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BBC News
16-06-2025
- BBC News
'It involved the Mafia, Freemasonry and the Vatican': The mysterious murder of 'God's Banker'
Forty-three years ago this week, the BBC reported on the death of Roberto Calvi, an Italian banker whose body was found in strange circumstances in the centre of London. His bank was linked to the Vatican, a masonic group and the Mafia – and his murder left many unanswered questions. Roberto Calvi was the chairman of the prestigious Banco Ambrosiano, the largest private bank in Italy. He was so closely connected to the Roman Catholic Church that he was known as "God's Banker". Warning: This article contains references to suicide and murder But in June 1982, the 62-year-old Calvi went missing. And on the morning of 18 June, his body was discovered hanging beneath Blackfriars Bridge in London. "Calvi was at the centre of an incredibly complex web of international fraud and intrigue," reported the BBC's Hugh Scully. "It involved the Italian banking world, the underworld, the Mafia, Freemasonry and, most startling of all, the Vatican." The banker's death would trigger a wide-ranging political and financial scandal in Italy. It would involve the disappearance of millions of dollars, and leave behind an enduring mystery. Calvi had been missing for nine days before he was discovered hanging from scaffolding beneath the bridge. But it was the strange circumstances of his death that puzzled UK police. His pockets were stuffed with bricks, and with some £10,000 ($14,000) in cash in multiple currencies. He also had a fake passport bearing the name Gian Roberto Calvini. Despite this, the initial coroner's report in July 1982 found no evidence of foul play on his body, so ruled that the banker had taken his own life. But even at the time there was suspicion that something far darker was afoot. "Calvi's last journey was hardly that of a man contemplating suicide," said Scully. "Indeed, he had made the most elaborate plans to get out of Italy secretly." The banker had shaved off his moustache to avoid being recognised before disguising his route out of Italy by going through other countries first and hiring a private plane to spirit him to London. "He had taken a one-month lease on a flat in Chelsea and then there was a false passport and an airline ticket," Scully continued. "Inside the passport was a current visa for Brazil and the airline ticket was for a one-way ticket to Rio de Janeiro. Why, you might ask, go to all those lengths simply to finish up on the end of a rope under Blackfriars Bridge?" Calvi's was not the only unexpected death at Banco Ambrosiano. The day before his body was found, his personal secretary Teresa Corrocher had also apparently jumped to her death from the fourth floor of the bank's headquarters in Milan. She left behind a note condemning her boss, writing that he should be "twice cursed for the damage he caused to the bank and all its employees". Calvi and his bank had operated in a murky world where finance, organised crime, politics and religion overlapped. Founded in 1896, Banco Ambrosiano had a long history with the Catholic Church – and the Institute for Religious Works (IOR), often known as the Vatican bank, had become its main shareholder. IOR holds the bank accounts of the Pope and the clergy, but it also manages the church's financial investments. Because the Vatican is its own country, Italian regulators have no control or oversight of the IOR. Mafia connections "The Vatican is entirely free of exchange controls and other government regulations; secrecy is everything," said Scully. "The Vatican has to account to no one for its financial dealings, and enormous sums of money can be sent anywhere in the world without anyone knowing about it other than those directly involved." Through his role as head of Banco Ambrosiano, Calvi had forged close ties with his opposite number in the IOR, its chairman Archbishop Paul Marcinkus. In turn, this American priest had financial connections and associates that raised eyebrows. "Best known of these was Michele Sindona, an international banker with mafia connections who is now serving a 25-year jail sentence for fraud in the US," said Scully. Sindona, who was known in banking circles as "the Shark", would later be transferred to prison in Italy where he would meet his own suspicious end in 1986, after drinking coffee laced with cyanide. Sindona had mentored Calvi in his banking career since the late 1960s, and they both belonged to a shadowy masonic lodge called Propaganda Two (P2). The masonic group was linked to extreme right-wing groups and was run by Italian multi-millionaire and avowed fascist Licio Gelli. It counted leading figures in the armed forces, politics, business and newspapers among its members. An Italian journalist, Count Paolo Filo della Torre, told the BBC in 1982 that while P2 was theoretically