The Vatican’s financial scandals
The Vatican is one of the stranger institutions on Earth. It once dominated the European world politically as well as spiritually, humbling great emperors who dared to cross it. But the tiny city-state of the Pope is now facing another moral crisis, which is also a financial crisis, because it appears that disgraced cardinals ferreted millions of euros into self-serving investments.
The main players in this scandal include the Vatican’s long-time investment banker Enrico Crasso, who oversaw a multimillion-euro real estate investment on behalf of the Vatican in the well-heeled London borough of Chelsea. And behind the banker there is Cardinal Angelo Becciu, who stands accused of having feathered his own nest but pleads ignorance of the details of Crasso’s investments.
Pope Francis has relieved Becciu not only of any role in the powerful Secretariat of State: in September this year the Pope also made Becciu relinquish both the privileges of a cardinal and his position as a prefect of the Congregation for the Causes of Saints. Moreover, Francis has finally acted on the advice of Cardinal George Pell – the Vatican’s former treasurer who was found guilty of child sexual offences in Australia before being acquitted by the High Court in April this year – that all financial holdings should be held by the Vatican treasury, not the Secretariat of State.
Within the Vatican’s walls, the shift is seismic.
The Pope has told the secretary of state, Cardinal Pietro Parolin, that from now on all Vatican money will be in the hands of Pell’s former office, the Secretariat for the Economy, which Francis established in 2014. Perhaps the most telling sign of the seriousness of the Pope’s crackdown, though, is his decision to call in the most famous prosecutor of Cosa Nostra, Giuseppe Pignatone, to head the Vatican’s criminal tribunal.
Much of this reads like a Mafia melodrama, and in fact it was touched on by Francis Ford Coppola in The Godfather: Part III, but the current wave of corruption stretches back a long way. In 1982, there was the figure of the Vatican banker Roberto Calvi, who was found hanged under London’s Blackfriars Bridge – murdered, it is believed, by the Mafia lords with whom he had drunk deep.
The Calvi story is riddling, but it certainly involved collusion between this banker with Mafia and Fascist connections and the Chicago-born archbishop Paul Marcinkus, then in charge of Vatican bank accounts. Calvi illicitly exported funds and was exposed by his dark allies: he was convicted, let out on appeal and then ultimately killed, it is believed, by his organised-crime allies. The British, who initially ruled his death a suicide, eventually reversed their finding in 2002 to one of murder. But, although they were convinced it was a Mafia revenge killing, they could not secure a conviction against the supposed Mafia boss who was indicted.
Documents related to Calvi’s murder were stolen on March 30, 2014, just weeks after Pell was tasked with getting to the bottom of what was rotten in the Holy City’s finances – an effort that also involved Libero Milone, the Vatican’s first auditor, late of Deloitte.
It all sounds a bit lurid for the present iteration of the Vatican, a site led by a reformist pontiff of markedly liberal disposition, a bane to many conservative Catholics who declared recently that this level of corruption was worse than a sin. But there have always been the deepest kind of tensions in the world of Catholic and specifically Roman politics, not least about that root of all evil, money.
The story goes that Joseph Ratzinger, Pope Benedict XVI, that supremely agile conservative head of the latter-day Holy Office, spat the dummy and abdicated because he thought the burden of dealing with the financial corruption of the church was too much for him. It is apparently a common perception for anyone who gets up close to the Vatican’s financial troubles that the scandal of the call girls and boys who service some of the upper circles of the Roman monsignori is dwarfed by the scale of the financial malfeasance in the Holy See.
In The Australian last weekend, Paola Totaro reported on some key findings of The Vatican’s Black Book, a new book in which Italian investigative journalist Gianluigi Nuzzi gives a blow-by-blow account of the break-in at the offices of Pell and Milone in 2014. All that had been taken, according to Nuzzi, apart from a few hundred euros, were – in classic Mafia style – the papers relating to that long-ago murder of the disgraced Vatican banker Calvi.
Nuzzi writes that the thieves wanted to return confidential correspondence between senior Vatican officials and shady figures regarding the 1970 Vatican Bank scandal, which led to Calvi’s death. But this was also the plainest kind of warning, Nuzzi says, and it was clearly being done in the interests of high-flying cardinals, such as the notorious Angelo Becciu – it was a provocation designed to stop any scrutiny of the very Swiss bank accounts now under investigation.
Pell and his associates knew the raid on his offices was a declaration of war, according to Nuzzi. The journalist recounts a meeting between Pell and two of his closest confidants, Milone and former Sydney Archdiocese business manager Danny Casey, during which the cardinal told them: “We must have nerves of steel. I’ve been in the City [of London] and I met with some friends, Australian bankers. They confirmed to me that there are important funds belonging to the Vatican which are still hidden in Switzerland.”
Outwardly, though, the cardinal projected calm. He told the Italian press after the raid, “Enough to scandals … We’ve had enough of Calvi … Enough with surprise news delivered in newspapers. We need transparency in finance, professionalism and modernity in methods. And honesty.” Of course, just three years later, he would be embroiled in a scandal of his own.
Vatican investigators are now working with Swiss authorities, who have frozen tens of millions of euros under scrutiny for links to Crasso. The Swiss courts last month granted the Holy See access to documents related to accounts into which cardinals stand accused of funnelling money. It appears these are the financial records of a company Crasso founded after leaving Credit Suisse in 2014, AZ Swiss and Partners.
In October, Pell, who has returned to Rome, made headlines in Australia when there were reports from the Italian newspapers La Repubblica and Corriere della Sera that funds had been sent from the Vatican to aid the efforts to get Pell convicted of the sex offences. The cardinal’s initial barrister, Robert Richter, QC, said these claims should be investigated. Victoria’s Independent Broad-based Anti-Corruption Commission said it reviewed the Italian media reports of Cardinal Becciu seeking to influence the course of justice in Australia and, based on that evidence, found “the threshold to commence inquiries or an investigation was not met”. They referred the matter to the Australian Federal Police and to Victoria Police.
A false alarm, it seems, but elsewhere these Vatican rorts, with their Italianate touches of Mafia drama, continue to be unwound. Pope Francis, to his credit, takes the dimmest possible view of this behaviour, and accuses the perpetrators of embezzlement and nepotism. He is arguably also just slightly maddening in the way he talks sagely of not being too optimistic because corruption in the church is a perennial problem.
It is clear this rot runs deep, but its depths are only beginning to come to light. There are the “hundreds of millions” George Pell said he found “tucked away in particular sectional accounts and did not appear on the balance sheet” – ostensibly controlled by Becciu. The whole place, with the corruption rising like incense, needed to be audited at the very least.
In recent days, Pell has sat down with the Associated Press for his first interview since being released from prison, for the most part to discuss his upcoming memoir. But the cardinal also touched on his feelings about the scandals now being exposed by the Vatican investigators, described by the newswire as “a dismayed sense of vindication”.
“It just might be staggering incompetence,” Pell offered. “… But given that they have happened, it’s quite clear ... what we were trying to do explicitly. Trying to do, and to some extent substantially achieved.”
Yet even he didn’t grasp the extent of what was happening while tasked with its clean-up.
“I never, never thought it would be as Technicolor as it proved,” Pell told the AP. “I didn’t know that there was so much criminality involved.”
This article was first published in the print edition of The Saturday Paper on Dec 5, 2020 as "Sins of the Fathers".
A free press is one you pay for. In the short term, the economic fallout from coronavirus has taken about a third of our revenue. We will survive this crisis, but we need the support of readers. Now is the time to subscribe.
Letters & Editorial