. Sciacca called in his trusted construction company, pointed to the dividing wall between the two apartments, and asked them to knock it down to connect the two units. He needed more valuable square footage to make his abode more comfortable. Although the workers were surprised at the request, in a few hours the job was done and a passage had been built into the neighboring apartment. A new room, to be used as a parlor, appeared magically in the Monsignor’s residence, while the apartment of the ailing priest, unbeknownst to him, was downsized.
Sciacca did not stop there. He also “incorporated” the furniture of the appropriated room, which had come from the “Floreria,” the Governorate office that also handles the furniture of senior prelates. The priest’s personal belongings were placed in cardboard boxes and left in the hallway, as if he were preparing to move. Finally, the door from the newly conquered room to the rest of the priest’s apartment was walled up.
The story was greeted by shock, hilarity, and discontent within the Curia—especially when the elderly priest, who had no intention of moving on to greener pastures, returned home. Imagine his astonishment! As soon as he opened the door he realized something was wrong: his apartment had been modified, and was missing one room, but he was too old to fight back and seek justice.
Not so his brave and trustworthy housemate, the nun, who conferred with some other nuns, asking their advice. While they invited her to use caution, she found the injustice intolerable and decided to go all the way to the top and address the Pope himself. She wrote a passionate letter to Benedict XVI telling him the story and pleading for justice and mercy. But these were the last months of his papacy, and a few weeks later the situation changed irreversibly: the elderly priest died, Ratzinger resigned, and Francis became the new Pontiff. The tide was turning.
Only five months into Francis’s papacy, he demoted Monsignor Sciacca, sending him notice of his transfer to a new assignment. In a matter of a few days he was to leave his office at the Governorate and assume a new post. Rather than wait for a coveted spot to open up on the Holy See’s roster of senior positions, a new position was tailor-made for Sciacca. On August 24, 2013, he was appointed as the Adjunct Secretary of the Supreme Tribunal of the Apostolic Signatura. This was the Tribunal that handles legal and administrative cases, and its Prefect was American Cardinal Raymond Leo Burke, who was not exactly in Francis’s good graces. Burke and Bergoglio had sharp theological differences. The Wisconsin prelate, born in 1948, continued to celebrate the Tridentine Mass despite the liturgical reforms almost sixty years earlier through the Second Vatican Council. His days were also numbered: in November he, too, was removed from office as part of the ongoing “soft revolution” of Francis, which would continue throughout 2014.
Getting back to the matter of the enlarged apartment, the Monsignor was called upon to quickly evacuate the premises after losing his post at the Governorate, and the apartment was assigned to another prelate. Stories such as these went public for the first time, traveling all the way to Casa Santa Marta and Francis, who was left speechless. The incidents also revived old stories about misdeeds that had never been addressed with the necessary firmness. Cardinal Santo Abril y Castelló related to Francis and the priests and monsignors closest to him problems he had discovered upon his appointment as archpriest of the Santa Maria Maggiore. The treasurer of the Basilica, the Polish Monsignor Bronisław Morawiec, was convicted of embezzlement and misappropriation of Church funds and sentenced to three years imprisonment for withdrawing large sums from the rich Basilica’s account at the IOR. To understand what and how much had been misappropriated, the new archpriest wrote up an inventory of sorts.
One of the missing items was a set of keys to an apartment in the adjacent building, one which houses priests and ecclesiastics. The front door of the apartment was locked and the entrance was clean and neat. Officially, the home did not appear to be rented, and it was ready for a new tenant when necessary. At least, this was the situation on paper—but as soon as the inspectors gained access, they were shocked to find that the apartment had been inhabited for quite some time. The priest in the apartment downstairs had cut a hole in the ceiling to connect the two units with a spiral staircase, which he bought at his own expense. This allowed him to double the square footage of his living space, convinced that no one would ever notice. Once the illegal expansion was discovered, his superiors were immediately notified.
Cut-Rate Deals on Real Estate
These two cases are not isolated. The immense real estate holdings of the Vatican are a challenge to Francis’s program and another thorn in the side of his Pontificate. The recent history of the Vatican’s management of its real estate has not exactly been happy. Under both John Paul II and Benedict XVI, the convents, buildings, and churches were administered without a common strategy, and management was characterized by waste, nepotism, and outright scandals. But these problems were never addressed, and passed along from pope to pope for decades. The status quo prevailed, enabling the more powerful or more astute to take advantage of the general state of neglect.
Fundamental information was missing from the records, starting with the most important: the value of the real estate holdings, which no one knew. There was no comprehensive assessment of properties of all of the Vatican’s administrative bodies or of the Church’s entities and religious orders in the world, such as a general land registry that would provide a standardized list of all of the properties. The dicasteries’ data banks did have assessments, but their listings and descriptions were incomplete. Not all of the properties were listed, and the units that were listed did not always include the basic financials. This created the potential for many more stories like that of Monsignor Sciacca.