a masonic lodge, it "practically was something very much associated with [the] mafia and with all sorts of dirty dealings". In March 1981, Italian police raided Gelli's offices and discovered in a safe a list of hundreds of alleged P2 members, including politicians, military officers and media tycoon and future prime minister Silvio Berlusconi. The revelation caused a political explosion. The Italian prime minister Arnaldo Forlani and his whole cabinet resigned, a police chief shot himself, and a former minister was rushed to hospital after taking an overdose. The police raids also uncovered compromising documents that implicated Calvi in fraudulent practices and illegal offshore operations. By May 1981, the banker had been arrested and found guilty of currency violations. He was sentenced to four years in prison but was released on bail while pending appeal. Calvi used this as an opportunity to skip the country with a briefcase full of damning documents about Ambrosiano's activities. Within days of his arrival in London his bank had collapsed, leaving behind huge debts. Missing billions "Before Roberto Calvi disappeared, Italian investigators discovered that $1.5bn was missing from his bank," said Scully. "It's now believed that this money was sent abroad through the Vatican bank which escapes Italian exchange controls. Some of that money was lent to South American countries at low interest rates as directed by the Catholic Church. The rest was put into ghost companies in Luxembourg and South America from where it was returned to Italy to buy shares for Calvi in the Banco Ambrosiano. By this method he was able to use bank funds to build up his own personal fortune." Marcinkus was also sought for questioning but was granted immunity as a Vatican employee, and he maintained his innocence of any wrongdoing. The Vatican never admitted any legal responsibility for Banco Ambrosiano's collapse, but in 1984 said it had a moral responsibility for the bankruptcy and made a voluntary contribution to the bank's creditors of $406 million. More like this:• The woman who inspired The Sopranos• The bizarre siege behind Stockholm Syndrome• Why The Godfather was a stark warning for the US Investigators believed that the shell companies that Calvi had set up were being used to move money both to support secret political activities in other countries and to launder money for clients such as the mafia. "Police investigations of Calvi's affairs thus threaten many powerful people in Italy and some think provided a motive for his murder," said Scully. Filo della Torre, who knew Calvi, told the BBC in 1982 that he believed the banker had been killed, and that his body being left under Blackfriars Bridge indicated masonic symbolism. He said that P2 members wore black robes to their meetings and referred to themselves as "frati neri", Italian for "black friars". When Scully said that this made Calvi death's sound "like something out of the Borgias", the Italian journalist replied: "I'm afraid it does very much. We are going back in [a] sort of Italian tradition." Calvi's family also refused to accept the suicide ruling, which was overturned in 1983 when a second inquest delivered an open verdict on the death. But his family, including his widow, Clara Calvi, kept pushing for the police to investigate, hiring their own private investigators and forensic experts to look into the banker's death. After Calvi's body was exhumed in 1998, evidence mounted that he could not have killed himself. Forensic tests showed that injuries to his neck were inconsistent with death by hanging, and that Calvi's hands had never touched the bricks in the pockets of his clothes. In October 2002, Italian judges concluded that the banker had indeed been murdered. An Italian police investigation was launched, and in October 2005, five people went on trial in Rome, charged with Calvi's murder. The prosecutor, Luca Tescaroli, argued that the banker had been murdered for stealing Mafia money which he was meant to launder, and that Calvi was planning to blackmail several other prominent people, including politicians. In June 2007, after a 20-month trial, Sardinian financier Flavio Carboni, his former girlfriend Manuela Kleinszig, Roman entrepreneur Ernesto Diotallevi, Calvi's former driver bodyguard Silvano Vittor, and convicted Cosa Nostra treasurer Pippo Calo – who was serving two life sentences for unrelated Mafia crimes – were all acquitted of any involvement in Calvi's death. Speculation remains about who commissioned and ultimately carried out the killing of the Italian banker, but to date no one has been convicted. -- For more stories and never-before-published radio scripts to your inbox, sign up to the In History newsletter, while The Essential List delivers a handpicked selection of features and insights twice a week. For more Culture stories from the BBC, follow us on Facebook, X and Instagram.
