2 Corriere della Sera, November 24, 2013.

    3 Email sent to Cardinal Calcagno, President of APSA, on January 22, 2014.

    4 From the preliminary document of February 18, 2014, on the work of the COSEA Commission, drafted for the meeting of the so-called G8, the group of eight cardinals who are helping Bergoglio with the reforms.

    5 Ibid.

  5. The Sins and Vices of the Curia

    1 From the Pope’s homily at the Mass for new cardinals at St. Peter’s on February 23, 2014. http://w2.vatican.va/content/francesco/en/homilies/2014/documents/papa-francesco_20140223_omelia-nuovi-cardinali.html.

    2 In his report Nicolini emphasized many “weak points” in the project. Because of “the almost total lack of adequate human resource management,” various countermeasures had to be taken. Among these, he indicated, “the start of a mid- and long-term project for the purpose of significantly reducing human resources, creating incentives for personnel in order to combat growing absenteeism, recourse to overtime hours as a tool at the disposal of management and not as a means of supplementing an employee’s salary.”

    3 Of the other Vatican-owned gas stations, three are located in the city of Rome, one is near the pontifical villas, and one is in the vicinity of the Vatican Radio.

    4 The group was established during the October 12 meeting and was led by Enrique Llano and had, as members, Zahra, Monsignor Vallejo Balda, and Jean Videlain-Sevestre, as can be seen in the document with the “operative decisions” taken at the meeting.

    5 The final draft is dated February 18, 2014, and it gives a progress report on COSEA’s investigations into thirteen different workstreams.

    6 Ibid.

    7 Ibid.

    8 Nello Rossi made this observation during a conversation with the author on September 21, 2014.

    9 Ibid.

  10 The document goes on to say: “EY recommends the following actions to improve oversight and reduce the operative and/or economic risks of the commercial activities:

  • With regard to buyer’s cards: review the policy and the requirements for issuing the cards; verify the status of the temporary cards; regulate the limits on use.

  • With regard to the sub-contracted operators/contracts: agreement for a temporary extension until a new partnership strategy and reliable procurement process have been defined. The commercial activities should address their attention to revenue and the generation of profit for basic supplies [in other words, without going overboard]. For this purpose, specific actions have been inserted for each activity:

  • Supermarket: limit customer targets and reduce the assortment of products; also, assess an alternate path for the supermarket.

  • Fuel: limit target customers; also, assess the number and position of sales points and consider the partnership with a third party.

  • Pharmacy: limit customer targets and reduce the assortment of products.

  • Clothing and Electronics: limit customer target and assortment of products; in the long term, the activity can be suspended.

  • Tobacco: limit customer target, raise prices (bring Vatican prices to the level of Italian prices); in the long term the activity can be suspended.

  • Fragrance Shop: raise prices (bring Vatican prices to the level of Italian prices), limit customer target and establish maximum amounts card-holders can buy; in the long term, the activity can be suspended.”

  11 The email is addressed to a Governorate manager and signed by a manager of the private company.

  12 The President of the Governorate, Cardinal Giuseppe Bertello, has a project to reorganize the Governorate. This, too, is stalled. He had been pushing for “a new structure of the Governorate that would be more streamlined and functional, reducing an organization of 23 departments and central offices to only 10.”

  6. The Immense Real Estate Holdings of the Vatican

    1 The letter that Monsignor Viganò wrote to Pope Benedict XVI, defending his actions and criticizing Secretary of State Bertone, is an eloquent document of the dramatic period I am describing: “Most Holy Father, I find myself constrained to make recourse to Your Holiness because of an incomprehensible and serious situation affecting the governance of the Governorate and me personally … My transfer from the Governorate in this moment would cause deep dismay and discouragement among those who believed that it was possible to clean up the many situations of corruption and abuse of power that have long been rooted in the management of various departments … I place in the hands of Your Holiness this letter, which I addressed to His Eminence the Cardinal Secretary of State, so that you may dispose of it in accordance with your august will, having as my only desire the good of the Holy Church of Christ. With sincere sentiments of profound veneration, the most devoted son of Your Holiness.” A few days later, Viganò would deliver to Pope Benedict XVI in person a confidential note describing his actions. Here is an excerpt from that note: “When I accepted the assignment at the Governorate on July 16, 2009, I was well aware of the risks I would encounter, but I never thought I would find myself facing such a disastrous situation. I mentioned this on several occasions to the Cardinal Secretary of State, pointing out that I would not be able to manage through my own forces alone: I needed his constant support. The financial situation of the Governorate, already gravely debilitated by the international crisis, had suffered losses of more than 50–60 percent, also because of the incompetence of the persons who administered it. To remedy the situation, the Cardinal President has assigned the management of two State funds to a Finance and Management Committee, consisting of some major bankers, who ended up acting more for their own interests than for ours. For example, in December 2009, in a single operation they made us lose two and a half million dollars. I reported this to the Secretary of State and to the Prefecture of Economic Affairs, which considered the very existence of this committee to be illegal anyway. Through my constant participation in the meetings, I tried to contain the action of these bankers, with whom I often had to disagree necessarily. More about the conduct of this committee can be related to you by Mr. Gotti Tedeschi, who was a member until his appointment to the IOR, and he is well aware of how much I tried to keep its conduct under control.”

