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“They didn’t like change”: Cardinal Pell ‘underestimated’ opponents of Vatican financial reform attempts

Australian Catholic Cardinal George Pell has spoken out about his attempted efforts to reform the Holy See’s finances, saying he believes he underestimated those who opposed his decisions while he was head of the Vatican’s Secretariat for the Economy.

Pell, who turned 80 in June, said those within the Catholic Church opposed to his reform efforts showed “ingenuity” in response to attempts to challenge Vatican financial corruption, and displayed “resilience” in the face of opposition.

“I underestimated the ingenuity and resilience of the opponents of reform,” Pell said during a webinar which took place on 23rd September, organized by the Pontifical University of the Holy Cross in Rome.

He added, “they didn’t like change, they didn’t understand what was being proposed.”

Pell also referred to current corruption within the Church, and he said those involved were unequivocally opposed to any challenge to their dishonesty.

There was also “certainly opposition from people linked to corruption,” he said, although he did not give names.

In the recent webinar, Pell was asked if he would have done things differently in hindsight. In response, Pell said he believes “we made a major mistake when the auditors were fired, and when Libero Milone was sacked.”

Although he said he never approved of these measures, he ventured that “perhaps I should have pushed farther on that.”

Pell was appointed as head of the newly established Secretariat of the Economy back in 2013, making him the Vatican’s third most powerful figure. In his capacity in that role, he was tasked with reforming the Vatican’s finances.

However, Pell stepped aside in 2017 when he was falsely accused of abusing two minor boys while he was Australian Cardinal in Melbourne in 1996.

He was charged by Australian authorities over the alleged abuse, and despite his repeated pleas of innocence at the time, he was convicted in the second trial (after the first trial ended in a hung jury) and was sentenced to six years in jail. Pell, however, was innocent of the crime and has now spoken out about his imprisonment over the false allegations. He spent 400 days in jail in isolation, before he was eventually acquitted in April 2020 by Australia’s High Court.

Pell has tried repeatedly to achieve financial reform within the Vatican. During his time at the Secretariat for the Economy, Pell tried to progress his plans to target financial corruption, including organising audits, creating balance sheets, and endeavouring to loosen the Secretariat of State’s influence over a significant portion of Vatican funds.

Pell and the Secretariat of State were involved in a tug-of-war of sorts, with the Secretariat of State emerging victorious when Pope Francis issued new legislation securing the Secretariat of State’s control over the Vatican’s money belt. However, that decision went on to be reversed by the Pope, who limited the Secretariat of State’s transactional authority after a scandal over a London property investment.

In November, it was reported that Pope Francis was to shake up the running of Vatican funds, moving them to the supervision of its economic offices due to the luxury London real estate deal. Notably, when Pell first came into office in 2014, he signed a contract with multinational accounting firm PricewaterhouseCoopers (PwC) for a major audit of the Vatican’s finances. Such a move was speculated to be a major step in placing the Vatican in-line with generally accepted business standards in the 21st century. At the time, many commentators praised the move as a huge leap of progress for the Vatican in terms of transparency and accountability.

Pell, a man hand-picked by Pope Francis to lead the drive for reform, was left dismayed when only two years later, in April 2016, the Vatican suspended that audit. The surprise decision exposed an internal rift and raised new questions about the commitment of some of those within the Catholic Church to the cleaning up of its finances. The audit was suspended without explanation by then-Archbishop Angelo Becciu, who at the time was serving as sosituto or “substitute” to the Secretariat of State, equivalent to the pope’s chief of staff.

Then, in June of that year, a new contract with PwC was drawn up, this time with PwC as a resource for the Vatican’s own in-house auditing agency alongside other departments. Under the very different new contract, PwC was appointed to comply with the Vatican’s own legal framework, specifying that departments can voluntarily employ PwC’s accounting services in implementing international Public Sector Accounting Standards (IPSAS) in their area of responsibility.

Significantly though, that new contract did not include an audit, which means that PwC never completed the financial audit they were hired to do in the first place.

Another controversy came when the Vatican hired businessman Libero Milone as their first auditor general, promising Milone wide-ranging access to its financial records and direct access to Italian Cardinal Pietro Parolin, the Vatican’s Secretary of State. Despite apparently being given broad access to financial information, the businessman was sacked in 2017, a mere two years into his 5-year mandate. The Vatican accused Mione of spying on his superiors and he was swiftly threatened with a lawsuit.

Milone however, fought back, denying the allegations and later saying he had found himself isolated and side-lined, and that the Vatican’s “old guard” had forced him out in order to protect themselves from crucial reform efforts.

Milone placed the blame largely on then-Archbishop Becciu, the same man who suspended the initial PwC audit organised by Cardinal Pell. He said, “I wanted to do good for the Church, to reform it like I was asked, but they wouldn’t let me.”

Indeed, Cardinal Pell has said that Becciu has been a prominent obstacle in his efforts for financial reform, and his main source of opposition. Pell has also suspected Becciu of playing a role in his own legal woes. After initially being reassigned to the Vatican’s congregation for saints’ causes back in 2018, Becciu was given the boot last year by Pope Francis, who accused him of financial impropriety.