New Indian Express
10-05-2025
- Business
- New Indian Express
With papacy, Leo XIV inherits Vatican money troubles
The Vatican fills its coffers by running hospitals, museums, and owning a vast real estate portfolio, together with donations from the faithful. Yet, its finances regularly run in the red. In 2023, it reported a consolidated loss of almost 70 million euros ($79 million) on revenue of 1.2 billion euros. The Catholic Church's economic affairs have long been murky and scandal-prone. In a telling example, in 1982 the Banco Ambrosiano -- a bank majority-owned by the IOR -- collapsed amid accusations of money-laundering mafia money. Its director, Roberto Calvi, was found hanging that same year from London's Blackfriars Bridge. Resisting resistance When Francis became pope in 2013, things were not much improved. Italy's central bank had recently suspended all bank card payments in the Vatican over its failure to implement anti-money laundering laws, and a year earlier the US had added the tiny city-state to its list of countries of concern for money-laundering. In 2014 Francis created a special secretariat for the economy, clamping down on corruption and stepping up scrutiny of investments. "There was no strong governance, the rules were not respected, we did not have the right competence," de Franssu recalled of his early days at IOR. Francis once likened the effort fix and bring transparency to the books to "cleaning the Sphinx of Egypt with a toothbrush", but the efforts produced some results, including the closure of nearly 5,000 suspect bank accounts. The Vatican's reputation improved: it joined the Single Euro Payments Area and was later commended by the Council of Europe for its fight against money laundering. "We have been more resistant than those that wanted to resist," said de Franssu. Yet problems persist. Italian Cardinal Angelo Becciu, a former advisor to Francis who once one of the most powerful figures in the Vatican, was sentenced to five years and six months in jail for embezzlement in 2023. He was one of 10 defendants in a trial that began in 2021 focused on a disastrous investment by the Vatican in a luxury building in London. The accused included financiers, lawyers and ex-Vatican employees accused of a range of financial crimes in what prosecutors called a "rotten predatory and lucrative system". The trial involved the risky purchase of a building in London's upmarket Chelsea neighbourhood, that resulted in major losses for the Vatican. The scandal was particularly embarrassing because Church funds used for such ventures also came from the Peter's Pence, money donated by the faithful for the pope's charities. Becciu -- who was earlier removed from office and stripped of his cardinal "rights and privileges" and thus did not take part in the conclave that elected Leo XIV -- lodged an appeal. Among the ongoing financial challenges facing Leo are a decline in donations from the faithful, rising staff costs and a fragile retirement system. Francis said last year the latter currently "cannot guarantee in the medium term the fulfilment of the pension obligation for future generations".
