By introducing transparency, accountability and a dash of best practice, the head of the Catholic Church aims to cut the Vatican’s maverick spend – and instil a culture better suited to peace and humility
Most procurement leaders will understand the issues in Pope Francis’s in-tray. He is trying to instil financial discipline in an organisation where maverick spenders have behaved as if he has his own magically replenishing money tree. He is seeking to replace opacity with transparency and overcome an institutionalised momentum against change, which makes it hard to ensure compliance across the Vatican, an exceptional organisation that also happens to be one of the world’s oldest multinationals.
On top of that the Pope has to address the child sexual abuse scandal, which has made organisational reform especially urgent. The Wall Street Journal estimates the Holy See lost £60m last year, hit by a 40% decline in donations since 2015, the partial write-off of a £26m loan to keep a Catholic hospital in Rome afloat and some wasteful historical spending, such as the £480,000 spent on a Christmas nativity scene for St Peter’s Square.
The cultural challenge facing Francis is exemplified by the case of Nunzio Scarano, formerly one of the Vatican’s top accountants. Known in Rome as ‘Monsignor 500’ because he liked to flash around €500 notes, he was found guilty of corruption this year. (He can still appeal.) At the time of his arrest, he was living in a 17-room apartment in Salerno decorated with artwork – including originals by Marc Chagall and Vincent van Gogh – estimated to be worth at least £5m. He insisted that the £1.5m found in his bank accounts was from donations. Even so, investigators wondered, how could a man with a salary of £32,000 a year build up a £6.5m fortune?
Scarano is not the only official whose behaviour has hurt the Vatican’s image. In October 2013, Francis fired Franz-Peter Tebartz-van-Elst, aka the ‘Bishop of Bling’, who had spent £31m renovating his own residence and church buildings in Limburg, Germany. For a pope who wants the church to be known for humility, modesty and frugality, the purchase of a £12,000 golden bathtub must have struck in the craw, and the diocese’s chief administrator was obliged to take early retirement. This is the kind of lavish spending that has led Francis to fulminate against “airport bishops” (who spend more time jet-setting than tending their flocks), and declare that “it breaks my heart” to see priests and nuns driving expensive new cars.
To resolve a crisis of such magnitude, the 82-year-old Argentinian pontiff has made some symbolic gestures, hired new people (and fired others) and defined new policies, particularly on administration, the environment and cooperation with investigating authorities, inside and outside the Vatican.
Cast but a glance at riches
The first symbolic act was his choice of name, a homage to St Francis of Assisi who, in the new Pope’s words, was “a man of peace, of poverty, who loved and protected creation”. His next symbolic gesture was to jettison the cape his predecessor Benedict XVI donned for ceremonies and always wear the ‘simar’, the white papal cassock. (He also asked Vatican tailor Raniero Mancinelli to make cardinals’ robes out of lighter fabrics which are cheaper than the traditional silk.) The change in tone from the top was emphasised by his decision to live in a suite of rooms in the Vatican’s guesthouse, rather than the lavish Apostolic Palace.
Persuading the other stakeholders to cut their cloth accordingly has been harder. Citing “senior Vatican officials”, The Wall Street Journal reported that the organisation is facing an economic crisis, due to “persistent inefficiencies, wasteful procurement and hits to investment income”. In May, Francis wrote to Cardinal Reinhard Marx, head of the Council for the Economy, which oversees the Holy See’s finances, urging him to “study all measures deemed necessary to safeguard the economic future of the Holy See.” Four months later, Cardinal Marx called an extraordinary general meeting at which some short-term savings – notably centralising IT and spacing out conferences – were approved and longer-term goals – in particular improving the profit on investments and real estate – agreed.
Although Italian journalist Gianluigi Nuzzi has warned that the Holy See could run out of money by 2023, officials told The Wall Street Journal it has assets worth around £1.5bn – not counting the true value of masterpieces it owns by Michelangelo and Raphael, which used to be listed on the books as worth one lira each. The Journal’s figure may be an underestimate: according to the New Statesman, the Pope is effectively the world’s third largest landowner (behind King Abdullah of Jordan and Queen Elizabeth II) with a global domain of 177 million acres.