I am not speaking of religious orders with properties in remote corners of Africa but rather about entities within the Holy See. I was able to see the internal database of APSA, which administers 5,050 assets in apartments, offices, stores, and land in the City of Rome. It’s a highly confidential database that I managed to access and make public. Until 2014 APSA’s financial statements were not even published. In combing through the data, a number of peculiarities crop up. First, no one within the Vatican walls has apparently updated photos of the assets, nor are they organized in any way. Even the square footage is often missing: for over 50 percent of the units—2,685 to be exact—there is no indication of the size of the apartment, shop, or office, making it impossible to assess the appropriateness of the rent. In many other cases the exact location within a building is missing or there is no indication of the rental fees. Taken as a whole, these factors prevent income optimization and the adoption of effective strategies when properties are being bought or sold.
The fact that the Vatican’s real estate holdings outside the Holy See are subject to taxation, thereby greatly reducing its rental income, should not be underestimated. APSA President Cardinal Domenico Calcagno, a Bertone loyalist, addressed this uncomfortable issue in his July 30, 2013, letter to Zahra:
It appears that a number of assets have not been recorded in the APSA patrimony, despite their belonging to various entities in the Roman Curia (as a by no means exhaustive example, there is real estate held by the Apostolic Camera, the College of Cardinals…), while, on the opposite side, there are properties [that appear] to be formally owned by the Holy See but have for some time been fully possessed and used, often without any form of contractual agreement, by parishes and religious institutions … As things currently stand, delicate issues relating to both the financial profile and more in general to the responsibilities stemming from ownership of these assets remain unsettled.… Although these assets are considered tax exempt because they are “formally” declared to be related to “needs of worship,” they are instead used for other purposes (even commercial) without any possible inspection or assessment by the current administration, which remains ignorant of the way the asset is actually used. The tax issue is a very serious one because exemption is strictly limited to use of these properties “for needs of worship,” while no exemption is granted for other uses, exposing APSA to the risk of a tax audit.
Another troublesome issue: the assets inevitably age and thus require renovations that can significantly drive up the costs of upkeep. In the 2014 fiscal year, APSA set aside 4.5 million euros for planned extraordinary maintenance and another 4.7 million for work on properties used for institutional purposes, such as the Palace of the Holy Office. In other words, a single administrative body earmarked at least 9.2 million euros for maintenance.
When the Governorate decides to do work on a building, it does not always hold the competitive bidding processes required in most European Union countries. The companies are often chosen by “direct call,” through which a private bid is tendered, leaving ample room for discretion. This means there is no effort to obtain the best estimate, and no way to keep costs under control.
Francis criticized this very practice in his remarks to the cardinals at the famous July 2013 meeting. The problem reappeared a few months later, during COSEA’s audit of the rental income. One issue was extraordinary maintenance of APSA property, outfitted for institutional use and included in the 2014 budget. There was no price tag on much of the planned work, especially jobs listed under “miscellaneous building, installing, outfitting and refurbishing work required to meet fire safety standards.”
Two cases were scrutinized: the historic San Calisto Palace and the Palace of the Chancellery, a glorious Renaissance building that houses the Holy See’s three tribunals: the Apostolic Penitentiary, the Apostolic Segnatura, and the Roman Rota. “Without a final project”—according to the internal documentation—“a provisional sum of 254,257 euros was earmarked for each job.”
Cardinals, bishops, and bureaucrats do care very much about the decorum of their apartments. They want everything to work perfectly; for the doors, windows, faucets, and radiators to be efficient, and the walls to receive a fresh coat of paint on a regular basis. APSA never forgets to earmark funds “for the appointment of quarters reserved for the Superiors of the Roman Curia,” not unlike other absolute monarchies in the world. As much as 700,000 euros in cash is kept ready, so that when a cardinal decides he needs to redo his home, there will be no delays and the work can be done promptly. Sometimes the tenants have renovations done at their own expense, for which they are reimbursed by the Holy See. To cover these out-of-pocket expenses, the Vatican administration earmarks 500,000 euros “to reimburse tenants for expenses incurred in the restructuring of their apartments.”
APSA was not the only administrative body guilty of such practices. The inspection by RB Audit turned up other instances of peculiar restructuring expenses. The ordinary and extraordinary maintenance expenses of the Congregation for the Evangelization of Peoples, formerly known as Propaganda Fide, raised more than a few questions:2
The Congregation does not have an actual roster of suppliers, i.e., a list of companies based on their meeting economical, organizational and technical requirements, which can be invited to participate in competitive bidding. The creation of a roster would be a valid tool for consulting the market divided up by service category. As matters currently stand, rather than have competitive bidding in the strict sense, the Congregation, on the basis of a specific project and specific technical requirements, approaches companies that meet the requirements, asking them to present their bid for a supply or service contract … It would be advisable for the Congregation to supervise more closely the assignment of contracts, by proposing, for example, a new method of awarding contracts with high price tags and for particularly complex projects.
