Pope Francis and the consequences of the trial of the century

It isn’t every day the pope’s chief-of-staff testifies in a major legal proceeding. It’s an even rarer thing for the papal chief-of-staff to testify in proceedings conducted by a state other than the Vatican. That’s what happened last week, though, and it was a really big deal.

Archbishop Edgar Pena Parra, sostituto of the Secretariat of State, gave evidence in proceedings initiated by Raffaele Mincione, one of the defendants in the so-called “trial of the century” in the Vatican. Mincione had managed the shares of the London building for the Secretariat of State and then sold them to a new manager, Gianluigi Torzi.

The Vatican court convicted Mincione and Torzi for some of the charges, but the Vatican court has yet to publish its full judicial opinion. It looks like that will come on July 20th, and it will be interesting to note how the court judges outlined the charges and guilt.

In recent days, the Vatican has also held a hearing on the lawsuit brought by Libero Milone, the former Vatican auditor general who, according to his reconstruction, was – according to him – forced to resign together with his deputy Panicco under extreme pressure from the then-substitute and archbishop Angelo Becciu, now a cardinal, who was also accused and convicted in the so-called “trial of the century.”

Furthermore, this is the time of year when the financial statements and reports of the Vatican’s financial entities and their supervisory bodies are published one at a time. The data from these balance sheets are essential for understanding how the century’s process took shape, its consequences, and who the actors at play were.

There are, in fact, two ways of looking at the process. The first is to point the finger at the details. Was there corruption or not? How did the people involved react? Was their way of acting correct and orthodox?

These are questions that have no simple answers. The memorial that Archbishop Pena Parra delivered at the Vatican trial speaks of a natural “Perlasca system.”

Monsignor Alberto Perlasca was the head of the administration of the Secretariat of State, who acted in the name of the Secretariat of State throughout the investment and entrusted the investments first to Mincione and Torzi.

In the declarations filed in the London trial, it is noted that many decisions are discretionary, and even the contracts stipulated are not to the advantage of the Holy See. Why, however, was Perlasca not even investigated? And why, after the trial, did Perlasca return to his job as a prosecutor—deputy promotor of justice in Vatican parlance—at the Apostolic Signatura (a position, among other things, to which he had been assigned precisely to get him out of the Secretariat of State, which was in difficulty due to the investments Perlasca himself had authorized)?

And then, again.

The Secretariat of State complained that there was fraudulent conduct towards the London investment and that Mincione and Torzi seemed to be competitors. Instead – the Secretariat of State noted – they had business together and agreed to extract the maximum profit from the deal because they had no liquidity after the failure of an operation with an Italian bank, CARIGE.

But Mincione and Torzi had agreements, which they exploited to the fullest of their possibilities, and a bargaining strength that they used to maximize their profits. They are businessmen, not churchmen; ultimately, the Holy See is nothing more than a business partner. A prestigious partner, of course, and doing business with the Holy See certainly increases the credibility of the Holy See’s business partners, but the Holy See has its own rules, relationships of trust, and “holes” in the system that can be exploited.

Hence, the position of Cardinal Angelo Becciu.

Was Becciu in a position to approve the investments? Yes, he was. Was he in a position to fully understand the proposed investments? No, or at least in some circumstances, he had to trust. Becciu first came across the possibility of an investment in oil shares with the Falcon Oil of the Angolan entrepreneur Mosquito, whom he knew. Then, after two years of already working on the possibility, the investment is considered unprofitable.

Mincione, who was called upon to take care of the investment, will propose the investment in the famous London building.

This system of doing things based on confidence, personal discretion, trust, and even economic availability had its limits. It works when everyone is competent and shares a common purpose. When this does not happen, when you are faced with management that is too much for your capabilities, it is necessary to make adjustments.

But it was the system. Is it enough to say that there was widespread corruption? Or does it speak above all of general incompetence, (in)discretion, and (perhaps) delusion of omnipotence on the part of the people involved?

But that’s just the finger pointing to the moon.

The general problem of the trial of the century is Pena Parra’s testimony in London. The Holy See system was peculiar and worked precisely because of its peculiarity. Even the Holy See’s international opening—including the acceptance of submitting to the mutual evaluation of the Council of Europe’s MONEYVAL Committee—was consistent with its mission.

The anti-money laundering law had been designed to meet international standards, also distancing itself from the Italian criteria that had dominated the first draft of the anti-money laundering law – and the presence of former Bank of Italy men on the board of the first Financial Information Authority was a clear signal in this sense.

This international opening, however, had to be managed.

The system only partially worked. The Vatican magistrates did not follow up on reports of suspicious transactions from the Financial Information Authority, and MONEYVAL did not fail to notice this. It was a system that closed itself to international standards, only to open up when in reality the scandal led to the perfect crime: removing all those who had enabled the international turning point of the Holy See.

A former Bank of Italy official once again came into the presidency of the AIF, the Vatican magistrates were able to continue their activities in Italy, and Pope Francis even allowed them to remain in the Vatican position part-time, when MONEYVAL had instead requested that at least one of the judges and promoters of Justice (the prosecutors) was employed full time in the Vatican.

There is much talk about the sovereignty of the Holy See, but the truth is that sovereignty has been weakened. The Vatican City State emerged strengthened because Vatican gendarmes and magistrates were predominant. Pope Francis personally intervened in the trial with four rescripts that changed the rules of the ongoing investigations – or covered a regulatory gap in the interpretation of the Vatican promoter of Justice.

The fact is that, beyond the episodes that led the Holy See to lose a considerable amount of money, this process caused damage to the Holy See’s system itself. The Secretariat of State claims to be the damaged party. It is not only economic. It has lost centrality among the bodies of the Curia, but this does not mean that there will no longer be corruption: management has passed to another central body, to other checks and balances, which, however, are all to be defined.

Rather than systemic reform, we are faced with dismantling an ongoing overhaul—a dismantling fueled by legal proceedings on real or alleged scandals and a ferocious spoils system. There are several examples of spontaneous resignations and illnesses due to trials. However, these resignations did not allow adjustments to be made. They demonized what was there before.

Yet, reports in hand, only some things were going badly.

The IOR had record profits of 86.6 million in 2012, which has never been replicated. Peter’s Pence had a higher collection, and 90 percent of the Peter’s Pence had always been allocated to the expenses of the Curia. Except that, in this situation, Peter’s Pence was called upon to give more because there were no contributions from the IOR, and so last year, it doubled its assets with the sale of properties.

The APSA, recently come into the management of all Vatican investments as a sovereign fund, is now called upon to try to monetize its properties, renovating, divesting, or renting more advantageously—and at times, renting to secular, more profitable organizations, more than to religious people.

From this point of view, the Vatican trial of the century, whatever the sentence, can be considered a failure.

From some point of view, the trial exposed the Holy See internationally, which undermined the institution’s reputation. It created reforms with only partial international approval. It brought secular criteria to the Holy See, which has always been in the concert of nations while maintaining its own peculiarity.

Among other things, it should be noted that the trial of the century originates from an internal short circuit: the Secretariat of State had a problem, tried to solve it, involved the Financial Information Authority in this solution, and asked the IOR for a loan. The IOR is not a bank, but it can grant loans under some conditions and in some situations. But the IOR first says yes, then denounces the Secretariat of State. Thus, a government body sues the government itself. Instead of fixing this short circuit, the sovereign agrees with the governing body, which should help and collaborate with the government.

There is a necessary fight against corruption. There are essential reforms. History will judge how they have been carried out, and that judgment will only sometimes be positive. Among other things, the principle of mutual collaboration within the Holy See has failed. The Curia has seemingly become a collection of offices and nothing more.