Pope Francis, a turning point in the Vatican trial that could have consequences

The change of narrative that the lawyers of the former top ranks of the Vatican Financial Intelligence Authority have imposed on the trial on the management of the funds of the Vatican Secretariat of State could also have a series of consequences for the Holy See at the international level. The lawyers of René Bruelhart, former president, and Tommaso Di Ruzza, former director, have stringently re-read the facts, highlighting three fundamental themes that cannot be overlooked when reading the trial documents.

The first is the theme of collaboration between the Vatican bodies and the Holy See, which are called to exercise their competencies (and, in the case of the AIF, to maintain proper autonomy and independence), but at the same time, are constitutively called to collaborate in unity of purpose for the greater good of the Holy See. The theme of collaboration is established precisely by Pastor Bonus, the apostolic constitution that regulated the Curia at the time of the events. Still, Pope Francis has also highlighted it numerous times in this pontificate.

The second theme is that of the greater good, that of the Holy See, which also concerns the decision not to open a legal dispute before recovering the ownership of the London building, which is the subject of the proceedings. It emerged, among other things, that the decision not to proceed with a legal dispute had explicitly been taken by the Holy Father and carried out by the Secretariat of State as the body involved in the matter. Pope Francis’ explicit consent had been communicated to the Secretariat of State’s “sostituto” (deputy) Pena Parra, Bruelhart, and Di Ruzza.

This modus operandi also showed how the Vatican bodies were led to collaborate, as established by the Pastor Bonus. The Secretariat of State, acting after having consulted the Pope – a fact described very clearly by the deputy Pena Parra in his oft-cited testimony – was operating in its coordinator role and called on the AIF to assist in the peaceful resolution of the painful issue.

Finally, there is the issue of the international standing of the Holy See, why the process, and how it was carried out also dealt a severe blow to the international credibility of the Holy See.

These crucial themes contribute to looking at the facts from another perspective. If the Secretariat of State, i.e., the Holy See, asks for collaboration from the Financial Intelligence Authority, why shouldn’t the Authority provide advice? Particularly since the opinions of the Authority are not binding—the choices are always made by the Secretariat of State itself.

Similarly, the Secretariat of State asked the Institute of Works of Religion, the so-called “Vatican bank,” for a loan to cover an existing mortgage on the London property when it was taking control of the property. It was a request for collaboration, to have everything “in house,” as the Secretariat of State’s deputy Pena Parra explained during the interrogation.

Was the operation really not feasible for the IOR?

The IOR —which then reported (with a “very curious” timing according to one of the defense team) the situation complaining of irregularities and starting the investigations from which this process arises— has said on several occasions that it had not granted the loan to the Secretariat of State mainly for two reasons: because it could not constitutionally make loans; and because it saw “dark” or “vague” sides in the financial operation. However, the defense noted no legal content or meaning was ever given to these terms.

The IOR could have carried out the operation because it was demonstrated that it had the necessary assets and that the operation was financially advantageous. After all, it would have generated interest, and the property itself served as guarantee.

Ultimately, the IOR is not required to know how the Secretariat of State manages its finances. It is only required to decide whether to grant a loan after authorization. Just as the AIF is not responsible for evaluating the operation of the Secretariat of State but only to advice on the best path. This behavior of the IOR cost the Holy See dearly, which continued to pay an unnecessarily expensive loan. At the same time, it seems that the Commission of Cardinals was not made fully aware of the situation by the lay leaders of the Institute nor of the loan request or the IOR’s decision to report the issue.

On the one hand, therefore, there is a process that wants to show the Pope’s willingness to end any illicit activity. On the other hand, the reconstructions show that, rather than illegal operations, we were faced with decisions that did not follow the functional unity of intent to which the institutions of the Holy See are obliged. Assuming that the deal was wrong or that the Holy See was manipulated – and this remains to be demonstrated – why did the institutions of the Holy See, starting with the IOR, not try to help the Holy See get out of the situation? Why, instead, did we get lost in what seems to be more of an internal struggle?

