ROME – For outsiders, making sense of the latest wave of alleged financial scandals to rock the Vatican is complicated not just by the dollars and cents involved, but also by the fact that they pit two institutions against one another, each carrying enough baggage to invite doubt: Vatican officials and the Italian press.

With the Vatican, it’s the nature of bureaucrats everywhere to deny or play down problems, and ecclesiastical functionaries have a checkered history of doing precisely that, from papal health scares to the early phases of the clerical abuse scandals. As for the Italian press, it can have a soft spot for conspiracy theories, gialli (meaning unresolved mysteries) and sweeping characterizations more akin to extrapolations than explanations.

While all that may make it tough to assess the latest round of purported scoops and stern denials, what’s becoming clear, at least, are the dueling narratives at work.

According to Italian journalists Emiliano Fittipaldi and Gianluigi Nuzzi, we’re witnessing the failure of Pope Francis’s attempted financial reforms due to internal opposition from an old guard.

Fittipaldi recently reported on a $200 million property deal in London carried out by the Vatican’s Secretariat of State, perhaps in defiance of the letter of recent reforms as well as their spirit. Meanwhile, in a new book called Last Judgment, Nuzzi presents a picture of a Vatican in chaos and on the brink of financial collapse, despite the pope’s desire to inject greater honesty and integrity into the system.

For Vatican officials, however, the situation is precisely the opposite: What we’re seeing now is the triumph of Francis’s reforms, because situations that previously would have been swept under the rug are instead coming to light.

In an exclusive Oct. 25 interview with Crux, Jean-Baptiste de Franssu, the French President of the Institute for the Works of Religion, better known as the “Vatican bank,” insisted that Fittipaldi’s revelations are a direct result of new reporting requirements instituted both by Francis and Pope emeritus Benedict XVI.

“This is the result of profound cultural and regulatory changes,” de Franssu said. “We are looking at something that would have not occurred a few years ago.”

In essence, the background is this: The Secretariat of State, the Vatican’s ultra-powerful coordinating agency, spent $200 million to buy a share of a former Harrod’s warehouse in London’s posh Chelsea neighborhood that’s slated to be converted into luxury apartments. Last year they decided they wanted to buy their way out of a partnership with an Italian financier also involved in the deal, and they asked the Vatican bank for a loan of $150 million to own the property outright.

In the end, the bank’s Supervisory Board had doubts about the transaction and reported it to the Vatican’s Promoter of Justice, who launched an internal investigation. Fittipaldi’s account in the Italian newsmagazine L’Espresso was based in large part on leaked copies of the reports of that probe.

“I realize that it might be difficult to apprehend the magnitude of those changes from the outside, but we have travelled a long journey,” de Franssu said of the fact that such an investigation even took place.

“Current events should be seen as the proof that the transformations are working for the better, even in difficult circumstances,” he said.

Beyond the impact of papal legislation, de Franssu argued there are two other forces driving reform.

The first is market pressure, he said, since the Vatican bank depends upon being able to conduct international transactions on behalf of its clients, and for that to happen, it has to be seen as “clean” by regulators as well as business partners.

In other words, it’s not just morality driving the bank to play by the rules, but money.

“This is clearly the case, and it’s very healthy,” de Franssu said, pointing to the Vatican’s recent entry into the Single Euro Payments Area (SEPA) as an example, which allows the Vatican bank to have its own IBAN code to facilitate wire transfers.

The November 2018 decision by the European Payments Council to approve the request to join SEPA was taken as a thumbs-up for the Vatican bank’s efforts to overcome its reputation as an offshore tax haven. Joining SEPA means faster and cheaper transactions, which, according to de Franssu, gives the bank a clear financial incentive to keep its nose clean.

The other force driving an embrace of “best practices,” de Franssu said, are the members of the Vatican bank’s supervisory board, whose own reputations would be at risk should something untoward happen on their watch.

That six-member board led by de Franssu includes Scott Malpass, the vice president and chief investment officer at the University of Notre Dame in the U.S. with a background earlier in his career in a Wall Street investment company.

Keeping things on the straight and narrow, de Franssu said of the board, “is our primary responsibility.”

“We’ve done it vigorously over the last five years, and will continue to do so,” he vowed.

In a nutshell, that’s the narrative, and it’s hard to argue with at least one point: There would be no “scandal” to talk about right now if the Vatican hadn’t, however clumsily, policed itself — and that alone, probably, ought to count as a measure of progress.

Follow John Allen on Twitter: @JohnLAllenJr

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