McCarrick: Foundation ‘irresponsible’ to question controversial Vatican grant

Washington D.C., Nov 6, 2019 / 03:40 pm (CNA).- Former cardinal Theodore McCarrick intervened to pressure members of the U.S. Papal Foundation to support a controversial grant request, intended to repay an illicit loan from APSA, the Vatican’s central bank. McCarrick met privately with the leadership of the bank in the months leading up to his intervention. 

McCarrick made the intervention in December 2017, after objections were raised to the Vatican’s request of $25 million from the Papal Foundation, for a bankrupt Italian hospital, the Istituto Dermopatico dell’Immacolata (IDI). 

The grant request from the Vatican Secretariat of State was, according to the minutes of a December Papal Foundation board meeting, first made in June 2017 as “an emergency request” from the pope, and was said to be intended to cover a short term cash crunch at the IDI.

The Papal Foundation is a charity that confers grants to charities at the request of the Holy See. Grants do not ordinarily exceed $300,000, which made the request for $25 million unusual. In autumn 2017, several board members objected to the request because they had discovered that the hospital was financially insolvent, and not merely in a short term cash crunch, as Vatican officials had led them to believe.

Among those who objected was James Longon, chairman of the foundation’s audit committee, who described the request in a memo to board members as a “disaster for the Papal Foundation. Not only is the decision process flawed, but the recipient has a dubious past.”

In early December 2017, another board member sent a letter to the entire board, raising objections to the grant request and outlining the financial problems of the IDI.

McCarrick responded to that board member by letter Dec. 14, 2017. He copied his letter to the cardinals on the foundation’s board. 

“Some of your own recent actions may have caused harmful injury to the Foundation itself,” the cardinal wrote to the board member, mentioning previous incidents of “unfortunate publicity” and “division” at the foundation, and suggesting that criticism of the grant request might cause more of the same. 

“The assertions and allegations that are mentioned in your letter were unfortunately based on anonymous sources ‘inside and around’ the Vatican. It is a shame that they do contain material that is demonstrably false, irresponsible, and seriously harmful to The Papal Foundation,” McCarrick wrote. 

“Many of the assertions supposedly supported by ‘an anonymous source” can be disproved by documentation that is readily available and public. It was unfortunate that you were not able to verify the information from your anonymous source before you disseminated it.”

“My objection is not to your disagreement with the grant request, but rather that your disagreement seemed to call into question the very integrity of the Papal Foundation itself,” McCarrick wrote, apparently suggesting that raising questions about the Vatican request was inappropriate.

Several sources close to the Papal Foundation told CNA that the “demonstrably false assertions” to which McCarrick referred included the claim that the IDI, which was declared bankrupt in 2013, had millions of euros of debt and liabilities. Those debts were in fact a matter of public record.

CNA has reported that the grant funds were never intended to go to the hospital but instead meant to partially repay a 50 million euro loan made by APSA, the Vatican’s central reserve bank, to fund the purchase of the IDI out of bankruptcy by a partnership established by the Secretariat of State and the Congregation of the Sons of the Immaculate Conception – the religious order that originally owned and operated the hospital, which had assumed the bulk of the IDI’s outstanding debts. That information was not disclosed to Papal Foundation board members.

It is not clear if McCarrick was aware of the actual intended purpose of the grant funds at the time of his letter. However, CNA has learned that, in July 2017, APSA’s secretary, Fr. Mauro Rivella, met personally with McCarrick in Washington DC – shortly after the Papal Foundation grant request was first sent, and two months after the first accusation of sexual abuse was made against McCarrick to the Independent Reconciliation & Compensation Program in New York.

At the time McCarrick sent his letter, allegations of sexual abuse of minors made against him had already been forwarded to the Vatican. Cardinals Donald Wuerl and Timothy Dolan, both members of the board, were aware of the allegations.

McCarrick served on APSA’s board until 2010, when he was required to retire after turning 80. After 2010, McCarrick continued to serve as the U.S. representative for the Fondazione Centesimus Annus Pro Pontifice, a non-profit group controlled by APSA, a role he maintained until his public disgrace following the publication of allegations of sexual abuse in 2018.

CNA has reported that the APSA loan was coordinated by Cardinal Angelo Becciu, then the sostituto at the Secretariat of State, and contravened internal policies and international regulatory agreements. CNA has also reported that APSA eventually wrote off 30 million of the 50 million euro loan.

The loan from APSA came after the same proposal was denied by IOR, the Vatican’s custodial  bank which provides banking services to religious orders and curial employees, after its president, Jean-Baptiste Douville de Franssu, along with Cardinal George Pell vetoed the plan, concluding that the IDI would be incapable of repaying the loan.

McCarrick’s letter said that information concerning the IDI’s outstanding debts, and history of fraud and embezzlement was “unverified” and had “caused serious damage to the Foundation.”

McCarrick suggested that lay board members defer to the foundation’s cardinal members to “repair any damages that may have been done” to the credibility of the Papal Foundation and the grant request, and “clarifying your position.” 

While lay members of the foundation’s board were nearly unanimous in opposing the grant request, the bishop and cardinal members of the board outvoted them, and in December 2017, the grant request was approved.

Two initial installments of the grant were sent to Rome in late 2017 and early 2018, totaling $13 million. After internal disagreements about the grant went public, Cardinal Donald Wuerl, charged with presenting the proposal, said he would ask the Vatican to cancel the request and return the funds. 

In early 2019, Cardinal Pietro Parolin, Vatican Secretary of State said the $13 million would be reclassified as a loan, rather than a grant, and would be repaid through "discounts" applied each year to the list of grants requested of the Papal Foundation by Vatican offices and Catholic apostolates.

“The poor will end up paying the debt,” a source close to the Papal Foundation told CNA.

One senior APSA source blamed the breakdown of the Papal Foundation grant on what he believed to be anti-Francis sentiment among Papal Foundation board members.

“All these objections raised about IDI not being like the normal grant recipients are just justifications,” he told CNA. “If this had been a request from Benedict or John Paul II, they would have sent the money without thinking about it.”

Asked if the grant request had actually come from Pope Francis, if the pope had endorsed the request, or if he knew of the undisclosed purpose of offsetting the APSA loan, the official said it was “immaterial.”

“So far as the Papal Foundation should be concerned, if the Secretariat of State asks, it is the pope asking, refusing is to refuse the pope.”

McCarrick was convicted by the Holy See of sexually abusing minors and seminarians and laicized earlier this year. McCarrick is living in seclusion at a friary in Kansas and is unavailable for comment.