Latest news with #VaticanFinances
Yahoo
10-05-2025
- Business
- Yahoo
With papacy, Leo XIV inherits Vatican money troubles
Along with the spiritual leadership of the world's 1.4 billion Catholics, Pope Leo XIV now inherits oversight of the Vatican's shoddy finances -- and his predecessor's efforts to clean them up. The dire state of the Holy See accounts was among the topics cardinals tasked with choosing a successor to Pope Francis discussed ahead of the conclave, according to the Vatican. Their pick, American Robert Francis Prevost -- now Leo XIV -- is likely to continue Francis's push to bring some order, said the chairman of the Vatican's bank, known as the Institute for Works of Religion (IOR). "Francis has started the process, I'm sure Leo XIV will continue," Jean-Baptiste de Franssu, a French businessman who was appointed to the role by Francis in 2014 as part of a radical overhaul of the Holy See's economic framework, told AFP. 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". max/ub/ams/rmb Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Al Jazeera
09-05-2025
- Business
- Al Jazeera
The Vatican's messy finances: Will Pope Leo XIV be able to clean up?
In the days leading up to the papal conclave, which concluded on Thursday with the election of Robert Francis Prevost, 69, as Pope Leo XIV, the editor of Catholic Church specialist news outlet Crux wrote: 'Fundamentally, there are three qualities cardinals look for every time they have to kick the tires on a possible pope. They want a missionary, someone who can put a positive face on the faith; a statesman, someone who can stand on the global stage with the Donald Trumps, Vladimir Putins and Xi Jinpings of the world and hold his own; and a governor, someone who can take control of the Vatican and make the trains run on time, including dealing with its financial crisis.' 'There's a solid argument Prevost ticks all three boxes,' John L Allen Jr concluded. The Vatican's finances are indeed in a mess and, while Pope Francis made some headway into the thorny issue of stamping out corruption, he did not manage to eliminate the Vatican's financial deficits. Clearing up the Vatican's messy finances, therefore, is likely to be a major task ahead for Pope Leo who, helpfully, has a degree in Vatican, which controls only its own budget and not that of the Catholic Church in other countries, has limited sources of income. It does not raise taxes or issue debt on which it could earn interest, such as bonds or loans. Instead, most Vatican revenues come from its vast Italian real estate holdings and pontifical schools or hospitals in Rome. Together, these generated 65 percent of the Holy See's 770 million euros ($875m) in revenue in 2022, the latest figure available. That year, roughly 30 percent of revenues came from donations, which have remained relatively stable for the past decade, averaging about 45 million euros ($51m) per year and spiking to 66 million euros ($75m) in 2019. The remaining 5 percent of the Vatican's income in 2022 came from the Institute for the Works of Religion, or the Vatican bank, where Catholic organisations and church employees keep their accounts, and from tourism, which declined during the COVID-19 pandemic. The Vatican hasn't published a full financial report since 2022. But the last set of accounts – approved in 2024 for auditing purposes – showed an 83-million-euro ($94m) operating deficit, a big jump from the 33-million-euro ($38m) shortfall reported in 2022. The Vatican's growing financial problems have been attributed to rising operational costs, including salaries, security and building upkeep. On top of this, there is also a significant deficit within the Holy See's pension fund. The deficit in the fund was estimated at 631 million euros ($717m) by the Vatican's Secretariat for the Economy in 2022. There has been no official update to this figure. In past decades, many workplace pension funds underestimated how long retired employees would be likely to live. In 1960, for instance, Italy's average life expectancy was 69, compared with 83 in 2022. This means many pension funds have not prepared adequately for the full amount they may have to pay out over a former worker's actual lifetime and, therefore, have built up significant shortfalls. It is not clear if the retirement fund for Vatican employees – a defined benefit scheme, which means it promises to pay a set amount of income to retirees regardless of the funds it has – has made adjustments to compensate for longer life expectancies. In November, however, the pope warned it would not be able to meet its liabilities over the medium term. 'The data … indicate a severe prospective imbalance in the fund, the size of which tends to grow over time in the absence of interventions,' Francis said in a letter to the College of Cardinals. 