Washington, D.C. Newsroom, Jul 10, 2020 / 04:00 pm (CNA).- The Holy See is facing a perfect storm of a massive income shortfall, months of financial scandal, and a looming international banking inspection. As it prepares to weather the second half of 2020, a range of measures have been taken to shore up its finances and reputation. But will they be enough, or could they end up making matters even more complicated?
According to an apparently leaked internal memo published on Monday, all curial departments of the Vatican have been asked to move all their cash deposits to the Holy See’s central bank. The move signals the depths of the current liquidity crisis facing the Vatican, and raises a number of questions about its ability to mitigate it.
On July 7, Vatican journalist Marco Tosatti published the text of a letter supposedly sent to the heads of all curial dicasteries on May 8. Fr. Juan A. Guerrero, S.J., prefect of the Secretariat for the Economy, said in the letter that the decision was taken after a May 4 meeting, led by Pope Francis, to respond to “this particularly negative economic juncture.”
According to the text of the letter, every Vatican department has been asked to move all their external cash deposits to APSA, which functions as the Holy See treasury, sovereign wealth manager, and administers payroll and operating expenses for Vatican City.
CNA asked the Holy See to confirm or comment on the leaked letter but received no response.
The instruction to move all curial funds to APSA is a dramatic step, exceeding previous attempts at financial centralization under Guerrero’s predecessor, Cardinal George Pell. It points to an acute cash crunch for the Holy See, and raises the possibility that it may already be struggling to meet daily operating expenses, including payroll.
In May, Guerrero said that in the wake of the coronavirus pandemic, the Vatican is forecasting a reduction in income between 30%-80% for the next fiscal year. While dismissing suggestions that this could lead to a default by the Holy See, Guerrero did say “that doesn’t mean that we are not naming the crisis for what it is. We’re certainly facing difficult years.”
Despite the loss of income, some Vatican departments maintain large investment and asset portfolios, most notably the Secretariat of State and the Congregation for the Evangelization of Peoples (Propaganda Fide).
But while moving all cash reserves and deposits held at external banks to APSA could provide a short-term liquidity bridge for the Holy See, it could also create fresh regulatory headaches for the Vatican, and will likely be difficult to achieve.
As CNA has previously reported, the Secretariat of State has maintained large cash balances with several external banks, including in Switzerland. However, transferring the balance of those funds could prove a far from straightforward process.
As reported previously, secretariat funds on deposit were used as security against a $200 million line of credit extended by two banks, Credit Suisse and BSI. The loaned funds were used, in part, to fund the secretariat’s controversial investment in a London building at 60 Sloane Avenue, which has led to the suspension of several curia officials and the arrest of Italian businessman Gianluigi Torzi.
In recent months, Swiss financial authorities have confirmed that several bank accounts, with balances totalling tens of millions of euros, have been frozen as part of an ongoing investigation into the London deal, led by Vatican prosecutors, making them likely hard to transfer.
It is also not clear if the arrangement of using cash deposits as collateral to secure loans to fund investments remains an ongoing practice for the secretariat with other banks. If it does, transferring those deposits to APSA could trigger the banks to call in their loans, adding a credit crunch to a cash shortage for the Vatican.
The text of the leaked letter from Guerrero appears to acknowledge some potential difficulties for different curial departments in complying with his “request,” noting that “where it is necessary to maintain a deposit with IOR or other banks for operational needs, I am kindly asking you to communicate this to this Secretariat [for the Economy] as soon as possible.”
Even if the Secretariat for the Economy is able to have all curial cash moved to APSA without serious financial penalties or complications, and even if this is sufficient to provide for the Holy See’s short-term liquidity needs, the move could still create other unexpected difficulties for the Vatican.
In September, Moneyval, the Council of Europe’s anti-money laundering watchdog, is set to conduct a two-week onsite inspection of the Holy See and Vatican City – the first since 2012.
The president of the Vatican’s Financial Information Authority, Carmelo Barbagallo has described the inspection as “especially important.” “Its outcome may determine how the jurisdiction [of the Vatican] is perceived by the financial community,” he said on July 3.