    2 The Sacred Congregation for the Propaganda of the Faith (Propaganda Fide), as it was formerly known, is the pontifical dicastery that leads and handles the general governance of Catholic missionary activity in the world. It currently consists of sixty one members, including cardinals, bishops, and archbishops. The head prefect is currently Cardinal Fernando Filoni, who was appointed in May 2011 by Pope Benedict XVI.

    3 This estimate is for the real estate assets of APSA (approximately 45 percent of the total value of the purchase), pension funds (about 17 percent), and Propaganda Fide (about 10 percent).

    4 If a tenant wished to have his entire apartment renovated at the expense of APSA, he would have to pay a 15 percent surcharge, which would drop to 10 percent if the tenant opted for a partial renovation or if work had already been done by the previous tenant.

    5 The data indicated in the RB audit refer to September 30, 2013.

    6 The data indicated in the RB audit refer to May 21, 2013.

    7 The document forwarded by Cardinal Calcagno highlights the gradual decline in APSA’s power: “Consequently attention should be drawn to the gradual erosion and dilution of the institutional role of APSA, from which many duties have been removed, but even more, which has had (and will continue to have) cognizance of various realities gradually emerging in the Holy See that rob APSA of its administrative duties (art. 172 of Pastor Bonus). All of this has inevitably diminished the power of the Dicastery in those areas that could be granted to it as financial ‘piazzas’ and, above all, it has opened up areas of administrative management that received practically a waiver from any form of oversight and that at times were the source of occasions of ‘hindrance’ with investments also outside of the IOR.”

    8 This is also mentioned in an investigative report published in Europeo in January 1977: “On August 6, 1976, the Holy See accepted a substantial donation from the Mollari siblings: it is twenty-two hectares of land with rural buildings at the locale ‘La Mandria’ on Via Laurentina 1351. There are two novelties about this donation. The first, as in countless other cases, is that the appraisal of the donated assets is unreliable: only 500 million. The second is that the decree by Italian President Leone requires the Holy See to sell everything within five years.”

    9 “Un Vaticano da 10 miliardi,” an investigative report published in issue 29 of July 24, 2014, by Emiliano Fittipaldi.

  10 “Diversa SA was founded in Lugano”—Fittipaldi writes—“in August 1942, while the battles of Stalingrad and El Alamein were being fought. Today it is chaired by Gilles Crettol, a Swiss lawyer who manages the interests of the Pope on the other side of the Alps: his name appears at almost every Swiss company.”

  11 On July 31, 2013, Profima had to pay more than 98,000 Swiss francs for services contracted to third parties, such as PwC for account auditing (26,924 francs), and 70,000 to the accounting experts of If Sfg not to mention the cost for Diversa SA of virtual office services at the Jordan holding company. If the attendance paid to the six board members was zero francs, this means that Gilles Grettol must have been paid 36,000 francs in 2012.

  12 According to the data collected as of January 31, 2014, it appears that the chairman, Robin Herbert, receives gross compensation of 12,357 sterling pounds, while the other four directors receive 8,240 each.

  7. Holes in the Pension Fund

    1 From the 2013 estimated budget, chart of pension fund contributions and post 1.1.93 pension chart.

    2 When confronted by the crisis of the diocese of Berlin, the German Bishops’ Conference agreed to let the consultants from McKinsey step in. According to the journalist Sandro Magister, the Conference, “asked the manager of the Munich branch, Thomas von Mitschk-Collande, to get its accounts back in order. He also drew up a plan for the German Bishops’ Conference to save on costs and personnel.” “La curia di Francesco, paradiso delle multinazionali,” Espressoonline, January 17, 2014.

    3 From the minutes of the auditors’ meeting on June 21, 2012.

    4 “If you look at the contribution of active employees (current average value of contributions—presently active),” Messemer underlines, “it will bring in 494 million euros: this is about 288 million less than what is needed to cover the estimated liability of 782 million euros for active employees.