Al Bawaba
09-05-2025
- Entertainment
- Al Bawaba
This critically acclaimed HBO series predicted the rise of the first American Pope
ALBAWABA - The rise of the first American pope draws eerie parallels to a bold, fictional HBO series. The most popular fictional work about Vatican intrigue after Pope Francis was elected in 2013 was "The Godfather Part III." The abrupt (some say mysterious) death of newly elected Pope John Paul I in 1978 and the Banco Ambrosiano crisis in the early 1980s served as inspiration for Francis Ford Coppola's crime saga's last film. Holy Father Francis' appointment as head of the Catholic Church was not suspect, but the funny-hatted men can hold this sacred office for decades (Pope John Paul II was in this position for 27 years). Therefore, it's entertaining to get involved in dark papal intrigue during a fresh election. But over the past 12 years, Holy Father fiction has increased for whatever reason. Later in 2025, when Pope Francis became ill, there was also a resurgence of interest in Edward Berger's highly regarded cinematic version of Robert Harris' book "Conclave." A sizable portion of the populace, including non-Catholics, suddenly grasped the process of choosing a new pope. Social media users are well aware that the election has led to an almost constant barrage of "Conclave" references in recent months. Since Pope Francis' death on April 21, these memes have only increased threefold. People from all over the world gathered in front of their viewing gadgets today to watch the Sistine Chapel chimney as white smoke streamed forth, anticipating the name of his newfound holiness. Pope Leo XIV, also known as Robert Francis Prevost, who is 69 years old, was the big winner from Chicago. Yes, we have a (likely) Cubs fan leading the Vatican for the first time in the Catholic Church's history. The novelty of an American pope is sweeping the nation, but we don't yet know what Pope Leo XIV thinks. We do know that he expressed indignation over the 2020 murder of George Floyd and chastised U.S. Vice President JD Vance for his disrespectful visit to the Vatican last month. At last, we received one! It's fascinating to note that nine years ago, the concept of an American pope was deemed sufficiently outrageous to be the premise for an HBO series starring Jude Law. How does our reality compare to this fiction? Holy Father Leo XIV, hopefully, is not at all like Pope Pius XIII from Paolo Sorrentino's "The Young Pope." Pius (also known as Lenny Belardo from New York City) is played by Law as a power-hungry pope who doesn't think the general public is qualified to see His Holiness. HBO In order to protect him from his Vatican rivals, he takes over the political affairs of the Vatican and installs Sister Mary (Diane Keaton), the nun who reared him after his "hippie" parents abandoned him when he was eleven years old. In the end, he gains enough influence to influence the choice of Italy's prime minister. At the end of season 1, he is about to become a one-man worldwide force when a crazy narrative twist casts doubt on everything. The premise of Season 2, "The New Pope," is even more audacious. I won't give anything away, but you should be aware that Law's outstanding acting and Sorrentino's shamelessly soap opera storytelling gained praise for both seasons. Therefore, "The Godfather Part III" (which Coppola recut in 2020 as the better "The Godfather Coda: The Death of Michael Corleone") is no longer the exclusive source of papal anxiety. Holy Father Lenny has come to demonstrate how a brazen New Yorker would influence the Vatican. Don't bother, my man. This is where he's popping!
Yahoo
23-04-2025
- Business
- Yahoo
The new leader of the Catholic Church will inherit a financial mess that Pope Francis spent much of his reign trying to fix
Even on his deathbed, Pope Francis didn't pause from pursuing a dogged campaign that distinguished his reign: reforming the Vatican's infamously troubled finances. On February 27, the pontiff's 13th day at Rome's Gemelli Hospital suffering from exhaustion and bronchitis, the pontiff unveiled the formation of a high-level commission assigned to raise donations for helping plug chronic budget deficits. Francis launched the fund-raising enterprise as a gambit aimed at blunting demands by top officials in the Curia, his vast administrative arm, that the leader of the world's 1.3 billion Catholics halt his drive for deep spending cuts. The bureaucrats bristled at the Pope's recent draconian moves: Since 2021, he'd slashed salaries for the Church's 250-odd cardinals three times. In 2023, he nixed the rich housing subsidies for elite staff, and last September for the first time in decades demanded that the Vatican set a rigorous timeline for achieving a 'zero deficit' regime. When Pope Francis passed away at age 88 on Easter Monday in his modest Vatican apartment, his brave campaign had made big strides, but stopped short of the promised land. This writer began covering the Pope's righteous charge right at the