Moneyval is expected to arrive with its own list of concerns and questions following months of reporting on Vatican financial scandals. A key item on its agenda is likely to be the role of APSA.
Following the last onsite inspection in 2012, APSA agreed to stop providing services to individuals or taking part in commercial transactions, with these functions being transferred to the Institute for Religious Works (IOR), often referred to as the Vatican Bank, which maintains accounts for Vatican employees, individuals and religious groups. APSA was to be limited to administering the sovereign assets of the Holy See, meeting payroll and operational costs, and functioning as the national reserve bank of the Vatican.
In exchange for agreeing to step back from commercial activity, APSA was exempted from annual inspections by the Vatican’s Financial Intelligence Authority (AIF), whose efforts are in turn assessed by Moneyval.
In 2014, Pope Francis issued new norms, transferring oversight and control of APSA’s remaining investment functions to the Prefecture for the Economy, then headed by Cardinal George Pell.
The AIF’s 2015 annual report concluded that since it is no longer an “entity that carries out financial activities on a professional basis,” “APSA stopped being a part of AIF’s jurisdiction at the end of 2015.”
The 2015 AIF report which exempted APSA from further scrutiny said that “If APSA were to carry out financial activities on a professional basis, it would fall again under the jurisdiction of AIF which… must publish and update the list of subjects who must comply with the requirements set forth in [relevant law].”
But last year, Bishop Nunzio Galantino, head of APSA, acknowledged that it had loaned 50 million euros to finance the purchase of an Italian hospital, the Istituto Dermopatico dell’Immacolata (IDI), in 2015, even though APSA is prohibited from making loans that finance commercial transactions.
APSA was forced to write off 30 million of the 50 million euro loan, wiping out APSA’s profits for the 2018 financial year.
The acknowledgement by Galantino that APSA was in 2015 engaged in prohibited lending activity will likely have attracted the attention of European financial watchdogs, who will want to discuss it in September.
In 2016, Pope Francis partially reversed some of the 2014 reforms, returning control of its investment activity to APSA from the Prefecture for the Economy.
That APSA is engaged in financial activity that requires oversight was underlined when, in June this year, Pope Francis moved the office of the Vatican’s financial records database from APSA back under the management of the Secretariat for the Economy — a move explicitly made to emphasise the need for external oversight.
When Moneyval arrive in September, they are likely to push for a renewed look at the role of APSA and its exemption from AIF and Moneyval’s vigilance – all the more so if it becomes the home for all curial assets.
Some Vatican departments, most notably the Secretariat of State, remain engaged in commercial investments as part of their ongoing financial activities. If, as Guerrero’s May 8 letter indicates, all, or even most, liquid curial assets are now being banked with APSA, it will raise serious questions about how those commercial ventures are being maintained, and if APSA can still credibly claim to play no part in commercial activity.
2020 has become an incredibly high-stakes year for the Vatican, on the line is its ability to continue daily operations and remain a respectable member of the financial community.
Returning to financial health and international credibility are, in many ways, tied together for the Vatican. But after years of regulatory chaos and dubious financial conduct, it remains to be seen if 2020 is a crisis year that makes those efforts come good at last – or finally breaks the bank.
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Pope Francis’ connection to the severe side of the Holy Spirit’s scripture in this and in the death penalty ( Rom.1:26-27/Rom.13:3-4) is non existent. His two predecessors were likewise disconnected from other severity related themes ( EV sect.40/ Verbum Domini sect.42). It’s pandemic and started in the early 20th century movement of Catholic biblical scholars towards Protestant liberal biblical scholarship which has good points and very bad habits also. Both the bad and the good entered Catholicism and the problem at its root is Biblical. Romans one is implicitly saying between the lines that heterosexuality is a result of passing many tests of loving God and homosexuality is the result of drift from God into excess which gradually leads to gay acts. The one exception I see would be the biological chimera who is the result of two fraternal twin eggs ( boy and girl) lying too close and merging into one embryo..the resulting one person then has both male and female dna which is the one case I know of…of sincere, non sinful gender confusion.