One Hundred Square Meters for 20.67 Euros a Year
The sales and rental market was another delicate issue. In the past twenty years the Curia and religious entities have been periodically embroiled in scandals involving the sale to friends or friends of friends of property whose value had been drastically understated. Headlines were made by real estate property sold at cut-rate prices: from Propaganda Fide to the assets of the IOR, whose former President, Angelo Caloia, was accused by the Vatican judicial authorities of embezzlement; the homes purchased by Monsignor Scarano; and the former monasteries converted into clinics and luxury hotels. Caloia’s trial is ongoing. The Promontory officials also sifted through APSA’s sales records from the past fifteen years. Relatively few properties had been sold, only 6 percent of the total assets: “228 units were sold”—according to the special confidential—“and 79 were donated. These included 20 apartments, 23 churches, refectories and residences were gifted, while 119 homes were sold.”
The rental market was equally troubling. Church-owned apartments were almost never rented at market prices. The price reductions were astonishing—ranging from 30 to 100 percent less than average market rates. This meant a loss of tens of millions of euros in income, and in extreme cases the properties came to represent a liability, considering the huge gap between rental income and extraordinary maintenance expenses.
The Promontory and RB Audit consultants inspected APSA, Propaganda Fide, and the IOR to get a clear picture of the catastrophic general situation. They gave their report to the COSEA commissioners, who in turn forwarded it to Francis and his closest collaborators. The documents to which I had exclusive access for this book show numerous discrepancies and irregularities, as the Commission’s report highlights:
Various Vatican institutions manage assets belonging to the institutions of the Holy See (valued at approximately 4 billion) and assets on behalf of third parties (approximately 6 billion) for a total of 10 billion euros, of which 9 is in securities and 1 is in real estate … Many Vatican institutions thus own real estate assets for a comprehensive value of about 1 billion euros. This estimate, based on about 70% of the portfolio, has a higher market value, however.3 With regard to the APSA assets (commercial, residential, and institutional units), the market value is estimated to be 7 times higher than that the amount entered into the balance sheets, for a total of 2.7 billion euros. With regard to Propaganda Fide, instead, the estimated market value is at least 5 times higher than the amount in the balance sheets, for a total of half a billion euros.
The rental income of Propaganda Fide’s property could be 50% higher if rents were raised to market rates for all external lessees. This fact regards only 219 commercial and residential units out of the 470 total. No information is available on the surface area of the remaining units. Moreover, former employees continue to receive an employee discount (about 60–70% below market rates) for as many as 8 years after they have stopped working for the Vatican. If we compare the actual rent per square meter of Propaganda Fide properties to market potential, the former would be 21 euros per square meter while the latter would be 31 euros per square meter, with an annual loss of 3.4 million euros. [According to the audit] of management [there is] a lack of oversight, efficiency and an adequate strategy for the use [of the properties].
APSA’s rental properties in Rome are divided into three categories: by type of contract (new or renewed); contracting party (employee, retiree, or external); and zone. Depending on the zone, prices can range from 5 euros per square meter in Castel Gandolfo and Ladispoli to 9.88 euros for a penthouse in the center of Rome.4 This means that a beautiful rooftop apartment in a historic palazzo facing Saint Peter’s Square can cost as little as 1,000 euros a month—truly super-discounted prices. Not to mention that retirees receive an additional discount of 15 percent off the rent.
The discounts were inexplicable, however, with the so-called “external” tenants—private individuals or companies that are not employed by the Holy See. For each building, APSA has a chart indicating the rental fees to be charged. The maximum fee is 26 euros a square meter per month for a beautiful home on Via dei Coronari, in the city center, with breathtaking views of Rome. Here, too, prices are below market. In addition to being discounted, the amounts listed for rentals to external tenants rarely correspond to the actual payments made by the tenants. In 50 percent of cases, the rent collected was far lower than even the minimum amounts indicated in the charts, leading the task force consultants to ask a number of questions:
Discrepancies between the rental fees paid and the fixed rates in the charts, a failure to adjust rents to changes in the “status” of the tenant, too many late payments and too much information missing from the documents. The systematic analysis of the data shows a frequent discrepancy between actual rent and the fixed rates both at the properties in the same price zone and within the same building.
