Merchants in the Temple

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1. Pope Francis Issues a Shocking Accusation

4 In the letter the auditors underline the huge conflict of interests they have come across. “In many offices there is no clear separation of financial duties. This means that, in general, the same individuals are responsible for the financial decisions, implementing them, recording the transactions and communicating them to the higher authorities. In the best of cases this results in limited oversight of irregularities, identification of errors, and identification of opportunities for improvement, not to mention ways of increasing efficiency.” The examples are abundant: from the management of the immense real estate holdings to the pension fund. “These failures are quite visible”—the auditors go on to say in their letter to Francis—“in the real estate sector, where for several years now the Vatican’s outside auditors have criticized the (non-existent) system of oversight, the difficulties in collecting rent, and other related questions. We are also worried about the pension fund, on which no professional actuarial analyses have been carried out.”

10 The Rules and Regulations of the Prefecture for Economic Affairs of the Holy See dictate the following: “Art. 10. The Prefecture shall be headed by a Cardinal President, who is assisted by a specific number of cardinals, with the aid of the Secretariat, which is normally one prelate, and by a General Accountant, with the consultancy of the Advisors…; Art. 20. The Prefecture shall make use of the collaboration of Advisors, Experts, and International Auditors. They shall be selected according to the criteria of competency and universality, and shall lend their efforts free of charge; Art. 23. The International Auditors, numbering five, are professionals who are particularly skilled in auditing accounts and analyzing financial statements. They are appointed by the Supreme Pontiff for a three-year period. The post can be renewed for a maximum of up to three terms.”

11 The discrepancy between estimated and actual costs is huge. At the meeting Salvatore Colitta, an auditor from RB Audit Italia, gave a few examples. “There are weaknesses in the formulation of the budget”—according to the minutes—“that show discrepancies, in the planning stage, of up to 100 percent. I would recommend a revision of the budget at least every six months. The procurement process has not yet been completed. There are no referenced suppliers; there are no agreements with the senior officials … the management of real estate has unbelievable levels of arrears, which often exceed the credits. There is something wrong with the system. There are also anomalies that need to be understood by conducting an investigation tenant by tenant. With regard to laid-off personnel, we should increase the number of units in the legal and real estate offices.”

12 The losses from the Banca Popolare di Sondrio can be blamed on the decisions of a single cardinal. General Accountant Fralleoni explains it clearly as the auditors’ minutes show: “The year in which the Governorate purchased these shares, Cardinal Szoka [Edmund Casimir Szoka, 1927–2014, President of the Governorate from 2001 to 2006] wanted to centralize some activities of the Governorate through this bank. He thought that the stocks would guarantee benefits, but the relationship with the bank did not turn out as expected, so in those years there were cumulative losses that led to an overall devaluation of the original investment equivalent to 1,929,000 euros.” The minutes of the meeting convey the drama that surrounded each thorny question, such as that concerning the American Patrons of the Arts in Vatican Museums (formed shortly after the American tour of the traveling exhibition The Vatican Collection, to support and finance the restoration of various pieces in the Vatican collection). “Cullell,” the minutes record, “raised the problem of the American Patrons who help the museums with their projects. The fund for the collection is in dollars. How is this income recorded in the account books? Is it divided up by year? Fralleoni explains that these funds were used to pay temporary personnel working at the museums. This is one of the reasons why these funds were kept in cash and not invested in other activities. According to him, they should be recorded in the books not as income but as capital that gradually decreases.” But Cullell would hear nothing of it: “If the donations of the Patrons are not recorded as a single entry, our general financial statement will have been falsified.”

14 In March 2013, the Cardinal discovered and reported to the newly elected Pope Francis that something was wrong with the budget for the basilica. He set his sights on Monsignor Bronisław Morawiec, the basilica’s camerlengo. An investigation by the Vatican’s chief prosecutor, Gian Piero Milano, found that Morawiec had withdrawn 210,000 euros from an IOR account held by the basilica, claiming that he had to pay for real estate brokerage services provided by “Integrate Trade Consulting SA,” a Swiss company that proved to be nonexistent. “There emerged in an incontrovertible way,” Milano wrote, “serious bookkeeping irregularities, false accounting transactions, and the total lack of a protocol for registering incoming and outgoing correspondence.” Morawiec was sentenced to three years of imprisonment on the charge of embezzlement and forgery. The Basilica of Santa Maria Maggiore is one of the richest, with holdings of thousands of apartments, lands, and other properties. The disappearance of 210,000 euros is not the only crime he was suspected of. The prelate was reported for publishing an illustrated volume at a cost to the basilica of almost 1 million euros.