A grounded pope spent 2020 trying to clean house on Vatican finances

With no international trips this year due to the coronavirus pandemic, the prolonged immobility provided Pope Francis some much-needed time to focus on cleaning out his own backyard, perhaps most notably when it comes to money.

ROME – Known as a globe-trotting pope who conducts the bulk of his diplomacy through words and gestures during trips, Pope Francis found himself with extra time on his hands this past year with international travel brought to a halt by the coronavirus pandemic.

The pontiff was slated to visit Malta, East Timor, Indonesia, and Papua New Guinea, and probably would have gone to other places too as the year went on. Instead, he found himself constrained to remain in Rome – and that prolonged immobility provided him some much-needed time to focus on cleaning out his own backyard, perhaps most notably when it comes to money.

Currently the Vatican is juggling several significant predicaments on the financial front. Not only is the Holy See looking down the barrel of a $60 million deficit for 2020, but it also faces a looming pension crisis caused in part by the fact that the Vatican is over-staffed relative to its resources and struggles to meet payroll, let alone setting aside a reserve for when these employees retire.

In addition, the Vatican also depends on contributions from dioceses and other Catholic organizations around the world, which has also been reduced since dioceses themselves face COVID-related shortfalls as collections from Sunday Mass have significantly dried up in places where public liturgies have either been suspended or had limited attendance due to the pandemic.

The Vatican is also undergoing immense economic pressure over years of financial scandal, the most recent example of which is a $225 million land deal in London in which a former Harrod’s warehouse originally slated for conversion into luxury apartments was purchased by the Vatican’s Secretariat of State drawing on funds from “Peter’s Pence,” an annual collection designed to support the works of the pope.

Francis has taken several steps to clean house since Italy’s spring lockdown began:

  • In March, the Vatican announced the creation of a new Human Resources section called the “General Directorate for Personnel” within the general affairs section of the Secretariat of State, responsible for internal ecclesiastical governance, describing the new office as “a step of great importance in the path of reform initiated by Pope Francis.” Just a day later the Vatican walked that announcement back, saying the new section was merely a “proposal” from officials inside the Council for the Economy and by members of the pope’s Council of Cardinals, indicating that while a genuine need has been identified, internal struggles could still prevent progress.
  • In April, Pope Francis appointed Italian banker and economist Giuseppe Schlitzer as the new director of the Vatican’s Financial Information Authority, its financial vigilance unit, after the abrupt departure last November of Swiss anti-money laundering expert René Brülhart.
  • On May 1, which marks the Italian celebration of Labor Day, the pope fired five Vatican employees believed to have been involved in the controversial purchase of the London property by the Secretariat of State, which unfolded in two stages between 2013 and 2018.
  • Still in early May, the pope convened a meeting of all department heads to discuss the Vatican’s financial situation and possible reforms, featuring a detailed report by Jesuit Father Juan Antonio Guerrero Alves, named by Francis last November as prefect of the Secretariat for the Economy.
  • In mid-May, Pope Francis shut down nine holding companies in based in the Swiss cities of Lausanne, Geneva, and Fribourg, all of which were created to manage portions of the Vatican’s investment portfolio and its land and real estate holdings.
  • Around the same time, the pope transferred the Vatican’s “Center for the Elaboration of Data,” which is essentially its financial monitoring service, from the Administration of the Patrimony of the Apostolic See (APSA) to the Secretariat for the Economy, in bid to create a stronger distinction between administration and oversight.
  • On June 1, Pope Francis issued a new law on procurement which applies to both the Roman Curia, meaning the Vatican’s governing bureaucracy, and the Vatican City State. Among other things, the law bars conflicts of interest, mandates competitive bidding procedures, requires evidence that that contract expenditures are financially sustainable, and centralizes control over contracting.
  • Shortly after issuing the new law, the pope named Italian layman Fabio Gasperini, a former banking services expert for Ernst and Young, as the new number two official at APSA, effectively the Vatican’s central bank.
  • On Aug. 18, the Vatican issued an Ordinance from the President of the Governorate of Vatican City State, Cardinal Giuseppe Bertello, requiring volunteer organizations and juridical persons of the Vatican City State to report suspicious activities to the Vatican’s financial watchdog entity, the Financial Information Authority (AIF). Later, in early December, Francis issued new statutes transforming AIF into the Financial Supervision and Information Authority (ASIF), confirming its oversight role for the so-called Vatican bank and expanding its responsibilities.
  • On Sept. 24, Pope Francis ousted his former chief of staff, Italian Cardinal Angelo Becciu, who resigned not only as the head of the Vatican’s office for saints but also from “the rights connected to being a cardinal” at the pope’s request over allegations of embezzlement. Becciu had previously served as the sostituto, or “substitute,” in the Secretariat of State from 2011-2018, a position traditionally likened to the Chief of Staff for a US president. In addition to the allegations of embezzlement, Becciu had also been linked to the London property deal, which was brokered in 2014 during his time as sostituto, leading many to think he was ultimately responsible. Becciu’s removal was interpreted by many as retribution for financial wrongdoings, and a sign that such maneuvers will not be tolerated.
  • On the Oct. 4, feast day of St. Francis of Assisi, Pope Francis published his encyclical Fratelli Tutti, dedicated to the topic of human fraternity and in which he advocates for a complete restructuring of politics and civil discourse in order to create systems prioritizing the community and the poor, rather than individual or market interests.
  • On Oct. 5, just days after Becciu’s resignation, the Vatican announced the creation of a new “Commission for Reserved Matters” determining which economic activities remain confidential, naming allies such as Cardinal Kevin J. Farrell, prefect of the Dicastery for Laity, the Family and Life, as president, and Archbishop Filippo Iannone, president of the Pontifical Council for Legislative Texts, as secretary. The commission itself, which covers contracts for the purchase of goods, property and services for both the Roman Curia and Vatican City State offices, was part of new transparency laws enacted by the pope in June.
  • On Oct. 8, three days after the commission was created, Pope Francis met at the Vatican with representatives of Moneyval, the Council of Europe’s anti-money laundering watchdog, which at the time was conducting its annual review of the Vatican following a year of money-related scandals, including Brülhart’s ouster in November 2019. In his speech, the pope condemned a neoliberal economy and the idolatry of money and outlined steps the Vatican has taken to clean up its own finances. The results of this year’s Moneyval report are expected to be published in early April when the Moneyval plenary assembly takes place in Brussels.
  • On Dec. 8 the Vatican announced the creation of the “Council for Inclusive Capitalism with the Vatican,” a partnership between the Holy See and some of the world’s largest investment and business leaders, including CEOs from Bank of America, British Petroleum, Estée Lauder, Mastercard and Visa, Johnson and Johnson, Allianz, Dupont, TIAA, Merck and Co., Ernst and Young, and Saudi Aramco.  The aim is to harness resources from the private sector to support objectives such as ending poverty, protecting the environment and promoting equal opportunity. The group has placed itself under the moral guidance of Pope Francis and Cardinal Peter Turkson of Ghana, head of the Vatican’s Dicastery for Promoting Integral Human Development. Pope Francis met the group during a Vatican audience in November 2019.
  • On Dec. 15, the pope’s Council for the Economy convened for an online meeting to discuss not only the 2020 deficit, which is expected to be more than $60 million due to both shortfalls related to the coronavirus and the looming crisis in unfunded pension obligations.

In his annual address to the Curia Dec. 21, Pope Francis, without going into specifics, said moments of scandal and crisis in the Church should be an opportunity for renewal and conversion, rather than throwing the Church into further conflict.

This process of renewal and conversion doesn’t mean trying to dress up an old institution in new clothes, he argued, saying, “We need to stop seeing the reform of the Church as putting a patch on an old garment, or simply drafting a new Apostolic Constitution.”

True reform, then, is about preserving the traditions the Church already has, while also being open to new aspects of truth that it has yet to understand, he said.

To try and inspire a new mentality, a new mindset, in an ancient institution has been at the heart of Francis’s reform efforts from the beginning. This effort can also be seen in the steps he has taken this year to bring the Vatican in-step with modern international standards for a clean, transparent financial system.

Follow Elise Ann Allen on Twitter: @eliseannallen

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