28 December 2020, The Tablet

Pope forges ahead with financial reforms

Pope forges ahead with financial reforms

Pope Francis, pictured in the library of the Apostolic Palace yesterday, is pushing ahead with financial reforms.
Vatican Media/PA

Pope Francis is pushing forward with his reforms of Vatican finances with a new law that tightens oversight over Holy See investments and ensuring greater transparency. 

The move comes as the Vatican continues its investigation into a disastrous €350 million London property investment which had been overseen by the Secretariat of State, the body which sits at the heart of the Church’s central administration. 

The new law, which comes into effect on 1 January 2021, removes the Secretariat of State’s power to manage investments and property holdings and hands that authority to the Administration of the Patrimony of the Apostolic See (APSA). APSA oversees the bulk of Vatican investments and also acts as the equivalent of a treasury. 

The Pope has also ruled that APSA will also take over control of Peter’s Pence from the Secretariat of State. The Peter’s Pence fund is derived from donations made from Catholics across the world and its purpose is to help the Pope run the Holy See and fund charitable projects.

Francis’ legislation comes after a letter he wrote in November authorising that APSA would take over the management of the Secretariat of State's funds. In that letter the Pope called for the Vatican to exit the investment in 60 Sloane Avenue “as soon as possible.”  

By 4 February 2021, the latest law explains, the Secretariat of State must transfer all “cash funds” in Vatican or foreign bank accounts, “securities and real estate investments,” and investments in companies or investment funds to APSA to manage. In turn, APSA will be held accountable to the Secretariat for the Economy, which has a general oversight role. 

One of the obstacles to Vatican financial reform has been a siloed system where different departments control their own money with little accountability, and clergy without financial expertise overseeing large investments. 

The Holy See’s Sloane Avenue investment was managed by the Secretariat of State alone and saw saw middlemen walk away with millions in fees. A number of officials believe the Church was fleeced by unscrupulous investors, and the scandal blew up in 2019 when Vatican police raided the secretariat’s offices. One of those involved in overseeing the Sloane Avenue deal was Cardinal Angelo Becciu, who was sacked by the Pope in September. He has denied wrongdoing.  

Some have reported that Peter’s Pence money was used for the London deal, a claim which has been denied. In the past, however, Peter’s Pence has helped cover Vatican deficits while the way the fund was managed has been somewhat opaque.

From now on, it will become part of a section titled “Papal Funds” in the financial statements of the Holy See. This will contain “sub-accounts” that must keep separate accounting procedures. These include Peter’s Pence, the “Discretionary Fund of the Holy Father”, and any funds with “particular donation requirements” from the donors.

The Pope’s new law, the Vatican explained, seeks to reduce the number of individuals making financial decisions while ensuring that the Holy See’s economic activity is managed by the departments who have that responsibility. 

The Vatican has said it is setting up an investment committee of outside experts, while the Pope appointed a raft of new financial advisers last summer including a British former cabinet minster, Ruth Kelly, and ex-treasurer to the Prince of Wales, Leslie Ferrar. They sit on the Council for the Economy, which acts as the equivalent of a Vatican financial board. 

The Secretariat for the Economy is the body which has broad oversight over all the Vatican’s finances. Set up in 2014, its first prefect was Cardinal George Pell who sought to bring greater transparency to the Holy See’s money management. Three years later, however, he was back in Australia fighting child sex abuse charges, of which he was eventually acquitted.  

It is run by a Jesuit priest, Father Juan Antonio Guerrero, with Maximino Caballero, an experienced financier, working as its number two. Last October, the secretariat released the most detailed financial statements ever produced by the Vatican. The budget for the Holy See, according to the new legislation, is compiled by the economy secretariat and then sent to the Council for the Economy - made up of lay experts and cardinals - for their approval. 

One source close to the Holy See’s financial operation says the appointment of non-ordained financial professionals is crucial. Caballero was appointed last summer as was Dr Fabio Gasperini, who is the number two at APSA and the first layman to hold the position. Gasperini worked for almost 20 years at Ernst & Young, one of the “big four” accounting firms, and has three decades experience working in finance. 

Soon after his election, Francis declared he wanted a “poor Church for the poor” and took over the papacy at a time when the Vatican was battered by financial scandals. 

The Vatican said the latest changes are aimed to ensure that the “People of God generously help to support the mission of the Bishop of Rome can do so with the confidence that their contributions are administered in a proper, transparent manner, and with the exercise of due controls.”



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