Reforming the Vatican’s Finances: Souls are at Stake

By Samuel Gregg Published on September 8, 2016

A problem that has publicly plagued the Catholic Church since the mid-1970s is back in the news: the financial affairs of the Vatican. Pope Francis, recognizing the finances were a mess, initiated a reform effort and appointed Australian Cardinal George Pell to head it up. But now comes reports that the appointed reformer’s wings have been clipped and his efforts obstructed.

The news, if true, is disheartening. Much more is at stake with Cardinal Pell’s efforts than simply establishing financial probity. The reform effort is about terminating a culture of patronage, ending a major cause of scandal, and saving souls.

An Unholy Mess

It’s worth remembering the shambolic state of the Vatican’s finances prior to Pell’s appointment as the inaugural Prefect of the Secretariat of the Economy. Take, for example, what’s known colloquially as the Vatican Bank —the Istituto per le Opere di Religione, or IOR for short. From the late 1970s onwards, the IOR was implicated in scandals ranging from the implosion of the Italian financier Michele Sindona’s banking empire in 1974, to the bankruptcy of the Banco Ambrosiano in 1982. In the 2010s, several IOR officials were formally charged with money-laundering. And the amounts held by the IOR are far from insignificant. At the end of 2015, it reported assets of 3,204,258,000 euros.

Significant reform of the IOR began under Benedict XVI, something for which he receives little credit. But there’s no question that one reason why Cardinal Jorge Bergoglio SJ was elected as Benedict’s successor was the sense that only an outsider could clean out the stables. Bergoglio also had a strong reputation for austerity and detachment from material things.

In a recent Wall Street Journal article, however, Francis X. Rocca argues that Pell’s reform effort is being undermined from within. The whole piece is worth careful reading, not least because it identifies the major players and some of the tensions beneath the surface. But Rocca’s central argument is that, having been brought from Australia by Pope Francis to streamline and make transparent the Vatican’s finances, Cardinal Pell is finding his powers to do so steadily reduced by the man who gave him the job in the first place.

Whatever the cause, any serious obstruction or even termination of Pell’s efforts to make all the Vatican’s institutions fully financially transparent and subject to modern auditing requirements surely would be judged as a major failure of this papacy. Moreover, given the amount of time and words Pope Francis spends denouncing what he regards as various economic and financial injustices, that rhetoric will seem somewhat hollow if there’s any perception he couldn’t get his own house in order.

De-Italianizing the Vatican

There is another side to the effort to reform the Vatican’s finances. This involves making the Vatican less-Italian in its ways.

Italy has a remarkable history of civilizational achievement. It’s the land of Michelangelo and Dante, the home of the Renaissance, and the birthplace of modern banking and capitalism. Like all societies, however, Italy has its blind-spots. One concerns financial probity. Transparency International has consistently ranked Italy as the most corrupt country within the Eurozone — worse than Greece, which is no small achievement. There’s no reason to believe that either the Church in Italy or the Vatican are somehow immune to this general cultural problem.

When Pell was appointed to his current position in the Vatican, more than one person pointed out that “Anglo-Saxons” are widely perceived as viewing questions of financial probity rather differently from how those who hail from Mediterranean countries do. Indeed, nations such as Australia, Britain, Canada and New Zealand are listed by Transparency International as among the world’s least corrupt nations. So it’s not “racist” or condescending to state that Pell comes from a culture with higher expectations regarding financial transparency and accountability than what’s hitherto prevailed throughout much of the Vatican.

This doesn’t just clash with the more “casual” mindset about financial issues prevalent throughout Italy. It also runs smack into Italy’s culture of clientism. In his book Italy and its Discontents: Family, Civil Society, and the State, the historian Paul Ginsborg defines clientism as when a “public patron, a politician, or a civil servant” acts “as a sort of gatekeeper, distributing selected public resources (jobs, pensions, licenses, etc.) to clients, friends and relations in return for fidelity, both personal and electoral.” You scratch my back, I’ll scratch yours — even if the scratching means serious financial malpractice.

From Clientism to Cronyism and Corruption

When you read through the various cases of financial wrongdoings involving Vatican officials over the years, clientism rears its head everywhere. What seem like initially harmless arrangements between friends turn out to have been the basis for more nefarious improprieties involving church money and assets — especially property.

Whether it’s the Tammany Hall politics presently turning Chicago into the next Detroit or the monsignor working in the Vatican who arranges for his otherwise-unemployable great-nephew to be given a job that comes with a rent-free Vatican-owned apartment in Rome’s picturesque Trastevere neighborhood, clientism invariably facilitates corruption and cronyism. Generally-speaking, people shouldn’t be selected for positions in public or ecclesiastical institutions simply because they are the employer’s cousin. But it’s even less-justifiable to appoint someone on the basis of his perceived willingness to turn a blind eye to, or even support, various financial shenanigans by the person who gave him the job. That’s a sure-fire guarantee of corruption.

Pope Francis comes from a country ranked as one of the world’s most corrupt nations. So it’s not as if he’s unfamiliar with the problem. As Francis said in a homily earlier this year, “corruption is a very easy sin for all of us who have some power, whether it be ecclesiastical, religious, economic, political … Because the devil makes us feel certain: ‘I can do it’.”

That perhaps is what’s really at stake in Pell’s effort to bring light to parts of the Vatican long shrouded in fiscal obscurity and blackened by financial malfeasance. Money is a powerful tool. In the right hands, it can do tremendous good. Indeed, it was Catholic theologians who developed many of the modern financial and accounting tools we take for granted today. When misused, however, money can disfigure people’s souls and corrupt clergy and laity alike.

The Atheist’s Best Argument

This in turn puts the souls of many others in peril since such corruption compromises God’s instrument of salvation, the Church, and repels many people from Christ.

Among “the causes of atheism,” wrote the English philosopher, politician and scientist Sir Francis Bacon, “are divisions in religion” and the “scandal of priests.” Bacon himself regarded the arguments for atheism as weak and often the product of undisciplined learning and poor philosophy. But he recognized that many have been turned off from Christianity by the corruption of Christian leaders. Christianity provides, of course, a profound explanation for why we all sin, and a path to forgiveness and redemption. But given Christ’s pointed warnings about the temptations associated with money, we shouldn’t be surprised that Christians and non-Christians alike are especially scandalized when they read about Christians getting entangled in sins associated with money.

Too much is at stake here. Cardinal Pell’s reform effort needs the pope’s energetic support. Pray that news of its death has been greatly exaggerated.


Samuel Gregg is Research Director at the Acton Institute and author of For God and Profit: How Banking and Finance Can Serve the Common Good (2016).

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