Pope Francis cements financial reform in new laws, creates Vatican auditor general

Vatican City — Ending weeks of speculation that curial officials would stop his reform of the Vatican's scandal-plagued finances, Pope Francis has approved a set of new legislative norms that formalize his moves to bring financial accountability and transparency to the Catholic church's central bureaucracy.

The new laws concretize the pope's creation last year of a new central Vatican office with wide control over financial matters, giving that office authority to mandate financial standards for Vatican departments and power to monitor and review the implementation of such standards.

The pope has also created a new position within the Vatican bureaucracy for an auditor general, giving that as-yet unnamed person near-complete authority to investigate irregularities in accounting -- extending even to unannounced on-site investigations of Vatican offices.

Francis made the financial moves in a new series of norms, known together as a motu proprio, that were posted to the Vatican website Tuesday. The norms, which were signed Feb. 22 and went into effect Sunday -- concern three Vatican entities: the Council for the Economy, the Secretariat for the Economy, and the new office of the auditor general.

The pope created the council and the secretariat in February 2014, appointing German Cardinal Reinhard Marx to lead the former and Australian Cardinal George Pell to lead the latter.

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The council is an oversight body of 15 members that meets occasionally at the Vatican, while the secretariat was launched as an entirely new Vatican office to consolidate and control the many diverse curial offices that control church finances.

Before the issuing of Tuesday's norms, there had been speculation that Pell's power as the head of the secretariat might be curtailed to meet criticisms from some Vatican officials that he was being given too much authority.

Adding to the intrigue was the publication by the Italian magazine l'Espresso last week of accusations that Pell himself was misspending Vatican money, which the secretariat staunchly refuted in a press release.

Outlining the powers of the council, secretariat, and auditor general separately, the norms are particularly sweeping in describing the authority given to Pell and to the new auditor.

The norms specify that the Secretariat for the Economy is to have two sections: one designated to control and watch over Vatican finances and another to administration of the secretariat itself.

Under the authority of the first section, the norms specify Pell is to have the power to issue executive decrees to all Vatican departments concerning their guidelines and procedures "aimed at effective planning, budget forecasting and management of human, financial and material resources entrusted to the departments of the Roman Curia."

Marking substantial changes to a culture of opacity -- where Vatican offices have operated for years without a central budget or accounting system -- the first section of the secretariat is also to have power to analyze all Vatican operations to ensure all activities are "carried out efficiently" and are "in compliance with the approved budgets."

Likewise, the norms specify that the secretariat is to create one centralized budget for the entire Vatican and a consolidated balance sheet to show earnings and expenditures of each curial office. The norms do, however, make a distinction in the secretariat's power over the Vatican City State and the Holy See, the Vatican's diplomatic entity.

While the laws state clearly that the secretariat "controls the annual budget and the final budget of the State of Vatican City," they state that the office "prepares" the budget for the Holy See.

Obliquely referencing past news reports that Vatican offices may have inappropriately sold expensive properties they owned in Rome and other cities, the norms also give Pell the power to "approve every act of alienation, purchase or extraordinary administration put in place by the departments of the Roman Curia or institutions linked to the Holy See."

Pell is also empowered to ask the newly created auditor general to make specific reviews of any Vatican office. Creating the new auditing office in the norms, Francis writes that the office is to be composed of one auditor general and two assisting auditors.

The auditing office, he writes, is to have four key roles that are to be fulfilled "in full autonomy and independence and following the best internationally recognized practices in the field of public administration."

Those four roles:

  • Implementing an annual auditing program for Vatican entities;
  • Performing reviews on those entities "when he deems it necessary or if it is requested by the Council for the Economy";
  • Receiving reports of "anomalies in the activities of institutions and administrations" and investigating those; and
  • Proposing new "appropriate measures" to be followed in financial accounting.

The auditor's office is given power to perform specific reviews "whenever there is reasonable cause to suspect that" there are:

  • Initiatives and activities that "deviate substantially" from approved budgets;
  • "Anomalies in the use or ownership of financial resources or materials";
  • "Irregularities in the accounts or records";
  • "Significant irregularities in the awarding of agreements or contracts for outside services or in the carrying out of transactions or disposals"; and
  • Acts of "corruption, embezzlement or fraud."

Tuesday's norms specify that the Council for the Economy is to "receive and consider" reports from both the auditor's office and the economy secretariat. That body, Francis writes, is to "exercise its functions in the light of the Gospel and according to the social doctrine of the Church."

Francis also formalized the current structure of the council, mandating that eight of its 15 members must be either cardinals or bishops and the remaining seven must be laypeople. The terms for all members are set at five years, with a limit of two terms.

During meetings, members of the council "are required to disclose any conflict of interest resulting from other offices, private investments or relationships of cooperation in place with the Holy See, the State of the Vatican City or any other subject that may have a business relationship."

"The member who is in a situation of conflict of interest shall not participate in discussions in relation to which the conflict may have relevance," Francis writes.

While Pell is able to participate in the council meetings, he does not have a right to vote in their deliberations. Likewise able to attend with the same restriction is the Vatican's secretary of state, Cardinal Pietro Parolin.

The secretary of state is mentioned again in the norms in the section about the powers of the Secretariat for the Economy, where Francis writes that Pell and Parolin should "work in collaboration" but stipulates that Parolin "has sole competence for matters relating to relations with States and other subjects of public international law."

Pointing to just how expansive the powers of the Secretariat for the Economy are, the pope also writes that the secretariat is to help in processing Vatican salaries, creating hiring and firing practices for employees, proposing professional training courses, and managing personal data of Vatican staff.

[Joshua J. McElwee is NCR Vatican correspondent. His email address is jmcelwee@ncronline.org. Follow him on Twitter: @joshjmac.]

A version of this story appeared in the March 13-26, 2015 print issue under the headline: Pope sets financial norms, creates auditor spot .

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