What appears particularly odd is that the rent indicated on the contracts for apartments leased to external applicants was lower than the minimum fee of reference in at least 259 cases out of 515 … Special mention should be made of the security deposit system to protect the solvency of the lessees. While there is virtually no risk for Vatican employees or retirees, the risks become concrete with the externals. In some cases the deposit was not commensurate to the value of the lease. I am referring in particular to the customer Banca Intesa, which for an annual lease of 163,369 euros, paid a security deposit of only 1,894 euros, the equivalent of 1.16% of a year’s rent. The bank also seems to have a vague history of outstanding debts [as of October 9, 2013, the date of the RB report].
It is remarkable that the Vatican’s external clients would include a bank, and that the bank’s lease agreement was actually “facilitated,” allowing it to pay a ridiculously low security deposit, hardly necessary considering the bank’s size and influence. There was also a paradoxical note referring to the “vague outstanding debt situation” of one of Italy’s largest banks.
The late payments piled up exponentially. The Propaganda Fide Congregation was owed some 3.9 million euros in overdue rent, more than one third of which (1.6 million) was from the first nine months of the year.5 APSA, instead, had accumulated rental arrears of 2.9 million euros, a full 9 percent of total rental income.6 To make matters worse, an odd new practice was added to the mix. Some tenants, without consulting the landlord, had taken the initiative to lower their own rent, sometimes by as much as 50 percent.
Equally strange is the fact that approximately 18% of arrears consists of credits owed on expired leases … Credits owed by tenants with expired leases amounts to approximately 770,000 euros … Another issue is the self-applied discount, as a result of economic hardship, which was not formalized through a rider to the contract, and consequently the entering into the books of rental income that would never be collected and on which taxes had been paid … Emblematic of the practice is Borghi S.r.l., which for months had unilaterally reduced its rent, paying a monthly sum of 50,000 euros rather than the more than 93,000 established in the contract [with] arrears reaching 400,000 euros.
The investigation turned up even more outrageous stories, such as prestige addresses offered at zero rent for no apparent reason. The A0 (Affitto 0) or “zero-rent” properties were given not only to cardinals but also to laymen, bureaucrats, and private individuals. Properties were often given rent free as a form of compensation for individuals who deserved a higher salary than allowed by the Vatican pay scale because of their professionalism or educational background. But that was not always the case.
The hundreds of rent-free apartments were a coterie of preferential treatment, an expression of privilege at odds with the principles cherished by Francis. It was not clear why an asset that may have been purchased using the donations of the faithful should be granted free of charge, with an open-ended lease.
Many surprises were being uncovered in the contracts for the 5,050 properties that APSA leased in the city of Rome. The annual rent for 715 of the units (homes, offices, and stores)—almost 15 percent—was listed as “zero” in the income column. The apartments were often in luxury buildings in the heart of Rome, a few blocks away from St. Peter’s, either in the Prati neighborhood or the historic center. Another 115 properties had ridiculously low rent, between 1.72 and 100 euros per month. One employee, whose initials are given as F.A., pays a monthly rent that is the equivalent of lunch at a pizzeria: for his 97-square-meter apartment on Via di Porta Cavalleggeri, he signed a lease on November 1, 2011, for a yearly rent of 20 euros and 67 cents. The contract does not indicate whether the utilities are included. This is almost half of what one of his neighbors pays: J.L. has a yearly rent that is almost twice as much, 51.65 euros a year, but for an apartment of 142.99 square meters.
Promontory reported these incidents of mismanagement in a confidential file that was delivered to the Holy See. The overall surface area of the APSA patrimony is 347,532 square meters, providing revenue of 23.4 million euros, but with the much higher market potential of 82.8 million. Increasing the rents to market level would raise the earnings rate from the current 1.14 to 4.02 percent. In other words, APSA derives very little income from its real estate holdings, also because 44 percent of its units, according to Promontory, appear to be unrented. If market rates were applied, the homes given to employees would generate income of 19.4 million euros rather than the current 6.2 million. The “institutional” buildings, which generate no revenue today, would guarantee another 30.4 million euros. The margin for the commercial units is smaller: it would increase from 14.6 to 17.5 million euros.
Backstabbing in the Curia Against the Friends of Francis
The story that will follow shines an important light on the infighting and envy that rules life in the Curia. The unwitting protagonist was Benedict XVI. Guzmán Carriquiry Lecour began his career at the Vatican under Wojtyła and Ratzinger and was later appointed to important posts by Bergoglio. Born in Montevideo, Uruguay, in 1944, he was a director of the Catholic Youth and University Student Movement, first in his native country and then for all of Latin America. A lawyer, he began his service to the Holy See in the 1970s. In 1991 Pope John Paul II appointed him Undersecretary of the Pontifical Council for the Laity, a post to which he was confirmed by Pope Benedict XVI, who in 2011 appointed him also as the Secretary of the Pontifical Commission for Latin America. Today he is considered perhaps the most influential and powerful layperson at the Vatican. He plays a strategic role that has only grown after the elevation of Francis to the throne of St. Peter. In fact, Guzmán is a personal friend of the Pope. The two men have known each other for years and have sincere affection and respect for each other. Married with four children, Guzmán lives in a rent-free home on Via delle Grazie in Rome, a 138-square-meter apartment. His home is not far from St. Peter’s Square and St. Anne’s Gate, the Vatican gateway closest to the Tower of Nicholas V, which houses the offices of the IOR.