Now, Becciu is the leading man in an upcoming megatrial on Vatican financial corruption, in which 10 people have been indicted. Becciu personally faces various serious charges, including embezzlement, abuse of office, and subornation, mostly related to the London real estate deal, which he presided over while he was still acting in his capacity as sostituto, and which cost the Vatican over $225 million.

The land deal came under fire for using funds from “Peter’s Pence” which is an annual collection which takes place in Ireland and in Churches across the world, and is designed to support the charitable works of the pope.

In the webinar, Pell was asked for his opinion on the state of Vatican financial reform. In a reaction likely to please many, Pell was positive, and said he believes things are progressing in the right direction despite the notable resistance from some.

“We’ve got good, honest men in charge of it. We have a methodology with a modern, contemporary message of presenting financial information, so it’s possible for the authorities to fairly easily work out where we are,” Pell said.

In the past three years alone, the visible Head of the Catholic Church, Pope Francis, has replaced the heads of all major Vatican financial departments in another effort to get #house in order.

In 2018 the Pope appointed Italian Bishop Nunzio Galantino as the new head of the Administration of the Apostolic See (APSA), tasking him with leading the management of the Vatican’s real estate holdings and financial portfolio. The APSA was long perceived to be a financial black hole of sorts within the Vatican.

72-year-old Galantino took hold of the ropes from Cardinal Domenico Calcagno, who himself was at one point accused of involvement in an embezzlement scheme in his previous diocese.

The overhaul continued in 2018, with Pope Francis also appointing Archbishop Edgar Peña Parra as the new sostituto, giving him Becciu’s old job and serious authority over a department that maintains control over a significant general administration fund, which includes vital funds from the charitable Peter’s Pence worldwide collection.

In 2019, Jesuit Father Juan Antonio Guerrero, whose background is in economics, was appointed to take the place of Pell – who was in the process of being vindicated for the abuse allegations – as head of Secretariat for the Economy.

Whilst Pell has confidence in the reform, he says he still has concerns when it comes to the Vatican’s budget, saying that the Vatican was essentially living above its means.

“For years, the Vatican has been spending more than it earns. It’s a moot point as to how long you can do this,” Pell said, adding, “It’s not just a question of an annual deficit, but there are significant pressures on the pension fund, and a decline in Peter’s Pence.”

“I think we’ve made very substantial progress against corruption, but even when you get rid of corruption, it doesn’t mean you can pay your bills,” he said.

Pell’s comments come as the Holy See currently faces a $60 million deficit for 2020, attributable in part to the impact of the coronavirus pandemic. However, a drop in Peter’s Pence funds in the aftermath of the London real estate scandal is also a reason for the deficit. The Vatican is also believed to have a problem when it comes to employment, meaning it is over-staffed in relation to its resources and struggles to meet payroll, let alone being able to set aside a reserve for when Vatican employees retire.

During the last 18 months, Pope Francis has taken several steps to tackle financial corruption and to try and quell the Vatican’s spending. The pope has issued new legislation, establishing new transaction oversight commissions, and has also cut the salaries of cardinals, bishops, and priests in curial positions. He has also limited the number of conferences being held to try and reduce costs related to travel and expenses.

Pell said that he is hopeful for the Vatican’s financial status due to the concrete steps that have been taken, but warned that “We’re not out of the woods yet,” implying significant work still needs to be done. He commended the work of Jean-Baptiste de Franssu, a French investment management and banking professional, who has served as the head of the Vatican Bank since 2014. He said that Franssu has “done a good job” heading the Institute of Religious Works.

Pell also said that the upcoming trial, which was set to begin in July but will now take place on October 4th, will be an important indication of just how serious the Vatican is about facing the problem head on; not just when it comes to identifying and exposing corruption, but also punishing it and holding those involved to account.

In the webinar, the Australian Cardinal was asked about the transfer of approximately $7.35 million to Australia between 2014 and 2020, and his own suspicion that some of these funds were potentially used to ramp up the accusations against him. Pell responded that the nature of the financial transfers in question is “unclear” at this time.

“We don’t know where [the money] went. It might be entirely coincidental, but it’s still a situation that’s unclear,” Pell said, adding, “It might be nice to understand why the money went” from Australian authorities.

“Perhaps it will come up in the trial,” and some light will be shed on that question, he ventured.

In the webinar, Pell also spoke about his experience in prison for false accusations. In June, in an interview with Vatican News to mark his 80th birthday, he said that he received God-given grace to forgive his accusers during the time he spent in prison. He relived the experience he had during 13 months of detention, recounting it in his book “Prison Journal”.

“It helped me to live my sufferings by associating them with those of Jesus. I have always believed that God was behind everything that was happening to me,” he said.

He also addressed the clerical sexual abuse crisis, the current state of Catholic media, and the different personalities and input of different Popes, including Popes John Paul II, Benedict XVI, and now Francis.

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