The first figure to come under consideration was the number of employees, approximately 700. The internal analysis found that a good turnover rate would optimize the output of the available human resources. The most viable idea would be to keep the museums open for the whole weekend, which would increase receipts by 30 percent.

  But no one at the Apostolic Palaces seemed very receptive to these possibilities, although Ernst & Young’s proposals had reached Francis’s inner circle:

  The museums should be considered one of the pillars of the Vatican’s economic development. [They could only grow] comparing the key performance indicators with the development of potential growth strategy proposals, including extending the hours every day and to certain days of the week (for example, staying open on Sunday), expanding the exhibition area, raising ticket prices, and exploiting the “brand” to increase the sale of merchandise.10

  A Secret Unsigned Contract with Philip Morris

  According to the statistics of the World Health Organization, tobacco smoke is the second-leading cause of death in the world and the leading cause of preventable death. Given the obvious health risks, COSEA considered the sale of tobacco the most negative commercial activity at the Vatican. To support or even simply tolerate smoking could not be condoned by Francis’s pontificate. Selling cigarettes is the activity most alien to the Church’s mission and the most threatening to its image and reputation in both theoretical and practical terms. This was made quite clear in the late afternoon of November 18, 2013, at a two-hour presentation on the Holy See’s various commercial activities.

  The presentation was given by two laymen of the Curia, Sabatino Napolitano of the Governorate’s Department of Economic Services and Enrico Bartelucci of the General Accounting Office. The two men assured the auditors that “the Vatican City”—as can be read in the report written immediately after the meeting—“does not engage in promotional activities for tobacco.” This meant there was no advertising, no promotion of smoking, and no push to sell cigarettes. Their policy was to safeguard health and to condemn those who profit from tobacco sales. Their actions, unfortunately, told a different story. The Vatican, like any other state, had a strong interest in selling as many packs of cigarettes as it can. There could be no clearer proof than a letter of February 2013, which the Commission would examine a few months later.

  The letter was written during the last days of the pontificate of Benedict XVI. On February 11, 2013, the Pope announced his resignation, to the shock and dismay of the faithful throughout the world. In the same period, business proposals arrived in the Curia that were not quite consistent with the message of the Holy Gospel. On February 21, one of the Vatican’s cigarette suppliers sent an email to the Governorate management on the subject of the “2013 Agreements.” The text listed all the benefits that would accrue by reaching a certain sales threshold:

  Dear Sirs,

  Pursuant to our telephone conversation, I wish to confirm the following:

  1. Bonus target

  • Annual sales volume of 1.7 million

  12 thousand euros

  • Annual sales volume of 1.8 million

  14 thousand euros

  2. Contribution for Introduction

  We take note of your agreement to the introduction of the 2 Winstons (Winston One and Winston Silver) and confirm our special contribution of 4,000 euros (2,000 euros as a reference)

  3. Danneman Cigarettes

  We have no budget available, but since we believe this product could be interesting to you, we are ready to provide you with a contribution of 1,000 euros to introduce it.

  At your disposal for any further information you may require, Paolucci & C. International, SpA11

  In their reply the only point that the Governorate managers objected to was the clause regarding Danneman cigarettes, which was immediately rejected. Napolitano wrote, “Not possible. OK only under the same conditions.”

  I have no way of knowing if and according to what terms the proposal was accepted. But I do know that there were negotiations with the titans of the tobacco industry to receive a bigger cut of the profits a few weeks later, in March, in the midst of the Conclave. The cardinals had arrived from all over the world to elect the new Pontiff. On the evening of March 13, on the fifth ballot, a majority of cardinals voted for Jorge Mario Bergoglio. In the meantime, the Vatican’s commercial activities continued unabated. Business is business. On that same date, a document arrived on the letterhead of Philip Morris, the powerful tobacco holding company. It appears to be a commercial contract valid for one year, indicating parties, terms, and fees. The letter’s contents are jaw-dropping:

  The Governorate agrees to conduct merchandising activity on behalf of Philip Morris International (PMI) brand cigarettes. For the conduct of these services, Philip Morris International Services Ltd. Rome branch will pay the Governorate a fee in accordance with the terms and conditions of the present agreement. The Governorate will provide the following information on a monthly basis:

  • The volume of purchases (COT) for each brand at the Duty Free Shop of the Vatican State.

  • Competitive promotional campaigns under way and/or already conducted, product launches and initiatives relative to the retail sales price.

  • Information received from the Governorate will be kept confidential and reserved solely for internal use, except when Philip Morris Rome has a different need to divulge said information …

  For the provision of these services, PMIS-Rome will pay the Governorate a fee of 12,500 euros … The invoice should be sent to the PMI Service Center Europe Sp Z.o.o at Al.Jana Pawla II 196 Krakow, Poland. The payment will be credited to the bank account in Germany held by the Governorate.

  The contract is unsigned and should be considered a draft for an agreement that would become more nuanced. In the accounting analyses being conducted by Francis’s men, however, it could have been worse. Unsigned agreements were examined to understand whether approval was pending. Incredible, but true.