  “It is presumed that this discrepancy is financed both by the net assets and by future employees and that it will be covered, for the most part, by a mathematical reserve of about 180 million euros in the profits and losses account. To put it simply, the contributions of future employees should amount to about 575 million euros, while liabilities for the same group of persons is estimated at only 395 million euros.

  “To be more concise: contributions from future employees will finance about 180 million euros of the pension [liability] of current employees. If you look at the need to cut personnel costs, thereby reducing the financial base of future contributions to the pension fund, this would seem to be an unrealistic assumption …

  “The most important analysis that must be done urgently is an analysis of the correspondence between assets and liabilities. We are unable to say whether earnings from current and future assets (from a prospect based on the rate of risk/profit) are stable enough to guarantee the profits needed to cover the liabilities. The current interest rate for the calculation is about 4.7 percent. I should mention that the current interest rate on German government bonds (10 years) is 1.3 percent.

  “The IRS, the Swap interest rate (20 years) is about 2 percent, also indicates that we are seeing a dramatic drop in interest rates, within which a projected rate of about 5 percent is truly ambitious. Making things more complicated is the fact that one-third of the assets are real estate. What type of asset are we referring to? In what does it consist? Are there also investments that could, in the future, modify the budget structure?”

    5 The auditor had been particularly harsh five months earlier, on June 21, 2012, as documented in the minutes of the meeting of the international auditors’ board: “Mr. Messemer hopes that, in the space of a few years, we can have a holistic view of the economic and financial activity of the Vatican, avoiding unpleasant surprises … This is why it is important for the Pension Fund to have exact risk assessments and to undertake an accurate actuarial calculation. To this end, Mr. Messemer underlined several important needs:

  1. Change the pension system for new employees (i.e., per contribution);

  2. Understand that the Pension Fund is part of a scenario in which interest rates vary from 2–3%;

  3. Verify the exact correspondence between assets and liabilities. There are models that could be used as reference;

  4. Always assess the counterpart’s risk. The top insurance companies never neglect this aspect. If an insurance policy is drawn up with a bank, first check whether the bank is solvent.

  5. Try to respect promises made to employees. This regards both the Pension Fund and the Health Insurance Fund.

  6. Address the media’s skepticism in calm cool tones, trying not to sound too worried about what is happening.”

  The other auditors share Messemer’s concerns: “Mr. Prato returned to the subject of the Pension Fund and the two systems, of payments and contributions, that should exist after the introduction of contributions for new employees. Considering, however, the rather low turnover rate of Vatican personnel, it would be better to schedule a set date for the full transition to a system of contributions, for all employees, to prevent any possible disorder due to the coexistence of the two systems. Mr. Messemer claims that the separation of the two systems is the most immediate solution. It is problematic to transition to the new system if the old one is still widely misunderstood. Another source of concern is tied to the flows from one system to the other to allow the new pensions to pay for the old ones.”

    6 The document continues by underlining the following:

  1. All the personnel offices of all the administrative bodies that report to the Apostolic See, in any way and regardless of the de facto or legal autonomy they have so far enjoyed, will be unified in a single administrative structure that will perform all the functions in this area. Some of these functions could be delegated, in part or in whole, for a fixed term.

  • This structure will be called “Personnel Office of the Apostolic See” and it will report to the Prefecture of the Economic Affairs of the Holy See.

  • It will be headed by an appointed Director of Human Resources who will direct and coordinate all personnel who, at present, handle assignments in this field at the single administrative bodies;

  • The structure will be divided into two sections: one for all full-time permanent employees and another for other types of collaborators of any type working for administrative bodies of the Holy See, including unpaid collaborators.

  • All the existing regulations at the single dicasteries will remain valid, provided they are in compliance with regulations at the higher level and, of course, with the universal principles of equity and justice.

    7 Minutes from the meeting of the board of auditors on December 12, 2012.

    8 Risk-identification document drafted for the Council of Cardinals on February 17–18, 2014.

    9 Ibid.

  10 Ibid.

  11 From the “Report on the 2013 YTD Budget and the 2014 Estimated Budget.”

  12 Subsequently, we find 35 million in ordinary bonds of Barclays Bank Plc, 25 million at the Commerzbank, another 25 at General Electric, 12.3 million in France (Govd.Of), and 8 million in Eléctricité de France. Among the stock bundles, the most substantial are at Snam Rete Gas Spa (38,326), for a value of 143,000 euros, BASF for 141,000 euros, Eni for 127,000 euros, Enel Spa (22,800) for 64,000 euros, and Royal Dutch Shell with stocks valued at 73,000 euros. A substantial amount of stocks: investments in bonds would increase for the pension fund, to 11.2 million in the 2014 estimated budget (10.6 in euros and 0.6 in dollars) by comparison to the 10.9 million in the 2013 YTD budget.