Hardly ‘disconnected’ with John Paul II.
A temptation regardless of the origination.
The actual act in homosexuality is always a choice.
He called the death penalty “ cruel and unnecessary” in St. Louis in 1999 and sought world abolition of it despite his own catechism being a little better than that. To call some action cruel in itself is tantamount to calling it intrinsic evil and is to contradict the over 33 death penalties God gave to the Jews…and one death penalty God gave the Gentiles. He was not connected to all scripture as Aquinas was.
The defenders of Pope Francis will either embrace this or spin it. Let us see if there is a press release from the Vatican on Monday or Tuesday.
Pope Bergoglio’s statement is blasphemy since he claims that the All-Good God has committed “an act of grave depravity” by creating a homosexual person who, as such, is “intrinsically disordered” morally. This statement is also manifest heresy, directly contradicted by the entire Magisterium of the Church and explicitly summarized in the post-conciliar Catechism.
I can just imagine the press release that is being crafted by Vigano that will attempt to explain this latest example of Pontifical prudential absurdity.
New Gospel fragment discovered in Jordanian cave: “And Jesus said unto him, ‘you’re fine just the way you are; go, and change nothing about yourself.”
Pope Francis seems to flatly disagree with St. Paul’s assessment of the matter. If only Paul the Apostle could have understood Jorge Bergoglio’s take on humility and mercy, I’m sure he would have agreed with our Argentine pontiff and backed off all that nasty stuff we find in Romans 1:18-27. Of course, who could be expected to equal the theological brilliance and consequent insights that Francis has, as Vatican insiders assure us? Ah, we’re just so fortunate to live in this pope’s era of enlightened Christianity!
Oh, yes!!! And if only Bergoglio could have lived 2000 years ago, penned the gospels
and omitted the pesky warnings of Jesus which St. Paul reiterated, there would be so much less confusion in the world!! You need to hand it to Bergoglio. He is doing his best with a false torch of enlightenment to lead the masses already in darkness into a fiery abyss. Bergoglio told an abuse victim that God made him gay and that he should be glad to be gay??? Strange, many former homosexuals claim that sexual abuse was a cause of their homossexuality. Is Bergoglio suggegsting the the guy should be glad that he was abused????
According to what has been reported, Pope Francis did not say homosexual acts were o.k. If Pope Francis did say “God made you that way” he is going against what is in the Catechism in section 2357 says about homosexuality, that is “…Its psychological genesis remains largely unexplained…”
One item that would be quite tragic in all of the clergy abuse scandals that I haven’t seen addressed is if the abuse may be at the root of some of the victims’ homosexual tendencies.
Here’s the section in the Catechism on Homosexuality in its entirety:
Chastity and homosexuality
2357 Homosexuality refers to relations between men or between women who experience an exclusive or predominant sexual attraction toward persons of the same sex. It has taken a great variety of forms through the centuries and in different cultures. Its psychological genesis remains largely unexplained. Basing itself on Sacred Scripture, which presents homosexual acts as acts of grave depravity,141 tradition has always declared that “homosexual acts are intrinsically disordered.”142 They are contrary to the natural law. They close the sexual act to the gift of life. They do not proceed from a genuine affective and sexual complementarity. Under no circumstances can they be approved.
2358 The number of men and women who have deep-seated homosexual tendencies is not negligible. This inclination, which is objectively disordered, constitutes for most of them a trial. They must be accepted with respect, compassion, and sensitivity. Every sign of unjust discrimination in their regard should be avoided. These persons are called to fulfill God’s will in their lives and, if they are Christians, to unite to the sacrifice of the Lord’s Cross the difficulties they may encounter from their condition.
2359 Homosexual persons are called to chastity. By the virtues of self-mastery that teach them inner freedom, at times by the support of disinterested friendship, by prayer and sacramental grace, they can and should gradually and resolutely approach Christian perfection.”