Cardinal Pell says he ‘underestimated’ opponents to his Vatican financial reform attempts

Elise Ann Allen
|Senior Correspondent

ROME – Australian Cardinal George Pell has again spoken out about his attempted reform efforts of the Holy See’s finances while he was still head of the Vatican’s Secretariat for the Economy, saying he underestimated those who resisted his decisions.

“I underestimated the ingenuity and resilience of the opponents of reform,” Pell said during a Sept. 23 webinar organized by the Pontifical University of the Holy Cross in Rome, adding, “they didn’t like change, they didn’t understand what was being proposed.”

There was also “certainly opposition from people linked to corruption,” he said, although he did not give names.

Asked if he would have done things differently in hindsight, Pell said he believes “we made a major mistake when the auditors were fired, and when Libero Milone was sacked.”

Although he said he never approved of these measures, “perhaps I should have pushed farther on that.”

In 2013 Pell was appointed as head of the newly established Secretariat of the Economy, making him the Vatican’s third most powerful figure and the man tasked with reforming the Vatican’s finances. He stepped aside in 2017 when he was charged by Australian authorities of sexually abusing two minor boys while Archbishop of Melbourne in 1996.

Despite Pell’s repeated pleas of innocence, he was unanimously convicted in a second trial, after the first ended in a hung jury, and was sentenced to six years in prison. Pell spent over 400 days in prison in isolation before was eventually acquitted in April 2020 by Australia’s High Court.

During his time at the Secretariat for the Economy, Pell made several moves toward financial reform, including putting together balance sheets, organizing audits, and attempting to loosen the Secretariat of State’s grip on a significant portion of Vatican funds.

A tug-of-war of sorts emerged between Pell and the Secretariat of State, which Pell effectively lost when the pope at one point issued new legislation cementing the Secretariat of State’s grip on the purse strings. That decision was later reversed by Francis, who after a scandal involving a shady London real estate deal limited the Secretariat of State’s transactional authority.

One of the things Pell did when he initially came into office was sign a contract with global firm PricewaterhouseCoopers (PwC) for an audit of the Vatican’s finances in 2014.

At the time, the move was touted as major step in getting the Vatican on the same page with generally accepted business standards in the 21st century and was hailed as a major step for the Vatican in terms of transparency and accountability.

However, just two years later, in April 2016, that audit was suspended without explanation by then-Archbishop Angelo Becciu, who at the time served as sostituto, or “substitute” of the Secretariat of State, akin to the pope’s chief of staff.

A new contract with PwC was inked in June of that year, this time with PwC as a resource for the Vatican’s own in-house auditing agency as well as other departments.

Under the new contract, PwC was designated to comply with the Vatican’s own legal framework, specifying that departments can voluntarily utilize PwC’s services in implementing International Public Sector Accounting Standards (IPSAS) in their area of responsibility, however, that new contract did not include an audit, meaning PwC never completed the audit they were initially hired to do.

Another twist in the Vatican’s financial saga came when the Vatican hired Italian businessman Libero Milone as their first auditor general, promising him broad access to its financial records and direct access to the Vatican’s Secretary of State, Italian Cardinal Pietro Parolin.

In 2017, however, just two years into a 5-year mandate, Milone was fired after being accused of spying on his superiors and threatened with a lawsuit. Milone denied the allegations, saying later that he had been isolated and sidelined, and that the Vatican’s “old guard” forced him out to protect themselves from his reform efforts.

Shortly after his departure, Milone said he had been “intimidated” and forced to resign, placing the blame largely on Becciu, saying, “I wanted to do good for the Church, to reform it like I was asked, but they wouldn’t let me.”

Becciu, who Pell has said was his main rival in reform efforts, and who Pell has suspected of having a hand in his own legal woes, was reassigned to the Vatican’s congregation for saints’ causes in 2018, but was fired last year by Pope Francis, who accused him of financial impropriety.