'This means that the current system is not able to guarantee in the medium term the fulfilment of the pension obligation for future generations.' Last year, the pope appointed a new administrator – Cardinal Kevin Farrell, an Irish-American cleric based in Vatican City – and suggested that the pension fund's operating structure may need to change but didn't provide details. Funding the shortfall in the pension fund will be tricky. The church is likely to face opposition to using donations, for example, because these are generally made with specific charitable causes in mind. After spending nearly 350 million euros ($398m) through a series of complex transactions to acquire a luxurious London property from 2014 to 2018, the Holy See suffered a public backlash. In an effort to move on from the uproar over this spending, the Vatican sold the building in 2022 at a loss of 140 million euros ($159m). The transaction sparked questions about the Vatican's opaque finances and eventually led to the corruption trial of Cardinal Angelo Becciu, who had overseen the deal. The Vatican has been embroiled in other financial scandals as well. The most notorious was the 1982 collapse of Banco Ambrosiano, Italy's largest private bank at the time, which caused the Vatican about $250m in losses. At the time, the Vatican had close dealings with Roberto Calvi, the bank's powerful chief. Calvi's body was discovered hanging from Blackfriars Bridge in London with his hands tied behind his back shortly before it emerged that he had been party to a scheme to launder money through offshore companies, transfer illegal payments to Italian political parties and fund illegal arms deals. During World War II, the Vatican was accused of laundering money and gold looted from Jews and other victims of Adolf Hitler's Nazi regime. In 2019, Francis spearheaded an anticorruption drive that involved a police raid on the Vatican's own bureaucracy and resulted in the Secretariat of State being stripped of its investment responsibilities. In addition to the suspension of five Vatican staff members, the investigation led to the conviction of Cardinal Giovanni Angelo Becciu, once a powerful figure, on multiple counts of embezzlement and fraud. In the months before he died, the pope expressed particular concern about the Vatican's finances. In September, he called on cardinals to pursue a 'zero deficit' agenda and to improve the Vatican's use of its economic assets. Then in October, he ordered the third reduction in three years of Vatican cardinals' incomes. Several Vatican department chiefs argued against the cuts and pushed back against the pope's plans to seek outside funding to fix the deficits, two senior officials told the Reuters news agency at the time. Francis was able to establish some momentum for financial reform. In 2021, the Vatican bank earned the highest possible rating from European watchdog Moneyval for its anti-money-laundering and antiterrorism standards. Ultimately, however, Francis was unable to eliminate the church's deficits, and his successor will face a formidable financial challenge. Pope Leo was very much an ally of Francis and may be keen to push on with his reformist agenda, perhaps by downsizing the Vatican's global diplomatic presence – and therefore one vast expense. It remains to be seen, however, if he will be in favour of such far-reaching reforms as his predecessor and whether he can truly balance the books.
Wall Street Journal
08-05-2025
- Business
- Wall Street Journal
The Financial Mess Facing the Vatican
Just days before his death, Pope Francis wrestled with an enormous problem: the Vatican's dire finances. The world's smallest country is now facing a budget deficit of millions, and a looming crisis in its pension fund. As the Papal conclave meets this week to vote for a new leader, WSJ's Drew Hinshaw pieces through how centuries of financial mismanagement have culminated into a mess that the next pope will inherit . Jessica Mendoza hosts. Full Transcript This transcript was prepared by a transcription service. This version may not be in its final form and may be updated. Jessica Mendoza: It was winter at the Vatican and Pope Francis was desperate. Francis sat in a reception room short of breath, aids shuffled in and out as the Pope worked through what he thought was a bad cold. Drew Hinshaw: And advisors and Vatican officials are coming in and presenting the details of a city-state effectively that is awash in priceless treasures, but is falling deeper into debt. Jessica Mendoza: Our colleague, Drew Hinshaw, spoke with us from Rome. How much did the finances of the Vatican actually kind of weigh on Pope Francis before his death? Drew Hinshaw: Right up until the end. Jessica Mendoza: That day in February, Francis reviewed documents underneath a cherished painting depicting Mary, Undoer of Knots. In it, the Virgin Mary is