  There was more. Contracts were also found with sums indicated that were reduced by half in an addendum bearing either the same date or the date of the next day. This meant that if a supervisor asked to review a contract with a friendly company, he would see the official version without the amendments that had magically reduced the amount that was to be paid to the Holy See. This practice of outright deception occurred repeatedly in leases. The contracts would indicate one amount while in the files an addendum would cut the amount in half.

  These two documents were not submitted anonymously to the COSEA commissioners. The man who believed that the Pontifical Commission needed to evaluate the email with the sales incentives was Francesco Bassetti, a layman who had worked at the Vatican since 1999 as an account auditor. He had the courage to bring these seemingly inexplicable papers to his superiors.

  “Do not obstruct the mission of Francis”

  Under the pontificate of Francis, the atmosphere had definitely changed: the draft contracts with the powerful multinational tobacco corporations were carefully evaluated, where in the past they had looked the other way. As we have seen, however, the Pope’s will would not always prevail in the Apostolic Palaces. Indeed, that would rarely be the case. As discussed earlier, John Paul I, the so-called Pope of Change, had wanted to reform a Curia that had been infiltrated by a group of senior prelates with ties to the Freemasons. He died mysteriously after only thirty-three days of his pontificate. While Pope John Paul II was deeply committed to fighting Communist regimes, he didn’t seem to realize that the IOR was involved in money laundering. When Benedict XVI was confronted by the strife within the Curia, corruption, and the evangelical problems of the Church in the world, he made the historic decision to hand over the helm of St. Peter’s Bark to a new leader.

  Today, almost three years since the beginning of Francis’s pontificate, his reform of the Governorate has still not taken effect. The shops alien to the Church’s mission are still open, churning out profits and serving thousands of customers who can make purchases there by exhibiting a buyer’s card to which they are not entitled. The museums have not extended their hours, ignoring the proposals of Ernst & Young. They remain closed on Sundays, except for the last Sunday of the month, when admission is free from 9 to 12:30, and the doors close at 2:00 P.M.12

  At the November 17, 2013, meeting in the Palace of the Governorate, clear guidelines had been given for the reform, based on the instructions of the Holy Father. On one side of the table were the analysts of Ernst & Young with Andrées Gomes, senior manager of EY Spain; on the other, the commissioners, from the coordinator, Monsignor Vallejo Balda, to Enrique Llano and Filippo Sciorilli. Vallejo Balda was very clear that the reform of the Governorate had to follow four cardinal points:

  1. Independence of the Pope (in the sense of freedom of action and a means for performing his work, not as an end in itself).

  2. Integrate the activity of the Governorate into the mission of His Holiness and make it consistent with the mission of the Universal Church.

  3. Structure and associated risks (economic and reputational).

  4. Sustainability / economic contribution.

  As my reconstruction of the events illustrates, there has still not been any movement on these four strategic principles requested by Francis and outlined by Ernst & Young.

  The situation is complicated, even Kafkaesque. One man who knew a thing or two about it was a member of the new guard, Cardinal George Pell, who would soon be chosen by Francis as the Prefect of the Secretariat of the Economy. Pell started to comb through the account books. He demanded transparency and shared Francis’s policy for a Church without privileges and on the side of the poor and needy.

  On March 26, 2014, the new Secretary of the Governorate, Father Fernando Vergez Alzaga, decided to address to Pell his heartfelt congratulation on his becoming the Minister Plenipotentiary of the Pontiff’s finances. He wrote a letter that deserves to be read in its entirety, from the first to the last illuminating word:

  My reverend Eminence:

  I ask first of all you please accept my warmest congratulations on your appointment as Prefect of the Secretariat of the Economy. At the same time, I am pleased to inform your Eminence that the following arrangements have been made on behalf of the most Eminent Cardinals:

  • The purchase of food, in amounts compatible with family needs, at the Annona commissary or the Community Warehouse at a 15% discount.

  • A 20% discount off the list price limited to a total of 200 packs of cigarettes per month.

  • A 20% discount off the list price for clothing.

  • A 400 liter a month supply of fuel at special prices subdivided as follows:

  a) Voucher for 100 liters.

  b) Special price vouchers (15% discount off the going price) for 300 liters.

  • To be requested with cardinal vouchers (white) to be used at the internal facilities of the Holy See.

  • and/or vouchers for use outside of Rome at gas stations that do not belong to the AGIP-Eni group, exclusively for motor vehicles with Vatican City and Diplomatic license plates. To get these arrangements under way, it would be useful for a member of your staff to contact the fuel office of the Economic Services Department of the Governorate.

  While remaining at your disposal for any further clarification you may require, I avail myself willingly of this opportunity to renew the assurances of my humble regard for Your Most Reverend Eminence.

  Your devoted servant, Fernando Vergez Alzaga

  Perks and preferential treatment were still being offered under Francis and promised to the Curia nomenclature and even the new Pope’s trusted men. The letter left a bitter taste with Cardinal Pell, who filed it away. The following October someone from inside the Apostolic Palaces leaked it to a reporter who covers the Vatican for the newspaper la Repubblica, Marco Ansaldo. The journalist remarks that he has almost never seen a cardinal smoking. So who are all those cigarette cartons going to? In his article Ansaldo does not exclude the possibility that they are resold by someone who is pocketing the difference between the discount and the resale price: “There are even nasty rumors that the person who receives the cartons turns around and sells them on eBay.”