The investigations that followed put the Holy See at risk, since it lost international credibility precisely because of the investigations and raids carried out in the AIF offices, which led to the seizure of documents belonging to the FIU. There, the autonomy of the Authority was violated, so much so that the Egmont Group severed the AIF from the secure information exchange system, and only a memorandum of understanding between the Promoter of Justice and the new Authority allowed it to re-enter the circuit.

This reconstruction highlights that at an international level, it is not the reputations of Bruelhart and Di Ruzza that are in question but rather the international reputation of the Holy See. As is known, the Holy See has submitted itself to the mutual evaluation system of adherence to the global anti-money laundering standards of the MONEYVAL committee of the Council of Europe. The MONEYVAL report that followed the start of the investigations already highlighted several critical issues, and it was a report with lights and shadows, certainly more damaging than the other reports on the compliance progress of the Holy See over the years. This signals a step backward that should not be underestimated because it shows the current system has a weakness.

Among other things, the latest MONEYVAL report for 2021 also highlights the modest results of the Vatican justice system following the AIF reports.

Furthermore, the new AIF management, in the Annual Report published in 2020 (on record), in reference to the activities carried out in 2019, states that “The AIF plays a central role within the money laundering and terrorist financing prevention system of the ‘HS/VCS. Its analytical reports are the main source the Promoter of Justice uses to initiate money laundering investigations. The Promoter believes these analytical reports are of good quality and useful for investigations.” Now, the Promoter of Justice complains that the AIF had failed to report. In reality, no international protocol calls for a report in the intelligence phase.

It was also noted that “The results in court are modest: two convictions for self-laundering, one in 2018 and one in 2019“.

A weakness demonstrated by the process itself. In a normal situation, AIF, the Promoter of Justice, state bodies, and Vatican police typically collaborate, each maintaining their autonomy and competence. This did not happen, and this can only create perplexity at the international level. Just think of the fact that a supervised body, the IOR, denounced the supervisory body, the AIF, and caused a “raid” by the Gendarmerie on the AIF offices, which interfered with its independence and autonomy. This detail is enough to show the “strangeness” of the situation in the Vatican.

Then, there are the risks associated with the process itself. One may ask whether Vatican justice is independent. Vatican magistrates are almost all lawyers or university professors from the ranks of the Italian judiciary or come from a small circle.

After the significant reform of 2020, Pope Francis modified the Vatican judicial system in 2023, canceling with the stroke of a pen one of the most important innovations of the law of 16 March 2020, namely the full-time presence of at least one of the ordinary magistrates of the court and one of the members of the office of the Promoter of Justice.

The magistrates of the Vatican court can also be at the service of judicial systems of foreign countries. They can even perform different roles, such as lawyers in Italy and “prosecutors” within the Vatican City State. It will remain to be seen how this will be judged at the international level by Moneyval, the committee of the Council of Europe, which highlighted, in the latest report on the Holy See, conflicts of interest for promoters of justice and judges of the Vatican Tribunal because they do not work full time for the Holy See.

The question that arises is whether a Vatican tribunal can be made up of part-time judges. They are certainly not experts in everything—some practice family law outside the State, yet find themselves presiding over complex financial trials. Until now, the fact that judges were part-time was justified because the volume of trials in the Vatican was not that high. But now, this is no longer the case. The changes represent a step backwards in the reform process.

Finally, there is the question of the judicial process itself. The Pope intervened with four rescripts, somehow changing the rules of the game. But the Pope had authorized the operations, and everything had been decided by sovereign will. These rescripts, which extend the possibility of investigations, cannot fail to appear as an alteration of the process itself by the sovereign.

These are burning questions, and now there is the possibility of looking at the facts from another perspective. The issue is not the management of the funds or the possible scandal. The issue is whether the Promoter of Justice has pursued an avalanche of crime hypotheses, never proven, and, in doing so, has, in the end, attacked a functioning and internationally recognized system.