This no-rent apartment was reported to the COSEA Commission by the President of APSA, Cardinal Calcagno, the scheming prelate and wily connoisseur of the Curia’s secrets. On September 30, 2013, Calcagno forwarded to the chairman of the Commission his thoughts on the matter in the file Zahra.doc. The document was unsigned and written on plain paper. The first part appeared to be a report on APSA’s difficulties in managing the properties of the Holy See. The document describes a chaotic situation bordering on anarchy, and throws in an occasional cutting remark:
The administrative situation of the Holy See, at least from the point of view of the Administration of the Patrimony of the Apostolic Seat (APSA) is characterized by more than a few gray areas that, in recent decades, have grown steadily darker rather than dissipating.
Notice must unfortunately be taken of the administrative presumption of certain Vatican realities that consider themselves somehow preempted from the need for managerial oversight and possible observations on the criteria for expenditures and expected compliance with the annual budget. The first situations to come to mind are those of the Prefecture of the Pontifical House and the Office of Liturgical Celebrations of the Supreme Pontiff: in both cases it is not uncommon to be told, however elegantly, that observations cannot be expressed on them since they are realities that must take care of the person of the Holy Father. Various Vatican offices do not look kindly upon any corrections or criticisms that APSA might present in the face of requests, or expenditures already undertaken, made in the spirit of luxury and with a lack of moderation.
In addition to the increase in Entities and Foundations there has also been an expansion of the administrative office of the Secretariat of State, which rather than limit itself to the possibly delicate affairs that the Holy Father wishes to reserve for it, manages and administers a considerable sum of money, whose provenance and management criteria no one knows or can say, not even the Prefecture for the Economic Affairs of the Holy See.7
Near the end of Calcagno’s report, an interjection appears—a few words laced with venom—referring to a single case: the only specific case mentioned in the whole report. It is the story of a home that was supposedly granted in accordance with the express wishes of Ratzinger:
Along these lines, there is no lack of exceptional personal cases that nevertheless place a burden on the finances of APSA, arranged for pro Gratia by the Supreme Authorities: just to mention one, there is the case of Professor Guzmán Carriquiry, to whom the Holy Father Benedict XVI granted, for himself and his spouse, the arrangement free-of-charge of an apartment for the duration of his natural life.
Calcagno is one of the cardinals of the old guard, and he seemed to be out of step with the new era. His relations with Francis were formal from the start. These lines from his report could be interpreted, without malice, as the classical curial knife between the ribs. The men who had led the Curia for years, exercising uncontested power, were feeling the pressure of Francis and his minute inspection of the books of their dicasteries. There had been plenty of infighting during the pontificate of Benedict XVI, but either he was not informed of it or he refused to intervene. A scholar, lover of classical music, and subtle expert on Church doctrine, rather than call for investigations he limited himself to condemning “the human ambition to power” so frequently cited in his sermons.
With the arrival of Francis, the cardinals were in culture shock. The international auditors championed his message in their meetings. And the growing reaction of the Curia, as this book documents, is potentially explosive. Calcagno, for example, was now reporting to the Commission preferential treatment that had been granted to a friend of the Pope, the lawyer Guzmán Carriquiry, as if to say, “if you want skeletons in the closet, I’ll show you where to look.”
For his part, Guzmán had no trouble explaining the apartment to anyone who might ask. It was a benefit granted to him to round off his salary. In the past years he had entertained various job offers with much higher pay than he received from the Holy See. Faced by the possibility that he might leave, the Vatican evidently gave him the apartment as compensation for his lower earnings.
Calcagno was feeling the pressure, and he realized that the investigation into the real estate holdings could also cast suspicion on perfectly legitimate interests and property dear to his heart, starting with a twenty-hectare farm on Via Laurentina, just outside the Gates of Rome. Here, at the expense of the Holy See, someone had created a farm with a promising future.
The Ranch
A few hundred meters away from the Laurentino cemetery, consecrated on March 9, 2002, is the San Giuseppe Agricultural Company. We are in Roma Sud, the area of the capital city where there is perhaps the biggest building boom. Here the craving for cement has been translated into the Fonte Laurentina neighborhood, with thousands of low-rent apartments in the vicinity of the Great Ring Road, the expressway that circles the city, popularly known as the GRA.