Becciu is now the star figure in an upcoming megatrial on Vatican financial corruption in which 10 people have been indicted. Becciu himself faces charges of embezzlement, abuse of office, and subornation, largely related to the London land deal, which he presided over while he was still sostituto, and which cost the Vatican some $225 million, and which was criticized for drawing on funds from “Peter’s Pence,” an annual collection designed to support the charitable works of the pope.

Asked for his opinion on the status of Vatican financial reform, Pell was positive, saying he believes things are moving in the right direction.

We’ve got good, honest men in charge of it. We have a methodology with a modern, contemporary message of presenting financial information, so it’s possible for the authorities to fairly easily work out where we are,” Pell said.

In the past three years, Pope Francis has replaced the heads of all major Vatican financial departments in yet another bid to clean house.

In 2018 Pope Francis tapped Bishop Nunzio Galantino, previously head of the Diocese of Cassano all’Jonio, as the new head of the Administration of the Patrimony of the Apostolic See (APSA), which manages the Vatican’s real estate holdings and investment portfolio, and which was longtime seen as a financial black hole in the Vatican.

Galantino took over for Cardinal Domenico Calcagno, who at one point was himself accused of involvement in an embezzlement scheme in his previous diocese.

Also in 2018, the pope appointed Archbishop Edgar Peña Parra as the new sostituto, giving him Becciu’s old job and significant authority over a department that maintains control over a significant general administration fund, which includes significant funds from the charitable Peter’s Pence collection.

In 2019, Jesuit Father Juan Antonio Guerrero, who has a background in economics, was appointed to take Pell’s place as head of the Secretariat for the Economy.

Yet while he has confidence in the reform, Pell said there is still concern in terms of the Vatican’s budget.

“For years, the Vatican has been spending more than it earns. It’s a moot point as to how long you can do this,” Pell said, adding, “It’s not just a question of an annual deficit, but there are significant pressures on the pension fund, and a decline in Peter’s Pence.”

“I think we’ve made very substantial progress against corruption, but even when you get rid of corruption, it doesn’t mean you can pay your bills,” he said.

At the moment, the Holy See is facing a $60 million deficit for 2020, due in part to the coronavirus pandemic and also to a drop in Peter’s Pence funds in the wake of the London real estate scandal.

The Vatican also has an employment problem, as it is over-staffed relative to its resources and struggles to meet payroll, let alone setting aside a reserve for when these employees retire.

Over the past 18 months, Pope Francis has taken several steps to crack down on financial corruption and to get the Vatican’s spending under control, issuing new legislation, establishing new transaction oversight commissions, and cutting the salaries of cardinals, bishops, and priests in curial positions. He has also limited travel and the number of conferences being held.

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

Pell said he has hope for the Vatican’s financial status given the steps that have been taken but insisted that “We’re not out of the woods yet.”

He praised the work of French investment management and banking professional Jean-Baptiste de Franssu, who since 2014 has served as head of the Institute of Religious Works, also known as the Vatican Bank, saying de Franssu has “done a good job.”

Pell said the upcoming trial, which began in July but was postponed until Oct. 4, will be an important sign of just how serious the Vatican is about not just identifying and weeding out corruption, but also punishing it.

Asked about the transfer of some $7.35 million to Australia between 2014 and 2020, and his suspicion that some of these funds were potentially used to gin up the accusations against him, Pell said the nature of the transfers is “unclear.”

The Vatican has previously said that the money was mostly used to meet “contractual obligations” as well as “ordinary management,” likely referring to its embassy in Australia.

“We don’t know where [the money] went. It might be entirely coincidental, but it’s still a situation that’s unclear,” Pell said, adding, “It might be nice to understand why the money went” from Australian authorities.

“Perhaps it will come up in the trial,” and some light will be shed on that question, he said.

In the webinar, Pell touched on a variety of other topics, such as his experience in prison, the clerical sexual abuse crisis, the current state of Catholic media, and the personalities and contributions of Popes John Paul II, Benedict XVI, and Francis.

Follow Elise Ann Allen on Twitter: @eliseannallen

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