shown unraveling a long ribbon. Three days later, Francis was hospitalized with double pneumonia. Drew Hinshaw: And on April 21st he died, leaving his successor with this economic puzzle that one Pope after the next has tried to solve. Jessica Mendoza: Today, as the College of Cardinals gathers to elect a new leader, a major question looms over the conclave. What will the next Pope do about the Vatican's financial crisis? Drew Hinshaw: I mean, this is one of the hidden stories of really the modern papacy is how much the Bishop of Rome is the ultimate bookkeeper for the Vatican. Jessica Mendoza: How would you describe the financial mess that this next Pope will inherit? Drew Hinshaw: I would say un-heavenly. Jessica Mendoza: Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, May 7th. Coming up on the show, do the Vatican's finances need divine intervention? For all its global influence, the Vatican is tiny. It's the world's smallest country. It sits in the center of Rome, occupying an area about one-tenth the size of Central Park. Drew Hinshaw: The Vatican, it's both like you think of it as the heart of the Catholic church, but maybe it's better to think of it as like the brain. Jessica Mendoza: That's Drew again. Drew Hinshaw: It's 900 residents. It's the home of the Pope and it's where the direction of the church is set, of course, but it's not where the money's made. Jessica Mendoza: The Vatican might call to mind priceless treasures, gold chalices, the Sistine Chapel, vast cathedrals. But if you look at the religious institution through a fiscal lens, it's actually asset-rich and cash-poor. Drew Hinshaw: The money on Sunday when the collection plate goes around, that's not really going to Rome, that's going to your local and national church. It's this odd thing where it's just totally paradoxical, this extremely wealthy city state that's at the center of this, the largest Christian denomination, but it's not where the money is, in the Catholic Church. Jessica Mendoza: Unlike other countries, the Vatican collects no taxes. The micro-state is increasingly relying on revenue from museum ticket sales and tourism, and that money has to pay for a lot of stuff. Drew Hinshaw: It's got to fund a network of embassies all around the world. It's got to fund a small army, the Papal Swiss Guard. It's got to do upkeep on these marvelous buildings that you can stand and take selfies in front of, and it's increasingly dependent on museum ticket sales to do that. This has got to be the only state on earth that depends on ticket sales. Jessica Mendoza: So how bad is the Vatican's financial situation right now? Drew Hinshaw: The pension fund is one source told us he used the words "Five alarm fire." Jessica Mendoza: As for the Vatican's budget deficit... Drew Hinshaw: It's around 80 million euros, give or take, which is triple what it was about 10 years ago. Jessica Mendoza: Wow. Drew Hinshaw: It's looking really dire. Jessica Mendoza: I want to understand how far back this problem goes. Was there a time when money wasn't a problem for the church? Drew Hinshaw: Maybe in the year zero. I'm being a bit... Look, this history really goes back centuries and centuries of course. The irony is, look, when you go to the Vatican and you see all these beautiful buildings, you're seeing buildings from an era when paying the bills wasn't very difficult for the Pope. The Crusades, Sistine Chapel, Saint Peter's Basilica, these were all financed, but they were financed through a sixth century invention called indulgences. Although that practice was considered so corrupt, it helped spark the reformation. Jessica Mendoza: For centuries, these indulgences basically money to reduce punishment in the afterlife, kept cash flowing until the practice ended in the 16th century. The church also made money by taxing the rich Italian farmland it controlled, territory known as the Papal States. Drew Hinshaw: And that was a pretty steady stream of income. Jessica Mendoza: But that business model fell apart in 1870. That's when the armies of Italy wrested Rome from Pope Pius IX. And it wasn't until 1929 under a treaty with Italy that the Vatican became an independent city-state occupying 0.2 square miles in the middle of Rome. Without taxes, the new micro-state needed other sources of revenue, so the Vatican positioned itself as a financial hub creating its own Vatican Bank. That bank started taking big shares in Italian and European companies. It also started getting mixed up in scandals, including allegations of money smuggling and laundering. Drew Hinshaw: Along the way, the Vatican kind of develops this reputation in the 70s and 80s for being like just basically a really shady place to have a bank account. If you've ever seen Godfather III, this is basically that era. Speaker 3: Oh, if only prayer could pay off our $700 million