Explaining the Latest Vatican Scandal

News broke yesterday about Vatican financial problems on a grand scale. LifeSite News publishes the story here. Their story is based on leaked documents, but like all news stories, corroboration may be needed and further details will shed more light on what has happened.

A word of explanation might be necessary for those who are not in the know about the key players.

The Papal Foundation is a highly respected Catholic charity established by Pope St John Paul II to help his charitable work for the poor. Hard working priests, nuns and people in the church in the developing world would write to the pope for assistance and he wanted a special fund to be able to send them help.

So JP2 asked wealthy American Catholics to set up a charity to raise funds which would be used at the pope’s discretion to fund projects in the developing world. The “stewards” of the charity are individuals or families who pledge at least one million dollars to the foundation.

The money has been used over the years to help fund orphanages, AIDS clinics, hospitals, monasteries, schools and other projects in the developing world. While the funds were “at the pope’s discretion” the charity did not simply hand the Holy Father umpteen millions. Instead, as I understand it, the pope would make a request and the request would then be followed up with due diligence by the charity. Applications would be submitted, paperwork and financial checks would be done, and then relatively small grants of no more than $200,000 would be made to the special cause close to the pope’s heart.

That’s the background. Today’s story is that documents have been leaked exposing the great unrest within the Papal Foundation. Stewards and administrators are unhappy that Pope Francis asked for a “loan” of $25m to be made to a hospital in Rome with links to the Vatican. The reason the members of the Papal Foundation are unhappy is that the hospital in question is a hotbed of financial corruption and mismanagement. They are unhappy that this is not a hospital in the developing world ministering to the poor and that the grant of $25 million dollars is far above the usual level of their giving to one organization. Furthermore, the members feel they were muscled out by Cardinal Wuerl of Washington and Cardinal Dolan of New York who demanded that the grant be made.

When the first installment of $8m went through the stewards asked for the necessary paperwork (which should have been presented and vetted first) When the paperwork did arrive it was described as “fluff”. The financial report consisted of four lines saying that for the four last years they had made “profit”.

The Vatican’s entanglement in the financial skulduggery of Italian bankers is notorious, and attempts to clean things up have invariably stumbled. Now that this story has broken more questions will be asked. What is the history of financial malfeasance at the hospital? How serious was it? What exactly is the link between the hospital and the Vatican Bank? Why did a hospital that reported “profit” for four years need an injection of $25m? Why didn’t they go to the Vatican Bank or a commercial bank for a loan if they needed it? Was there some problem why they could not deal with their debts in the usual way? Why was an American charity created to help the poorest of the poor expected to bail out a financially dubious institution in Rome? Who is in charge and why was the Pope drawn into the problem? Pope Francis is the Pope of the Poor. Is this hospital ministering to poor immigrants in Rome or to the homeless? Why was the Pope expected to help a hospital in Rome that was having financial problems? Is that his job?

Of course we must give the benefit of the doubt. It could be that the hospital went through a bad patch and simply needed a boost to get back on their feet, and the Pope saw a loan from the Papal Foundation as a way to save the day. However, it is not only sad to see the Vatican drawn into what seems at best incompetence and at worst, financial corruption, but who allowed the Pope to get involved?

No doubt the Holy Father was simply trying to solve a problem in his request for the funds, but this is not going to play well for poor old Pope Francis. Not only is his reputation going to be soiled, but the long term effect will be disastrous not only for the Papal Foundation but for anyone donating to the Vatican. I expect donations to the Papal Foundation will dry up pretty quickly, and that will be hard luck for those worthy, grass roots, small scale efforts in the developing world that really need the assistance.

More on this story from the UKs Catholic Herald is here.


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