creation. In early 2014, I traveled to Rome for a firsthand view of all the new and historic financial guard rails and disciplines Francis was installing, as well as the influx of business experts he'd summoned across the globe to assist him. When Francis took office the previous year, just about everything that involved how the Vatican handled money needed fixing: the huge and ever-rising gap between revenues and expenses; the leadership dominated by clergy lacking expertise in accounting and investing; and a scandal-scarred reputation. The stain of corruption, or at least incompetence, lingered from the Banco Ambrosiano affair of the early 1980s, when financier Roberto Calvi scammed the Institute for Religious Works, a.k.a. the Vatican Bank, in a caper that cost the IOR $250 million and emptied a big portion of its reserves. Days after his institution collapsed, Calvi's body was found hanging under London's Blackfriars Bridge; the British courts couldn't determine whether the cause of death was suicide or murder. Calvi's schemes duped his 'buddy' who headed the IOR, Archbishop Paul Marcinkus, whom in the mid-1980s I interviewed at the IOR's home in the ninth-century Gothic prison built by Pope Nicholas VI. The six-foot-eight Marcinkus, dubbed the Gorilla, had risen in the Vatican from a power base as Pope John Paul II's bodyguard. During our meeting, he chain-smoked Camels and pontificated for hours about how the IOR was the Vatican's biggest moneymaker courtesy of pocketing the 'spread' between the tiny interest it paid the Jesuits and other religious orders for their deposits, and the much higher rates it garnered re-channeling those funds to European banks. On Ambrosiano, Marcinkus insisted that charges he'd 'guaranteed' the bank's debts on behalf of the IOR was a bum rap, and that the Vatican only repaid the $250 million to safeguard its image. Shortly before, the Italian government had dropped an arrest warrant for Marcinkus that had exiled him for a year to the Vatican grounds, a liberation that perhaps explained his ebullient mood. 'I may be a lousy banker,' once told a close friend of his whom I interviewed for my story, 'but at least I'm not in jail.' Francis quickly showed that in money matters, he was a new kind of leader My sources were all business leaders newly appointed to aid in the Pope's offensive. On background, they related a dramatic meeting in the summer of 2013 where Francis first addressed a dimension of his domain that he deemed crucial—its chronically stumbling role as a commercial enterprise. The pontiff spun the globe to appoint a team of seven business leaders to a committee. Its task: pinpointing the problems and recommending specifics for a broad overhaul. They included the French executive heading asset management for U.S. mutual fund giant Invesco, the CEO of German insurer ERGO, the chief of Malta's largest bank, and the former prime minister of Singapore. Instead of holding the confab at the Apostolic Palace, the Renaissance showplace where pontiffs traditionally greeted visitors in high style, Francis ushered the distinguished guests into a nondescript conference room at the Casa Santa Marta, a five-story limestone guesthouse on the sub-luxury scale of a four-star hotel where the pontiff resided in a second-floor one-bedroom suite. No religious art or objects adorned the walls. Attired in a simple white cossack and metal cross, the Pope took the kind of highly managerial 'I'm the boss' approach his invitees might have recognized from addressing their own lieutenants. Speaking fluent Italian, pausing frequently so that a translator could repeat his words in English, the former cardinal of Buenos Aires stated that for his spiritual message to be credible, the Vatican's finances had to be credible as well. The Vatican hadn't overcome the practices formed by centuries of secrecy and intrigue to either manage its money efficiently, or issue a coherent accounting on where the funds came from and where they were spent. His primary mission, the new Pope stressed, was helping the poor and underprivileged. The Vatican budget careening from small surpluses to yawning deficits undermined that goal by inhibiting charity. 'When the administration's fat it's unhealthy,' he declared, adding that he wanted a far leaner and efficient organization that would prove 'self-sustaining.' Getting there would require strict rules and protocols. It particularly incensed the pontiff that the managers kept paying overruns on fixed price contracts, when the businesses should have eaten the excess billings. From now on, he admonished, when the Vatican gets a bill for a project where it's the contractor who is legally responsible for the extra costs: 'We don't pay!' Like a great CEO, the Pope charted a clear strategy. As one participant characterized the command: 'Let's make money for the poor.' Francis finished by intoning, 'I trust you. You're the experts. I want solutions to these problems.' Pope Francis wasn't a micromanager who'd study balance