deficit. Speaker 4: 769. Drew Hinshaw: There was a kind of mafia-linked financier who before his downfall, he'd been close to Pope Paul VI, and he had ties to New York's Gambino crime family. Speaker 5: Michele Sindona, the Italian financier, convicted of a multimillion dollar fraud that led to the biggest bank failure in our country's history. Drew Hinshaw: There was also a huge scandal in the 1980s when the Vatican Bank got caught up in the collapse of an Italian bank, Banco Ambrosiano, and the bank chairman was found hanging under Blackfriars Bridge in London. Speaker 6: The man known as "God's banker" was found hanging from a bridge, his pockets full of cash and bricks. Jessica Mendoza: By the early 2000s, the Vatican's money problems had become pretty dire. Benedict XVI, who became Pope in 2005, set up a unit to combat money laundering, and the Vatican Bank started releasing annual reports for the first time. But the financial knots proved to be too much. Drew Hinshaw: And every source we've talked to has said that this was a factor in Benedict deciding he would become the first pope to resign since 1415. Jessica Mendoza: I remember when Benedict stepped down and I remember what a huge deal it was. I had no idea it had to do with money problems. Drew Hinshaw: Right. Right. By all accounts, the headache of trying to clean this up just became a lot for him. Jessica Mendoza: Into this mess stepped Pope Francis. Speaker 7: The fight against poverty and hunger must be fought constantly. Jessica Mendoza: Francis's election in 2013 seemed to represent a new era of reform. He was known for his frugality having lived through many financial crises in his home country of Argentina. As Pope, Francis attempted to modernize the Vatican's bookkeeping, nuns were still keeping ledgers with pencil and paper. Under his stewardship, the Vatican Bank closed thousands of suspect accounts. He slashed cardinal salaries and perhaps, the biggest move of all... Drew Hinshaw: He hires an executive from the accountant firm, Deloitte, and basically says, brings him into his office and he says, "I want you to be independent. You have my go ahead to-." Jessica Mendoza: Blessing. Yeah. Drew Hinshaw: Yeah. "You have my blessing." I wasn't going to use the word, but, "You have my blessing to probe our accounts, to conduct audits." This was the first time the Vatican had an outside auditor in its modern history. Jessica Mendoza: How did members of the clergy in the Vatican respond to these efforts? Drew Hinshaw: Not well, I think is one way you could say it. And look, their reasoning is this money is vital. We needed to host a commission of theologians, we needed to buy office supplies, coffee. We need this to run our outfit. And if we have to go through the ropes of getting it from the Vatican Treasury, which is this whole other thing that the auditor is looking into, it's going to be really hard and time-consuming. Jessica Mendoza: According to The Journal's reporting, one cardinal took cash out of a Vatican Bank account with plans to hide the money from a team set up to track budgets. Drew Hinshaw: The Cardinal's advisor was telling him, "We must save our money." And they took money out of the Vatican Bank and started storing the cash in a bag, literally a bag. Jessica Mendoza: Wow. The auditor that Francis empowered to clean up the mess soon had a target on his back. Drew Hinshaw: It gets really crazy. I mean, the auditor comes back to his office at one point and the office has been broken into. It's Monday morning, and the bottom of his laptop is unscrewed. There's a spring missing. Jessica Mendoza: Wow. Drew Hinshaw: And he's spooked. He goes and asks Francis like, "What am I supposed to do?" And Pope Francis doesn't really push for an investigation. He just says, "Let's put security cameras outside the office." Jessica Mendoza: The auditor says he hired external consultants to investigate the tampering of his computer and to sweep for bugs in his office. But in June of 2017, Vatican police detained the auditor on suspicion that he hired private investigators to spy on Vatican staffers. The auditor was pressured to resign. He denies the spying allegation. Drew Hinshaw: And that's basically where that auditing effort hits a wall. Jessica Mendoza: Now, the financial woes that plagued Francis will fall to his successor. Speaker 8: And now the doors close. You can hear the applause breaking up behind us here in Saint Peter's Square. Jessica Mendoza: But should the next Pope continue his reforms? The clergy is already taking sides. That's next. The curia, the church's governing body, is famously secretive, so as the conclave gets underway this week, Drew and his reporting partners, Joe Parkinson and Stacy Meichtry have been holding hushed meetings across Rome. Drew Hinshaw: I've reported on authoritarian countries, and I've rarely