One difficulty Francis has in resolving this crisis is that he doesn’t know exactly how big the problem is. That’s why, in June 2018, he did what so many CEOs facing similar predicaments have done and hired a new head of procurement. Italian Bishop Nunzio Galantino was appointed president of the Administration of the Patrimony of the Apostolic See (APSA), which manages the investment portfolio, real estate holdings, human resources and procurement. The 71-year-old Galantino’s brief was simple: to introduce an “attitude of renewal” and transparency.
It is hard to say what progress Galantino has made. Nuzzi has claimed Francis’s attempts to change policy are being “anaesthetised, blocked and sabotaged” by Vatican insiders. Such claims have been denied by Galantino, who dismissed stories of secret bank accounts as “fictionalised depictions akin to The Da Vinci Code”.
Joseph Zahra, the senior layman on the Council of Economy, said the aim is for the Holy See’s administration to be self-sustaining but added: “One can see incremental changes but there have to be radical steps.” One proof of progress is the fact the organisation’s accounts for 2018 when published will be the first to meet international public sector accounting standards.
Da Vinci Code-style conspiracy theories were revived in October when Vatican police raided the offices of the Secretariat of State, the central governing office of the Catholic Church, and the Financial Information Authority (AIF). Italian news magazine L’Espresso reported that £560m in funds were being used in operations that were not on the Secretariat’s books. It has also reported that the Vatican’s auditor general, a role created by Benedict to combat corruption, believes £435m has been placed into Swiss and Italian accounts with Credit Suisse and suspects that £174m was spent on a luxury apartment near London’s Sloane Square. By choosing Giuseppe Pignatoni, one of Italy’s most effective anti-mafia prosecutors, to head the Vatican Court, Francis has signalled his determination to investigate such matters.
The fact that police raided the offices of the AIF, a body Francis has given greater supervisory power to in his bid to reform the scandal-plagued Vatican Bank, indicates the obstacles his reform programme must overcome. In 2012, the EU concluded that the bank, officially known as the Institute for Religious Works, was not compliant on seven of the 16 core banking standards. There were concerns about the way it was handling funds – as much as 25% of its business was done in cash, which money laundering investigators usually regard as a red flag – and about the ultimate beneficial owners of hundreds of accounts. Under pressure from regulators, Deutsche Bank’s Italian subsidiary went so far as to stop running the Vatican State’s 80 ATMs in January 2013. With tourists only able to enter the Sistine Chapel if they pay in cash, Benedict called in global risk group Promontory Financial, which is now reported to supply one in four of the bank’s staff.
Francis’s public condemnation of the “idolatry of money”, “all-encompassing corruption” and “tax evasion that had reached global dimensions” in a mass in November 2018 was an implied warning to the Institute of Religious Works, which has been credibly accused, as recently as 2013, of using tax havens. Massimo Faggioli, an Italian academic who has been observing the Vatican for 20 years, told the Financial Times: “Pope Francis understands the damage that has been done to the credibility of the church by this very small bank and its history of scandals.”
The attack also reflects the Pope’s deeply held personal beliefs as do his addresses on the evils of modern slavery and his campaign to prevent catastrophic climate change. His church circular on the environment, published in 2015, is eloquent, comprehensive and surprisingly blunt. “Doomsday predictions can no longer be met with irony or disdain. We may well be leaving to coming generations debris, desolation and filth,” he warned. Though some critics within the church challenged his right to prognosticate on such matters, Francis has done his best to turn words into action.
In June, his appeal persuaded leaders of 12 energy companies to commit to the Paris climate agreement. Within the Vatican itself, investment in a new eco-centre has boosted waste recycling, single-use plastics will soon be banned and by the end of this year 20 electric vehicle charging points will have been installed. Officials speculate it can only be a matter of months before Francis travels in his own electric Popemobile.
Like so much of what Francis does, a ‘greener’ Popemobile would be a symbolic gesture, albeit a significant one. His frugality makes his impassioned speeches more authentic, though he is not a fan of using such adjectives to “sweeten” reality. “Why say authentically Christian?” he asked recently. “It is Christian!” Tell it like it is, Francis.
Spent on bronze window frames by Franz-Peter Tebartz-van-Elst, Bishop of Limburg, suspended by the Pope in 2013.
The Vatican’s estimated loss in 2018, on a budget of £300m.
Spent on a Christmas crib scene for St Peter’s Square.
Electric vehicle charging points will be installed in the Vatican by the end of 2020.
Estimated value of assets held by the Vatican Bank at the end of 2018.
Number of Twitter followers of Pope Francis @Pontifex.