For now, however, fields and farmland still dominate the landscape, and the area is relatively peaceful, an oasis of rest and relaxation from the chaos of the metropolis, were it not for the macabre discovery, on March 8, 2011, of the mutilated torso of a woman bound in wire, with all of her organs removed; a crime that is still shrouded in mystery.
The San Giuseppe Agricultural Company, on Via Laurentina 1351, registered as a sole proprietorship on June 8, 2011. Twenty-two hectares cultivated primarily with wheat (for animal feed), medicinal herbs, and olive trees. There were originally eight hundred trees, whose fruit produced olive oil through a cold press. The name of the company is announced by a simple sign at the entrance to the farm, showing in block letters the names of the farmers, a family of Romanians—father, mother, and two children—who cultivate the land. They live there in a house owned by APSA, with a no-rent lease. Their surveillance became indispensable after this promising agricultural realty became the logistical base of a gang of thieves. Cardinal Calcagno explained this circumstance in a letter to Versaldi on May 29, 2013, in response to urgent requests for clarification from the Commission:
The fence had been cut at various points and an out-of-the-way area of the farm had been used by a gang of thieves as a deposit for stolen electric material (copper wire). This was reported to the Carabinieri at the Via Ardeatina station, who conducted a stakeout to surprise the thieves when they were recovering the loot. During a violent storm that hit the area during the night, while the Carabinieri unit was away, the thieves made off with the loot.
Once past the gate, the visitor is immersed in nature. On the right is a dirt road, lined by rows of olive trees, with twenty-two plants on each side, leading to a farmhouse that seems to be uninhabited but is well cared for. On either side of the second floor, the stucco has been redone and the casings are new, as if only one part of the house had been recently restructured. The path toward the house, a couple of hundred meters long, is quite pleasant: the visitor is welcomed by turkeys, hens, geese, and a couple of peacocks (a male and a female) that have the bad habit of singing at night, keeping the neighbors awake. In the barn there are three horses and two donkeys. The garden has everything—tomatoes, garlic, onions, peppers, melons, eggplant, potatoes, watermelon, cauliflower. And strawberries, planted for the children and for other guests of the farmer’s wife.
According to the neighbors, other characters often appear at the farm. Important figures: eminences and excellencies. “I was taking my grandson to play in the fields this summer when he suddenly disappeared from sight and it scared the living daylights out of me,” a woman who has been living there since the 1960s told me. “I saw him again a few seconds later near an elderly man carrying a cane and wearing a long, threadbare black coat. I thought he was a shepherd, and even said to the boy, ‘leave the shepherd alone and come here!’ At that the man smiled at me kindly and said, ‘Signora, I am not an ordinary shepherd. I am a shepherd, but not of sheep. I am a shepherd of souls.’ At the beginning I didn’t understand, so I asked him to explain himself, and he told me he was a cardinal, but to call him ‘Don Alberto,’ so I did.”
The few neighbors of the San Giuseppe Agricultural Company mention other names, well-known personalities who spend a good deal of time around here. Two in particular: “Cardinals Nicora and Calcagno.” Attilio Nicora, Calcagno’s predecessor at APSA, was from January 19, 2011, to January 20, 2014, the first president of the Vatican Financial Information Authority, a body that Ratzinger had created to oversee all the financial operations of the Holy See and bring them into line with the new anti-money-laundering regulations introduced by the European Union. According to the neighbors, Cardinals Nicora and Calcagno were familiar visitors to the area, which they may have been using as a country home to relax, “in the two renovated apartments inside the farmhouse.” The nephew of one cardinal, who was doing his university studies, also stayed there for a while.
Nicora had “accompanied the project and the establishment”—according to Calcagno—“of the San Giuseppe Agricultural Company, with the collaboration of Paride Marini Elisei, trusted notary of APSA and of the administrative office of the Secretariat of State. On September 13, 2011, a modal contract was drawn up between APSA and the Agricultural Firm for the leasing of the Laurentina and the Acquafredda estates.” This operation brought another forty-one hectares of land under the property of the Vatican.
But who did this land belong to? This is the beginning of another story with many question marks and few certainties. What is clear is that these twenty-two hectares once belonged to the Mollari siblings—Letizia, Giuseppina, Domitilla, and Luigi. Devout Catholics, all childless, they agreed to leave their property to the Church. This episode dates back to March 22, 1975, when Letizia, Giuseppina, Domitilla, and Commendatore Luigi—who was already an employee of APSA—decided to donate the land to the Holy See in a document signed before the notary Alessandro Marini. The donation was accepted by the Secretary of State, the same Cardinal Jean Villot whom Pope John Paul I had wanted to dismiss.8
The San Giuseppe Agricultural Company currently operates on this land. Its partners include another person whose surname is Calcagno: not Domenico, but Giuseppe. Was he perhaps a relative of the Cardinal? Verifications and investigations were attempted into this potential conflict of interest. The Prefecture requested an explanation from the Cardinal, who was so irritated that to disprove any possible connection, he even searched the gravestones in the family cemetery. Upon the return to the Vatican of the men whom we might refer to improperly as “cemetery inspectors,” Calcagno wrote, “From the information gleaned from the gravestones at the Tramontana cemetery, it is not possible to arrive at the genealogical contact point with a possible common ancestor.”
