Editorial: Financial reforms need transparency

by NCR Editorial Staff

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It seems counterintuitive, but every time you hear about a financial scandal in the Vatican, that is good news, not bad. It is good news because it shows -- to quote the Vatican's financial watchdog -- that the regulatory system is working.

For too long, the church has been racked by financial mismanagement. Now, some will say the basic problem is that clerics shouldn't be put in charge of finances. Because their training is in theology, they lack either the training or the interest in finances to develop the expertise necessary to run multimillion-dollar, multinational organizations and are too easily compromised by incompetent but devout lay advisers or duped by those with nefarious intent.

A second cause of Vatican financial woes, according to many observers, is geography: The Holy See may be a sovereign nation, but it is culturally Italian, and in Italy nepotism and financial corruption are common. Getting a job or a contract in the Vatican could depend on whom you know more than what skills you bring.

Pope John Paul II clearly had concerns about Italian practices and at the beginning of his papacy gave all the top financial jobs to non-Italians. He appointed Cardinal Edmund Szoka of Detroit to head the Prefecture for the Economic Affairs of the Holy See in 1990. Szoka imposed the first unified chart of accounts for the Vatican, computerized the books and published detailed financial statements.

Even with John Paul's blessing, Szoka's battle for accountability was tough. Many people in the Roman Curia hated that he was changing the way things had always been done. After he retired in 1997, things deteriorated quickly as the status quo returned.

Clerics' lack of training in finance probably does contribute to the mismanagement of church institutions, but Szoka showed those handicaps could be overcome. The far greater danger is the secrecy that clericalism engenders.

As with any entrenched and privileged group, jealous of its power and its prerogatives, the best way to break down the barriers clericalism erects is with a regime of transparency. This is true of the Vatican Bank and the parish finance committee.

Financial scandals were one of the burdens that Pope Benedict XVI was happy to lay down when he retired in 2013. Before he did, he made a crucial decision that set the scene for the financial reforms of Pope Francis. In 2011, Benedict ordered that the Vatican follow the financial rules and subject itself to review by Moneyval, the international agency responsible for guarding against money laundering and the financing of terrorism. That put the Vatican financial system under periodic review by outsiders.

Going against centuries of tradition, Benedict said that he wanted the Vatican on the international "white list," the list of countries that are implementing proper procedures to deal with money laundering. Organizations like the Financial Action Task Force use information provided by Moneyval to determine whether a country deserves to be on the white list.

At his election, Francis received a clear mandate from the College of Cardinals to move the reform ahead faster and further. Francis said he wanted "to allow Gospel principles to permeate [the church's] economic and financial activities, too."

How well has the Vatican been doing? Last December, Moneyval published a second progress report that the Vatican had made significant progress in addressing the technical deficiencies in its legislation and regulations. That is good news. The canceled contract with Pricewaterhouse-Coopers is worrisome because we don't know if it was an administrative glitch or a symptom of entrenched bureaucracy. Time will tell.

The Vatican's financial watchdog agency, the Financial Information Authority, referred 17 reports to the Vatican's Office of the Promoter of Justice for possible review of crimes such as fraud, tax avoidance, tax evasion and "more serious financial crimes ... such as market disruption in foreign states."

"Market disruption"? The sooner these reforms are in place, the better.

The Vatican accountants appear to be doing a better job managing the Holy See's finances, but without accountability and transparency, the job is only half finished. What is in these 17 reports? What is the promoter of justice doing with these cases? We need to start seeing results, which means prosecutions, convictions and confiscations.

As with the sex abuse crisis, it is not enough to simply catch offenders and close doors. Accountability, especially of those entrusted with the funds given to the church to do good, demands justice. Criminals need to be exposed and prosecuted, whether they are laypersons, clerics or princes of the church.

A version of this story appeared in the May 20-June 2, 2016 print issue under the headline: Financial reforms need transparency.

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