  6

  The Immense Real Estate Holdings of the Vatican

  The Roman Catholic Church has immense real estate holdings, ones that are internationally unique. No one knows their true extent and value, however—not even the Curia. Some data is registered in its financial statements, but the COSEA Commission soon discovered that those statements were unreliable. APSA’s holdings—ranging from commercial and residential properties to institutional buildings—turned out to be worth seven times the amount recorded in the account books. The market value of APSA is 2.7 billion euros, a figure that the Commission was able to document accurately the first time that they investigated the holdings.

  The rentals in question were managed with both carelessness and cunning. This practice applied not only to apartments granted to Vatican higher-ups—the princely residences provided free of charge to some cardinals, described in Chapter 3—but also to homes leased to many outside collaborators or friends. I had exclusive access to all of APSA’s rental records. Of about five thousand properties, mostly in the center of Rome and in the Vatican City, the monthly rent is less than 1,000 euros. Hundreds of documents were classified as A0 (Affitto 0), which stands for “zero rent.” Other tenants pay less than 100 euros per year: that’s right, per year. One particularly lucky tenant—whose apartment is located in the heart of Rome—pays 20 euros a year. In the Curia, the home is a status symbol, the proof of how much its inhabitant counts.

  Favoritism and opportunism are the order of business for APSA. The Commission discovered that one of Italy’s largest banks, Banca Intesa, had paid a security deposit of only 1,864 euros for an office it was renting from the Vatican. These vulgar, paradoxical circumstances are particularly intolerable by comparison to the situations of ordinary citizens. I was able to document this through my access to the papers reserved for Francis’s trusted men.

  A little background will help the reader to understand the climate and the characters that Francis and his men were confronting. One example of a grasp for power is illustrated in this story focusing on Monsignor Giuseppe Sciacca. Born in 1955 in Aci Catena, Sicily, a small municipality in the Province of Catania, His Eminence apparently had a weakness for comfortable and—above all—spacious living. He loved to throw cocktail parties and dinners for friends, but he apparently considered his beautiful apartment in the Palazzo San Carlo too modest (for which he paid no rent, of course).

  On September 3, 2011, Sciacca was appointed Secretary General of the Governorate. Benedict XVI’s loyal friend, Tarcisio Bertone, had convinced him to entrust the Monsignor with the delicate role of number two man at the Governorate, taking the place of Monsignor Carlo Maria Viganò. As I related in His Holiness, Viganò had attempted to straighten out the finances of the Governorate, denouncing the inflated contracts, excessive spending, and even episodes of outright theft. Rather than be rewarded for his efforts, he was exiled to Washington as Apostolic Nuncio, after a vigorous mano a mano with Bertone. He had encroached on too many interests, making enemies along the way, and the Curia doesn’t forgive.1

  Viganò had lost his position after a vigorous standoff with Secretary of State Bertone. Sciacca, on the other hand, posed no threat to the status quo. He would serve under the President of the Governorate, Cardinal Giuseppe Bertello, another Italian and a Bertone loyalist, like most of the heads of the various dicasteries that control the Church’s finances. Bertone’s influence in the Curia was at its peak in the fall of 2011. He had managed to create a power block by putting Italian cardinals and bishops that he trusted into the most strategic positions: a block that Francis inherited from Ratzinger, and with which he engaged immediately in a pitched war.

  Less than one year into his prestigious appointment, Monsignor Sciacca was itching to do something about his “modest” home. He wanted another apartment, more spacious and accommodating, but he didn’t know how to go about getting it. The only solution was to wait for the right opportunity, and the right opportunity came knocking one fateful morning. All he needed was a little cynicism and cunning and the deal would be done. With the speed of a jackal, the Monsignor devised a plan that was so brazen that it seems unbelievable even today.

  Sciacca’s target was his neighbor, an elderly mild-mannered priest in declining health who lived with a nun and who had stopped going out some time ago. He was no longer seen taking walks around the Vatican. The Monsignor inquired after him and learned that in recent months the poor priest had been under constant care and medical supervision. At the moment, he was in the hospital receiving emergency specialized care. Rumors about his health started to spread: many wrote him off as dying while others doubted he would ever return to his apartment.

  The time had come to act. Sciacca called in his trusted construction company, pointed to the dividing wall between the two apartments, and asked them to knock it down to connect the two units. He needed more valuable square footage to make his abode more comfortable. Although the workers were surprised at the request, in a few hours the job was done and a passage had been built into the neighboring apartment. A new room, to be used as a parlor, appeared magically in the Monsignor’s residence, while the apartment of the ailing priest, unbeknownst to him, was downsized.

  Sciacca did not stop there. He also “incorporated” the furniture of the appropriated room, which had come from the “Floreria,” the Governorate office that also handles the furniture of senior prelates. The priest’s personal belongings were placed in cardboard boxes and left in the hallway, as if he were preparing to move. Finally, the door from the newly conquered room to the rest of the priest’s apartment was walled up.