The men sent by Calcagno indicated the whole family tree, name by name, starting with his great grandfather Pietro. “When I was a seminarian I had asked the pastor”—the prelate concludes—“if I might see the parish’s baptism registers. I remember that the research proved to be laborious immediately because since the late 1500s the overwhelming majority of Tramontana inhabitants were registered as ‘Calcaneus de Calcaneis.’ To avoid blood relationships the men of the Calcagno family would marry women with a different surname.” Attached to his letter was a diagram from which it appeared, however, that between him and Mariangela, the wife of Giuseppe Calcagno, there was a relationship, but a very distant one: she was a fourth cousin.
The ties between the Agricultural Company and the Vatican is still strong, if it is true—as some of the farmers’ relatives averred—that the Romanian family, “works for the Vatican, and it is the Vatican that brings in day laborers every now and then, when the need arises.”
The APSA database that I have seen confirms that five parcels of land at Via Laurentina 1351 do indeed belong to APSA, as do four buildings, three apartments, a “residential complex,” eleven warehouses, and three storage facilities. None of these properties appear to be rented, with the exception of the 75-square-meter house (inhabited by the farmer and his family). So who is living in the other houses? This is a mystery shrouded in the deepest secrecy. At the Holy See rumors circulated of risibly low rents—150 euros a month—offered to prelates so that they might enjoy one of these country homes, an ideal refuge outside the gates of the city. The possibility cannot be ruled out with any certainty, but according to the official figures in the database, if this were true they would have to be phantom leases: from the data in my possession those houses appear to be unrented. There is no question, however, that significant attention and interests were converging on the farm. On April 13, 2013, Francis penned a chirograph on the matter, giving Calcagno “a mandate to handle every legal action, including the right to act in a judicial forum” with regard to the farm adjacent to Acquafredda. The Pope thus gave Calcagno the possibility to divest the asset or transfer it to a third party.
Various ideas and proposals had been advanced over the years. In 2008, for example, there were plans to build a solar panel facility, an ambitious project to bring in 203,000 euros a year that unfortunately collapsed. The future of the property is still unclear. While on the one hand the company “has taken measures to deposit a reimbursement of 7,800 euros (meaning 650 euros a month),” on the other, it was receiving substantial assistance. Also, in the lease it is expressly stated that the agricultural company “has the right to request reimbursement for expenditures made or, in the event that the expenses exceed 20,000 euros for each project, to proceed to the advance sale as provided for by the lessor [the Holy See], but only after prior authorization.”
A careful audit was done of the farm’s account books and of transactions in the APSA bank account number 19560, held by the “Fondo lavori Laurentina” [Laurentina Works Fund]. The inspection came to focus on a bank transfer of 57,982 euros on January 2, 2013, whose provenance was unclear. It turns out the money came from a 1.5 percent commission applied by APSA to a financial transaction payable to the Bergamo diocese, but which had never been paid to the diocese. According to the Commission’s reconstruction of the facts, on that same day a deposit of 3,865,499 euros was made into an APSA account opened at the BSI bank of Lugano, with the memo “Bergamo diocese, Zogno parish, payable to Casa Santa Maria of Laxolo.” According to APSA’s internal accounting, the money ended up in IOR account number 19412002 of the Bergamo diocese, but only after the 57,982 euro transfer for farm expenses had been cancelled. I was unfortunately unable to find out who had deposited that immense sum of money and why the commission had been withheld, rather than sending a bank transfer for the full amount to the Bergamo diocese.
In addition to the agricultural company at Via Laurentina 1351, there was also a warehouse registered to Edil Ars. S.r.l., a company that specialized in the restoration of historic buildings and—by a strange coincidence highlighted on the homepage of its website—“a subcontractor of works at the State of the Vatican City for the Administration of the Patrimony of the Apostolic See and for the Governorate.”
“We had a storage facility there, nothing more. Our headquarters is located elsewhere, on Via di Porta Cavalleggeri 53,” is what I was told on the telephone. The company pays an annual rent of 30,000 euros for a huge commercial space. Today Edil Ars. no longer exists, and has been incorporated by another company, Ap Costruzioni Generali, which does the same kind of work, with the same people and from the same location, on Via di Porta Cavalleggeri, a few hundred meters from St. Peter’s Square.