encountered the kind of just evident nervousness in talking to the press that you encounter here in the center of Rome when you're trying to answer questions about the budget deficit of the Vatican. Jessica Mendoza: Drew and the team met with officials from the Vatican's bank, pension fund and regulatory institutions, and with Cardinals attending the conclave. Drew Hinshaw: We had one guy sit down with me near midnight in the piazza, and one of his first questions for me was, "You're not recording me, are you? Because if you're recording me, this interview's over." And of course we weren't, but it's all fairly cloak and dagger here. Jessica Mendoza: But you did manage to get people to talk to you? Drew Hinshaw: Yeah. Jessica Mendoza: What did you hear? Drew Hinshaw: People are quite alarmed. Jessica Mendoza: Ahead of the start of the conclave, Cardinals held multiple sessions to discuss the financial crisis. One big issue is the pension fund for aging clergy members. The fund is facing about 2 billion euros in liabilities. But the culture of financial mismanagement is also a wedge issue. Drew Hinshaw: There's kind of two camps. There's one that can see it in the kind of dollars and cents terms that we're discussing it, but there's others who say, "Look, we're here to talk about matters of God, of spirituality. Why are we talking about these earthly concerns that are secondary to our mission of saving souls?" And the church has been around for 2000 years. There's a feeling of this is... If, look, if you are running a country, just a kind of totally secular small municipality of 900 people, and you had these kinds of budget deficits, you'd be freaking out. But when underneath that municipality is 2000 years of history, I think you think, "Well, we've survived before." Jessica Mendoza: What happens if the next Pope either does nothing or isn't able to solve this problem? Is this existential for the Catholic church? Drew Hinshaw: The way this was put to me is that they can't just keep kicking the can down the road. They're going to have to do things that are undoubtedly going to be painful for clergy who are expecting to be able to retire and who have obviously fixed salaries and who have one profession. Everybody we've talked to sees only painful choices ahead. Jessica Mendoza: It might mean more salary cuts, reducing core missions, hiking museum fees, overhauling the Vatican Bank. But there's one seemingly obvious solution to this whole money problem. So Drew, can you explain to me how can the Vatican be in such a financial mess if it's also sitting on this pretty unimaginable wealth of art and history, right? They've got the manuscripts in the Vatican Library. They've got works of art from da Vinci and Michelangelo. Couldn't they just sell that stuff? Drew Hinshaw: The Vatican has no intention of ever selling off its inheritance. In fact, it lists many of its kind of priceless works of art, including the Sistine Chapel on its books as at a nominal value of one Euro each, which is a way of saying these things are of religious and artistic and historical significance, not of financial significance. It would never, ever part with its... This is its patrimony. Jessica Mendoza: For the people most concerned about the Vatican's books, their hope is that the conclave will elect someone who can tether heaven to the ground, a pope who is part saint and part CEO. Drew Hinshaw: There's this incredible paradox at the center of this. You have a country that has immense wealth, but it's unable to sustain its basic functions without running a deficit. It's got all these people who work in finance who are basically in the Vatican running its bank and everything else. But at the end of the day, the decisions are taken by clergy who quite honestly could talk to you more about gospel or Acts or the New Testament, the Old Testament than the nuts and bolts of an audit. It's where two realms kind of meet, isn't it? Jessica Mendoza: Yeah. Literally, the earthly and the heavenly. Drew Hinshaw: Yeah. Jessica Mendoza: I guess, the spiritual. Drew Hinshaw: Yeah, exactly. Jessica Mendoza: Yeah. Drew Hinshaw: Yeah. On the one hand, Cardinals are electing someone who is very pointedly in charge of the biggest issues in life, theology and spirituality, and life after life, and doing good in the world, and all of the things that are core to the Christian Gospel. But they've got this kind of dollars and cents problem that they also have to solve, and the idea that one person is going to be good at both of those issues, it's I don't know, seems like a lot to ask of one human being. Jessica Mendoza: That's all for today, Wednesday, May 7th. The Journal is a co-production of Spotify and the Wall Street Journal. Additional reporting in this episode from Joe Parkinson and Stacy Meichtry. Thanks for listening. See you tomorrow.
