Analysis: Pope Francis’ ‘long game’ of Vatican financial reform comes full circle

Pope Francis during the Wednesday general audience inside the San Damaso Courtyard of the Vatican’s Apostolic Palace, Sept. 30, 2020. Credit: Daniel Ibanez/CNA

Yesterday morning, the Holy See announced that Pope Francis has removed control of financial affairs and investments from the Secretariat of State, transferring them to the Prefecture for the Economy and APSA. The decision, made in August, is the latest in a series of actions taken by the pope in response to the secretariat’s management of Vatican money.

The decision is a dramatic turn in the financial scandals surrounding the secretariat, and in the project of curial reform which has been grinding on slowly since the beginning of Francis’s pontificate.

The Secretariat of State has previously controlled funds amounting to hundreds of millions of euros, as well as an extensive property portfolio spread across the world. At times, there has been so much cash at its disposal that it has been informally referred to as the Vatican’s third bank, after the IOR and APSA.

Now, after more than a year of reporting has laid bare the details of its investments and business partners, management of assets and investments is being given over to APSA, under the oversight of the Prefecture for the Economy, with the secretariat only retaining control of “sovereign” financial affairs – essentially diplomatic expenditures – which are subject to the oversight of a new committee created by Francis last month.

While the letter from Francis to Cardinal Pietro Parolin announcing the move was graciously phrased, the reasons for the pope’s decision were outlined starkly – specifically mentioning the London property deal which kicked off the unfolding of recent scandals, and the Centurion Global Fund, run by Enrico Crasso, the former banker at Credit Suisse and longtime investment manager for the secretariat.

Now, the pope has ordered the secretariat to turn over control of its investments and assets and “exit as soon as possible” from the investments, or “at least dispose of them in such a way as to eliminate all reputational risks.”

But eliminating “all reputational risks” could prove more difficult even than closing down Vatican investments in the Centurion fund or selling a building for hundreds of millions of euros.

The Centurion fund itself, a CNA investigation found, is connected to several institutions linked to allegations of money laundering.

Crasso, its manager, was also instrumental in introducing the Vatican to Raffaele Mincione, the Italian businessman who took charge of several hundred million euros of secretariat funds and sold them the London building, and to Gianluigi Torzi, who was arrested earlier this year for his role in brokering the final stage of the sale.

Last month, a recording surfaced in Italian media that apparently captured Torzi, Crasso, and a secretariat official discussing both payments to Torzi for his role in the sale, and other investments Torzi wanted the Vatican to make in products he managed.

The London building itself, 60 Sloane Ave., is controlled by the secretariat through a UK registered holding company. As CNA recently reported, the company’s sole remaining director, a British-Italian architect and property developer named Luciano Capaldo, has multiple business links to Torzi.

When Capaldo was initially listed as a director of London 60 SA, official U.K. corporate filings approved by the Secretariat of State identified him as a “Vatican citizen.” A subsequent filing changed Capaldo’s nationality of record to British and Italian.

It is not clear if the original submission was an error, or if Capaldo had in fact been granted Vatican citizenship. The corporate filing form needed to be countersigned by both Capaldo and the secretariat.

CNA has asked the Secretariat of State to clarify if and why Capaldo was granted Vatican citizenship, and to date has received no response, leaving open important questions about the overlap between the secretariat’s handling of financial affairs and its sovereign diplomatic functions.

More broadly, Francis’s decision to strip the Secretariat of State of the power of the purse represents a jump “back to the future” for curial reform.

In the early days of the Francis pontificate, plans for curial reform included the possibility of reducing dramatically the size and scope of the secretariat’s influence over Church governance, even the possibility of breaking the department up altogether. At the same time, central to the pope’s drive for combating corruption was his effort to grant to the Secretariat for the Economy, then under Cardinal George Pell, total oversight of all curial finances.

So successful was the effort to reverse the trend of reform that a recent draft of a new apostolic constitution for the Roman curia actually envisaged an expanded role for the Secretariat of State, placing it at the center of all curial affairs and Church governance.

Now, with Becciu out of the curia and Parolin excluded from key financial oversight boards, the tide of reform appears to have come back in for the Secretariat of State.

Pope Francis’s letter to Parolin assured the cardinal that the department remained, “without a shadow of a doubt,” central to the curia and the pope’s governance of the Church.

But, with Vatican prosecutors still investigating the full extent of possible financial mismanagement and malfeasance at the secretariat, and a mounting toll of suspensions, resignations, and arrests among key figures, Francis’s reassurance appears to be the spoonful of sugar on a large and bitter pill Parolin has been asked to swallow.

Following the pope’s dramatic sacking of Cardinal Becciu in September, Cardinal Pell thanked Francis for his direct action on cleaning up the Vatican’s finances.

“The Holy Father was elected to clean up Vatican finances,” Pell said, noting that the pope “plays a long game” in reforming the curia.  

After seven years, Francis’s efforts at reform now appear to be, paradoxically, both back to the beginning, and further along than ever before.

Source: CNA