NEW YORK – While describing sensational recent leaks of secret materials from a papal study commission he led as “very sad,” the Vatican’s key lay financial adviser nevertheless insists those leaks “definitely” will not stop the march toward transparency and accountability on Pope Francis’ watch.
“In no way will it have an impact on all the work that’s being done, or the intention of the Holy Father to get the reform going,” said Joseph F.X. Zahra, a Maltese economist who’s the senior lay member of a new Council for the Economy in the Vatican created by Francis in 2014 to oversee financial policy.
Zahra said that if the aim of the disclosures was to slow down the pace of change, “it definitely will not work.”
Zahra spoke to Crux on Monday in New York, during a speaking tour of North America organized by the US branch of the Centesimus Annus Pro Pontifice Foundation, a body dedicated to promoting Catholic social teaching.
For one thing, he said, the content of those leaks may have been news to outsiders, but it was already well known to the people calling the shots today and action is being taken on the breakdowns the leaks describe.
“The [new] structures are operating,” he said. “They’re manned, statutes are in place, [and] people are highly motivated sitting around tables working on the changes that are necessary.”
By now, Zahra said, the process of reform is essentially “irreversible.”
“Even if one wanted to go back, once the human psychology has changed, the mindset, it can’t be done,” he said. “People are understanding the benefits of transparency, the benefits of having a system of checks and balances, and it will be impossible roll it back to the past.”
Zahra also delivered a ringing endorsement of Cardinal George Pell, the Australian prelate tapped by Francis in February 2014 to spearhead the reform effort as head of a new Secretariat for the Economy.
Pell’s take-no-prisoners style has led to criticism that he’s consolidated power around himself and sometimes ignored the rules he’s supposed to enforce, but Zahra largely dismissed the blowback.
“Cardinal Pell is the right man at the right place at the right time,” Zahra said. “He’s essential at this stage of the reform. His brashness is part of his personality, and I believe it’s helped the process and not hindered it.”
Though emphasizing he has no personal insight on the pope’s thinking, Zahra said he hasn’t seen or heard anything leading him to believe Pell has lost the pope’s confidence.
“My read of the situation is that Cardinal Pell is there to stay for quite some time, ensuring that these reforms are fully embedded within the system,” Zahra said.
By nature someone who prefers to operate behind the scenes, Zahra was the unwitting star of a new book called Via Crucis (released in English as “Merchants in the Temple”) by Italian journalist Gianluigi Nuzzi, based on a rafter of confidential documents from a study commission on Vatican finances created by Francis in 2013, known by its Italian acronym COSEA.
Last week, two former members of that commission, a Spanish monsignor named Lucio Angel Vallejo Balda and Italian laywoman Francesca Chaouqui, were arrested by Vatican gendarmes on suspicion of having leaked the documents.
For the record, Zahra denies ever having met Nuzzi – “I don’t have a clue who he is, except for seeing his face on television” – and insists he’s never provided COSEA materials to anyone who didn’t have a right to them.
“I must say that these have been very sad days for me,” Zahra said of the fallout from the leaks, confirming that the material he’s seen in the Nuzzi book is legitimate.
“Even in the corporate world, if you have colleagues who in one way or another allegedly – and we need to emphasize that point, because these are only allegations – have leaked information, you’d be extremely disappointed and unhappy about it,” he said.
Zahra said he’s had no contact with either Vallejo or Chaouqui since their arrest, and that Vatican gendarmes did not contact him as part of their inquest.
He insisted there’s nothing to be ashamed of in terms of the content of the material that’s been revealed.
“People around the table [on the commission] were talking from their heart about what needs to be done, and our studies were conducted in an absolutely professional manner,” he said. “We delivered on what the pope asked for.”
Even if every secret scrap of paper COSEA ever generated were to become public, he said, it would not be a threat. His concern, he said, is that by presenting such material in a “disorderly” fashion, Nuzzi’s book and another new title on Vatican finances, Avarizia (“Avarice”) by Italian journalist Emiliano Fittipaldi, have created “chaos and confusion.”
The truth, Zahra argued, is that the Vatican has made significant strides in a fairly short arc of time.
He pointed, for instance, to a recent shake-up of the board of directors at a Rome-based pediatric hospital named Bambino Gesù, which is run by a foundation overseen by the Vatican. Facing chronic reports of mismanagement and questionable spending, the Vatican recently appointed a new slate of directors promising a “completely new” approach.
Zahra also said that an investigation of an Italian banker named Giampietro Nattino, on suspicions that he used private accounts at an investment fund operated by the Vatican’s Administration of the Patrimony of the Apostolic See to launder money, is also a sign of progress.
First, he said, that kind of hanky-panky would be “absolutely impossible” today.
“What was considered acceptable 25 or 30 years ago now just isn’t any more, on an international regulatory level, because of issues around tax evasion, anti-money laundering, and anti-fraud standards,” he said. “Today, there is no way anything of that nature could happen.”
Further, he said, the fact Vatican investigators flagged Nattino’s accounts illustrates that “the system is working.”
Zahra argued that whatever resistance the reform effort encountered has largely dissipated. Going forward, he pointed to a couple of benchmarks for its success.
First is the Vatican’s annual financial statement, generally released in July. So far there’s been one under the new regime, and Zahra said the aim is to offer progressively greater disclosure.
Calling last year’s report “satisfactory,” Zahra said “we need to move from satisfactory to very good to excellent over time.”
He said he hopes the Vatican as a whole will use the annual report released by the Institute for the Works of Religion, the so-called “Vatican bank,” as a model. [For 2014, that report ran to 96 pages and carried a letter of certification from Deloitte & Touche, one of the “big four” global auditing firms.]
“It’s an annual report as it should be,” Zahra said. “You’ve got all the disclosures, all the details, so you feel that this information is reliable.”
Zahra that Pell’s office will shortly begin collecting year-end statements from each of the roughly 140 departments that fall under its purview, and will put them into a consolidated report review by the Council for the Economy’s four-member audit committee.
That group is led by Canadian businessman John Kyle, and in addition to Zahra it includes Spanish economist Enrique Llano Cueto and Italian layman Francesco Vermiglio, a board member of Malta’s Central Bank.
The financial statement will also be reviewed by the Vatican’s external auditors, he said, which at the moment is the Italian branch of the Russell Bedford International firm.
Second, Zahra said the Vatican is still working on implementing International Public Sector Accounting Standards (known as “ipsas”), a project he said will likely take at least another two years to complete.
Doing so, he said will ensure that the Vatican discloses financial data using “a common language that can be understood universally, and not only by people who are experts in Vatican accounting procedures.”
“We’re living in an open world, and people are questioning what’s going on and what’s happening in the Vatican,” he said. “You need a language that’s understood not only inside the walls, but also outside them.”
He also cautioned that bringing a fully-functioning system on line remains a work in progress.
“This is a journey, and we need to be patient,” Zahra said. “We’re talking about a 2,000-year-old institution, and it takes time.”
Yet Zahra said the final destination is clear.
“The idea is having an administration which is transparent, honest, and well-controlled, to ensure that more money is made available for the good intentions of the Holy Father and not less,” he said.
“The idea isn’t to adorn palaces, but to make sure resources go where they’re really needed.”