sheets, but he was a born leader expert at establishing clear objectives and choosing specialists needed to meet them—he'd rely on real bankers not amateurs in the Marcinkus mold. Then, without taking questions or extending pleasantries, he left the room. On finances, Pope Francis proved the greatest of all holy reformers. But the Vatican's budget woes persist to this day Following the meeting, that prestigious board helped design a radically new architecture directed not by the religious leaders who'd run the machine for centuries, but seasoned managers and consultants from around the world. The new regime hired KMPG to install internationally accepted accounting principles replacing the old crazy quilt of standards, EY to scrutinize the books of the tiny nation's stores and utilities, and Deloitte & Touche and Spencer Stuart to respectively audit the P&L and recruit fresh talent at the Vatican Bank. Pope Francis also established a new body called the Secretariat of the Economy that for the first time centralized all authority under a single agency and leader. Today, the top official is an MIT grad who has spent a long career in management positions for Catholic universities and prominent institutions of the church. Tighter oversight brought new discipline to runaway spending and boosted investment returns, but didn't end the Vatican's long history of headline-grabbing misdeeds. In 2014, the cardinal who served as second-ranking official in the Secretariat of State schemed with still another shady Italian magnate to purchase shares in a London building; the Secretariat subsequently took full control of the property for the highly inflated price of roughly $400 million, then sold it a few years later at a $150 million loss. An investigation launched in 2019 discovered that many millions of Euros disappeared in kickbacks and self-dealing. But this time, the authorities imposed tough justice. The Vatican courts sent eight people including the cardinal to jail, and levied fines on two others. Shortly after taking power, Pope Francis ordered a hiring freeze that remains in force to this day. Indeed, his strategy of shrinking the workforce through attrition has succeeded. But the Vatican is still haunted by the burden of the way-underfunded pension plans that he inherited. The Vatican's financial world is divided into two parts. The first is the City State, the 110-acre sovereign country that generally runs a budget on the scale of a midsize municipality, employs the ceremonial Swiss guards and 'gendarme' police force, and generally generates an operating surplus due to big revenues from the Vatican museum, the world's second most visited museum behind the Louvre, and the likes of sales of souvenir coins. The second is the Holy See or Curia, the Pope's sprawling bureaucracy that does everything from detective work to naming new saints to operating the equivalent of embassies in three dozen countries to operating nine cabinet-like 'congregations.' It's perpetually in deficit—once again, largely via what it owes its legions of retirees. In recent years, the Curia has been spending around $800 to $900 million a year, and running structural deficits of well over $50 million. And that's after allocating for operating expenses tens of millions of dollars in "Peter's Pence." That's money gathered in the collection baskets passed through church aisles in from Sydney to Warsaw on the Sunday marking the feasts of Saints Peter and Paul in late June. It's one time the world's faithful, rich and poor alike, send funds to the Vatican en masse. The late pontiff always wanted to steer Peter's Pence solely to its original purpose of supporting the impoverished. It was a goal he cherished but didn't live to achieve. Still, Pope Francis worked a near miracle bringing transparency, competence, and integrity to perhaps the most notoriously byzantine corner of the financial world. From his hospital bed in his final days, the pontiff kept fighting the Vatican establishment for reform that elevated sound money management as a tool for filling the role of his model and namesake, St. Francis of Assisi, the 13th century Italian friar devoted to raising the downtrodden. Only if his successor shares Francis's rare knack for business strategy will the job be finished. This story was originally featured on
Yahoo
23-04-2025
- Business
- Yahoo
The new leader of the Catholic Church will inherit a financial mess that Pope Francis spent much of his reign trying to fix
