Pope Francis: What’s at stake in his financial legacy?

Chosen to restore the Curia, overcome corruption, and even – it was said at the beginning of his pontificate – shutter the Institute of the Works of Religion once and for all (the IOR is the much-maligned and even more misunderstood “Vatican bank”), Francis finds himself at this moment of his pontificate facing a challenging economic situation.

TheHoly See’s deficit is estimated in millions of euros, the blow to the Vatican coffers from COVID has been felt, and donations to Peter’s Pence have dropped dramatically not only because of the global crisis but also because of the Church’s credibility crisis and the pontificate of Pope Francis in recent years, where a more aggressive narrative has been added to the hagiographic and positive narrative that points the finger at real and presumed scandals and inconsistencies.

Yet, Pope Francis has set up new economic organizations, immediately established a freeze on new Vatican hiring, then defined a procurement code, and even authorized huge trials on financial issues—the most famous being the trial on the management of funds from the Secretariat of State. Former IOR executives, such as former director and vice-director Cipriani and Tulli and former president Angelo Caloia, have also been affected.

Wasn’t all this effort, with a great deal of communication hype, enough to save the finances of the Holy See?

Perhaps not, it appears.

And the reason is simpler than the numbers might suggest.

This week, the Financial Supervision and Information Authority (ASIF) annual report, Holy See’s anti-money laundering authority, was published. In addition, The Pillar reported that the Vatican Pension Fund would have a deficit of at least 1.4 billion euros, based on several anonymous sources and the viewing of some documents presented to the Vatican’s economic bodies in 2014.

The two news items are somehow connected, which helps explain what has happened in recent years.

ASIF was called AIF until 2020. At the international level, AIF was respected. Its leaders had outlined the Vatican’s anti-money laundering law so that it was compliant with international standards and consistent with the Holy See’s mission. International cooperation was growing. The reports of MONEYVAL, the Council of Europe Committee that evaluates the adherence to global standards of the states participating in the procedure, were all very positive.

However, the AIF was hit together with the Secretariat of State with sudden searches and with unclear legal contours in the context of the investigations into the management of the funds of the Secretariat of State. The Vatican gendarmes could never search the Secretariat of State; it has its sovereignty and is located in the Apostolic Palace, which the Swiss Guards protect.

The AIF, an intelligence authority, cannot suffer the seizure of documents because the documents are simply intelligence documents; they belong to the States with which information is exchanged and can neither be the object of a search nor used in court.

The fact is that the top management of the AIF, who also had international credit, was decapitated, and new management was installed that turned back the hands of the clock with new statutes that changed the traditional separation between the chairman of the board and the director, and now even a director who also has the function of vice president. The narrative emphasizes that the ASIF is on a glorious path.

In reality, the latest MONEYVAL report had lights and shadows, the financial law had to be adapted to the recommendations of the European committee, and the unexpected search of the offices of the Authority also led to the suspension of the Vatican body from the international circuit of exchange of information Egmont – a presence restored only after an agreement between the Authority and the Vatican Promoter of Justice.

The details are all fairly technical, although explained in a general and not in-depth manner.

The synthesis of the speech is that, during Pope Francis’ pontificate, the “new guard” wanted to change everything so that power would remain in the hands of a few, and those few who, in recent years, have brought the Vatican back to being a small State. With little consideration for its legal system, the Vatican is not even inspiring if one considers the way in which the trial on the management of the funds of the Secretariat of State was conducted.

The Vatican is a small State and not even financially solid – And to think that, at the time of the IOR – Ambrosiano scandal, the IOR could decide voluntarily, and without having objective responsibilities, to pay savers a sum equal to 406 million dollars as partial compensation and still return in a short time to a solid financial situation.

In short, the system that Pope Francis inherited was burdened by the weight of negative propaganda regarding the alleged scandals of the Holy See, and poor Cardinal Pell also drew on this propaganda when he was about to re-establish control of the Vatican economy. But it was just propaganda. They even wanted to close the IOR. Not only did the Pope not close it, but today, the IOR was the institution that the Pope listened to after the complaint against the Secretariat of State – among other things, as if a national Bank were denouncing the government.

The sovereign was with the instrument of government, not the governing body.

Why, then, did they want to dismantle this system? There are various hypotheses, which all lead back to one central theme: the Holy See was gaining independence and international strength, which could not be tolerated. Simplistic, perhaps, but not for this reason unreal.

What does this have to do with the leaks in the documents on the deficit of the Vatican pension fund? It does because the leaks concern reports that came from the Commissions established by the Pope, which used external consulting firms. Expensive external consulting firms, which—among other things—certainly had more interest in justifying their presence than in fixing the Vatican system. The Vatican was treated like a company and not like the State it is.

There is talk of a pension fund deficit of 1.4 billion dollars.

This seems an unreal figure, considering that the IOR has only 4.4 billion in assets. It also seems unreal because the Pension Fund was fed with huge endowments by Paul VI and John Paul II, is formed by employee contributions, and should not be used for other investments.

Even Cardinal George Pell, when he presented the Secretariat for the Economy in July 2014 and with it the whole series of Vatican economic reforms, said that pensions were safe and would be safe for at least two generations. The problem was different: there was no generational turnover, pensions were paid out without a counterbalance of workers’ contributions, and they were paid out for many years. It is the general problem of population aging, which the Vatican experiences like all other states.

It must also be considered that the Pension Fund is the only one for which a balance sheet has never been given in the race for Vatican transparency. But its funds cannot be used to fill the gaps, so why not tell people how much the fund amounts to?

It is said that nothing has been done in ten years, and that is true. However, it is also true that the new guard, who Pope Francis wanted, has not acted. The IOR was left by the old guard in 2013 with a profit of 86.6 million, which has never been repeated. The international compliments for the State of the Vatican financial system will never be repeated.

The excellent results of international cooperation will never be repeated because everything done at that level – including adhesion to the UN Convention against Corruption – was born on foundations laid much earlier.

The Holy See has become Vaticanized, the Vatican has become little more than a courtyard, and in the meantime, the financial situation has worsened. The Pope has established a Commission for Pontifical Donations, asked the cardinals to give up their bonuses, made the service apartments profitable, and even outsourced some financial activities, while the Vatican supermarket is also moving towards outsourcing.

The outgoing Church seems to be, in the end, a Church that dismantles its institutions but does not know how to build new ones. Today, it finds itself in crisis, while the old and expensive consultants continue to send their inflated data and lend it to internal struggles in the Vatican. The real question will be what will survive all this in the next pontificate. Familism, conflicts of interest, inconsistencies, and centers of power have not been dismantled. They have only been transferred elsewhere:Who knows how consciously?