Edil Ars. was the same company that had infuriated the former President of APSA, according to a letter that Cardinal Nicora had written to Cardinal Bertone in 2008. The company was considered too “unreliable”:
On April 17, 2002, Monsignor Carlo Liberati, a representative of the ordinary section of APSA, drew up a leasing contract with the Edil Ars. company of Signor Angelo Proietti, granting free of charge occupancy of the barns, warehouses and a house and the use of water from the pre-existing artesian well. In reality, Edil Ars. went well beyond the allowances of the lease in its occupancy, modifying de facto the purposes of the locations and making increasingly difficult the collaboration with the pontifical villas [which were managing the asset at the time] … Considering the deterioration of the locations as the result of the storage of enormous quantities of materials, including the presence of polluting substances, and of various pieces of construction equipment, on December 22, 2006, APSA formally cancelled the leasing contract with Edil Ars., since the counterpart had proven to be unreliable.
Edil Ars did, however, enjoy the full confidence of Marco Milanese, who had been on the staff of former Italian Finance Minister Giulio Tremonti. Edil Ars presented a 400,000 euro project to restructure a house Milanese owned on Via di Campo Marzio, inhabited by Tremonti. Edil Ars had also been awarded contracts between 2002 and 2006 from the publicly traded company Sogei. These stories made headlines in the Italian newspapers in 2011, with pictures showing the dome of St. Peter’s in the background.
The Vatican Colonies in Europe
Another aspect of the Vatican’s real estate patrimony are the “colonies,” prudent real estate investments abroad into marquee buildings in various parts of Europe—downtown Paris, London townhouses on the Thames, dreamy apartments in Lausanne and other parts of Switzerland. The market value of these properties amounts to approximately 591 million euros.
This information is in the public domain today thanks to an investigative report by Emiliano Fittipaldi for the weekly magazine l’Espresso. Now the public knows all about the Sopridex holding company—valued at 46.8 million euros—which manages some of the most prestigious buildings in the center of Paris.9 “The staff includes a manager, three employees, cleaning personnel”—according to the article—“and 16 concierges.” The Promontory analysts documented the income of the staff and the members of the board: 56,000 euros is paid to the chairman of the board, and 6,825 to the three board members, one of whom is Paolo Mennini. The director of Sopridex, Baudouin de Romblay, received a gross salary of 12,956 euros per month, also for his thirteenth-month bonus. Fittipaldi combed through the wages of the sixteen concierges who work at the various properties: their salaries range from 7,000 to 29,000 euros. The 38,563 euros paid to their replacements during vacation was also verified and entered into the books. Seventy-five percent of the expenses for concierge services were billed to the tenants, while the remainder was covered by Sopridex.
In the French capital the Vatican owns “500 properties grouped into various buildings,” with a market value quite different from what appears in the financial statements. The confidential documents report that the income amounts to ten times more than what is declared, 469 million. The reason for this discrepancy is quite simple. The more the value of the property is understated, the lower the property tax owed to countries where there are real estate taxes.
The Swiss properties were administered by another holding company, Profima SA, founded in Lausanne in 1926, which in the past had been used as Pope Pius XI’s strong box for part of the so-called “damages” the Vatican had received from Italy after the signing of the Lateran Pacts.
Profima SA belongs to a financial archipelago consisting of nine other companies. These include Rieu Soleil and Diversa SA, which handle “savings management”—according to the analysts’ report—“holding securities, including stocks, in Roche.”10 Four other holding companies have almost exactly the same name, except for the last letter (S.I. Florimont B., S.I. Florimont C, S.I. Florimont E, S.I. Florimont F) and they are in good company with the other three “Siamese twins” (S.I. Sur Collanges A, S.I. Sur Collanges B, S.I. Sur Collanges C). A total of ten companies in Switzerland—a sophisticated network that controls a patrimony worth billions—report to the Vatican. “The ten companies”—according to the analysts—“were established to manage one property each, between Geneva and Lausanne.” Altogether they own assets indicated in their financial statement at 18 million, but their actual value is quite different: 49 million.11
In London, the properties are managed by British Grolux Investments Ltd., founded in 1933, which administers homes and luxury stores, with a market value of 73 million euros but entered into the books at 38.8 million.12 British Grolux also manages various properties located outside of the city. Altogether, according to the Promontory analysts, the real estate holdings of APSA—in Italy, Switzerland, France, and Great Britain—are worth a total of 2,000,709,000 euros. But the financial statements report a far lower amount: only 389.6 million euros. This discrepancy represents the deep contradiction within the Vatican today. On the one hand there is a sophisticated archipelago of holding companies led by managers in double-breasted suits who control immense wealth; on the other, a Pope who demands that the Vatican clean up its act and who is fighting for a poor church, following the dictates of the Gospel.