Even on his deathbed, Pope Francis didn't pause from pursuing a dogged campaign that distinguished his reign: reforming the Vatican's infamously troubled finances. On February 27, the pontiff's 13th day at Rome's Gemelli Hospital suffering from exhaustion and bronchitis, the pontiff unveiled the formation of a high-level commission assigned to raise donations for helping plug chronic budget deficits. Francis launched the fund-raising enterprise as a gambit aimed at blunting demands by top officials in the Curia, his vast administrative arm, that the leader of the world's 1.3 billion Catholics halt his drive for deep spending cuts. The bureaucrats bristled at the Pope's recent draconian moves: Since 2021, he'd slashed salaries for the Church's 250-odd cardinals three times. In 2023, he nixed the rich housing subsidies for elite staff, and last September for the first time in decades demanded that the Vatican set a rigorous timeline for achieving a 'zero deficit' regime. When Pope Francis passed away at age 88 on Easter Monday in his modest Vatican apartment, his brave campaign had made big strides, but stopped short of the promised land. This writer began covering the Pope's righteous charge right at the creation. In early 2014, I traveled to Rome for a firsthand view of all the new and historic financial guard rails and disciplines Francis was installing, as well as the influx of business experts he'd summoned across the globe to assist him. When Francis took office the previous year, just about everything that involved how the Vatican handled money needed fixing: the huge and ever-rising gap between revenues and expenses; the leadership dominated by clergy lacking expertise in accounting and investing; and a scandal-scarred reputation. The stain of corruption, or at least incompetence, lingered from the Banco Ambrosiano affair of the early 1980s, when financier Roberto Calvi scammed the Institute for Religious Works, a.k.a. the Vatican Bank, in a caper that cost the IOR $250 million and emptied a big portion of its reserves. Days after his institution collapsed, Calvi's body was found hanging under London's Blackfriars Bridge; the British courts couldn't determine whether the cause of death was suicide or murder. Calvi's schemes duped his 'buddy' who headed the IOR, Archbishop Paul Marcinkus, whom in the mid-1980s I interviewed at the IOR's home in the ninth-century Gothic prison built by Pope Nicholas VI. The six-foot-eight Marcinkus, dubbed the Gorilla, had risen in the Vatican from a power base as Pope John Paul II's bodyguard. During our meeting, he chain-smoked Camels and pontificated for hours about how the IOR was the Vatican's biggest moneymaker courtesy of pocketing the 'spread' between the tiny interest it paid the Jesuits and other religious orders for their deposits, and the much higher rates it garnered re-channeling those funds to European banks. On Ambrosiano, Marcinkus insisted that charges he'd 'guaranteed' the bank's debts on behalf of the IOR was a bum rap, and that the Vatican only repaid the $250 million to safeguard its image. Shortly before, the Italian government had dropped an arrest warrant for Marcinkus that had exiled him for a year to the Vatican grounds, a liberation that perhaps explained his ebullient mood. 'I may be a lousy banker,' he told me not-for-quotation; 'but at least I'm not in jail.' Francis quickly showed that in money matters, he was a new kind of leader My sources were all business leaders newly appointed to aid in the Pope's offensive. On background, they related a dramatic meeting in the summer of 2013 where Francis first addressed a dimension of his domain that he deemed crucial—its chronically stumbling role as a commercial enterprise. The pontiff had appointed a team of seven business leaders from around the world as a committee to pinpoint the problems and recommend specifics for a broad overhaul. They included the French executive heading asset management for U.S. mutual fund giant Invesco, the CEO of German insurer ERGO, the chief of Malta's largest bank, and the former prime minister of Singapore. Instead of holding the confab at the Apostolic Palace, the Renaissance showplace where pontiffs traditionally greeted visitors in high style, Francis ushered the distinguished guests into a nondescript conference room at the Casa Santa Marta, a five-story limestone guesthouse on the sub-luxury scale of a four-star hotel where the pontiff resided in a second-floor one-bedroom suite. No religious art or objects adorned the walls. Attired in a simple white cossack and metal cross, the Pope took the kind of highly managerial 'I'm the boss' approach his invitees might have recognized from addressing their own lieutenants. Speaking fluent Italian, pausing frequently so that a translator could repeat his words in English, the former cardinal of Buenos Aires stated that for his spiritual message to be credible, the Vatican's finances had to be credible as well. The Vatican hadn't overcome the practices formed by centuries of secrecy and intrigue to either manage its money efficiently, or issue a coherent accounting on where the money came from and where it was spent. His primary mission, the new Pope stressed, was helping the poor and underprivileged. The Vatican budget careening from small surpluses to yawning deficits undermined that goal by inhibiting charity. 'When the administration's fat it's unhealthy,' he declared, adding that he wanted a far leaner and efficient organization that would prove 'self-sustaining.' Getting there would require strict rules and protocols. It particularly incensed the pontiff that the managers kept paying overruns on fixed price contracts, when the businesses should have eaten the excess billings. From now on, he admonished, when the Vatican gets a bill for a project where it's the contractor who is legally responsible for the extra costs: 'We don't pay!' Like a great CEO, the Pope charted a clear strategy. As one participant characterized the command: 'Let's make money for the poor.' Francis finished by intoning, 'I trust you. You're the experts. I want solutions to these problems.' Pope Francis wasn't a micromanager who'd study balance sheets, but he was a born leader expert at establishing clear objectives and choosing specialists needed to meet them—he'd rely on real bankers not amateurs in the Marcinkus mold. Then, without taking questions or extending pleasantries, he left the room. On finances, Pope Francis proved the greatest of all holy reformers. But the Vatican's budget woes persist to this day Following the meeting, that prestigious board helped design a radically new architecture directed not by the religious leaders who'd run the machine for centuries, but seasoned managers and consultants from around the world. The new regime hired KMPG to install internationally accepted accounting principles replacing the old crazy quilt of standards, EY to scrutinize the books of the tiny nation's stores and utilities, and Deloitte & Touche and Spencer Stuart to respectively audit the P&L and recruit fresh talent at the Vatican Bank. Pope Francis also established a new body called the Secretariat of the Economy that for the first time centralized all authority under a single agency and leader. Today, the top official is an MIT grad who has spent a long career in management positions for Catholic universities and prominent institutions of the church. Tighter oversight brought new discipline to runaway spending and boosted investment returns, but didn't end the Vatican's long history of headline-grabbing misdeeds. In 2014, the cardinal who served as second-ranking official in the Secretariat of State schemed with still another shady Italian magnate to purchase shares in a London building; the Secretariat subsequently took full control of the property for the highly inflated price of roughly $400 million, then sold it a few years later at a $150 million loss. An investigation launched in 2019 discovered that many millions of Euros disappeared in kickbacks and self-dealing. But this time, the authorities imposed tough justice. The Vatican courts sent eight people including the cardinal to jail, and levied fines on two others. Shortly after taking power, Pope Francis ordered a hiring freeze that remains in force to this day. Indeed, his strategy of shrinking the workforce through attrition has succeeded. But the Vatican is still haunted by the burden of the way-underfunded pension plans that he inherited. The Vatican's financial world is divided into two parts. The first is the City State, the 110-acre sovereign country that generally runs a budget on the scale of a midsize municipality, employs the ceremonial Swiss guards and 'gendarme' police force, and generally generates an operating surplus due to big revenues from the Vatican museum, the world's second most visited museum behind the Louvre, and the likes of sales of souvenir coins. The second is the Holy See or Curia, the Pope's sprawling bureaucracy that does everything from detective work to naming new saints to operating the equivalent of embassies in three dozen countries to operating nine cabinet-like 'congregations.' It's perpetually in deficit—once again, largely via what it owes its legions of retirees. In recent years, the Curia has been spending around $800 to $900 million a year, and running structural deficits of well over $50 million. And that's after allocating for operating expenses tens of millions of dollars in "Peter's Pence." That's money gathered in the collection baskets passed through church aisles in from Sydney to Warsaw on the Sunday marking the feasts of Saints Peter and Paul in late June. It's one time the world's faithful, rich and poor alike, send funds to the Vatican en masse. The late pontiff always wanted to steer Peter's Pence solely to its original purpose of supporting the impoverished. It was a goal he cherished but didn't live to achieve. Still, Pope Francis worked a near miracle bringing transparency, competence, and integrity to perhaps the most notoriously byzantine corner of the financial world. From his hospital bed in his final days, the pontiff kept fighting the Vatican establishment for reform that elevated sound money management as a tool for filling the role of his model and namesake, St. Francis of Assisi, the 13th century Italian friar devoted to raising the downtrodden. Only if his successor shares Francis's rare knack for business strategy will the job be finished. This story was originally featured on Sign in to access your portfolio
