Reeling Under Financial Scandals And Embezzlement By Top Cardinals, Pope Announces Reforms On Managing Vatican Finances

Pope Francis has formally stripped the Vatican secretariat of state of its financial assets and real estate holdings following a financial scandal which is currently the subject of a corruption investigation, ABC News reported.

The Pope signed a new law over the weekend ordering the secretariat of state to complete the transfer of all its financial holdings to APSA, the Vatican’s existing centralised asset manager.

Under the new law, the Peter’s Pence collections from the faithful as well as other donations that had been managed by the secretariat of state will now be held and managed by the Vatican’s treasury office as separate funds that are accounted for in the Holy See’s consolidated budget.

Peter’s pence collections is made of the offering that member of the Catholic community give to the Pope directly so that he can provide for the needs of the entire Church. Peter’s Pence derives its name from a ninth-century English custom started by King Alfred the Great, who collected money from landowners as financial support for the pope. Further money came from fees for weddings, funerals and confirmations.

The new changes follows a criminal investigation into years-long allegations of mismanagement of donations and investments by the Vatican’s secretariat of state which has resulted in losses of tens of millions of euros at a time of financial crisis for the Holy See.

Giovanni Angelo Becciu, one of the most powerful cardinal of Vatican and the longtime number two in the Vatican Secretariat of State, was fired in September this year after evidence emerged that the Italian Cardinal embezzled 100,000 euros ($117,440) from the secretariat to fund a charity controlled by his brother.

In October 2019, Vatican began investigating on how $200 million funds that it had parked in Swiss bank accounts eventually ended up financing a luxury property development in London’s upscale Chelsea district and in the process generated windfall profits for a company that managed the investment for the Holy See.

The sum of $200m held in Swiss bank accounts was controlled by the Secretariat of State and was transferred to a Luxembourg investment fund called Athena Capital. The funds were channeled towards a project to construct 49 luxury apartments at 60 Sloane Avenue. The Vatican is said to be engaged in the project since 2014.

The Secretariat of State serves as the central papal governing bureaucracy of the Catholic Church. It is responsible for tall the political and diplomatic functions of the Holy See. It manages the millions of dollars in charity given by Catholics around the world.

Europe’s anti-money laundering body, Moneyval has also commenced its assessment of Vatican finances.

In August last year Pope Francis announced renewed statutes for the governance of the Vatican Bank, bringing in an external auditor for the first time and introducing new ethical guidelines for members of the bank’s staff.

As a part of an investigation of suspected financial irregularities, Vatican police had raided the offices of the Holy See’s Secretariat of State and its Financial Information Authority, or AIF and took away documents and electronic devices. The two departments were searched for evidence involving alleged financial crimes.

The Vatican itself had announced that raids were prompted by complaints lodged in the summer by the Vatican’s bank and auditor-general about “financial operations carried out over the course of time”.

Five Vatican employees, including a top official at the Vatican’s Financial Information Authority (AIF) and a monsignor, were also suspended following the police raid

The AIF, headed by Swiss lawyer Rene Bruelhart, is the financial controller, with authority over all Vatican departments.

Holy See’s investment with Athena Capital was personally authorised by Cardinal Giovanni Angelo Becciu, who is said to have met the London-based financier inside the Vatican. Cardinal Becciu was at the time in charge of the administrative duties of the Secretary of State, and reported on a daily basis to Pope.

Vatican Bank, better known as the Institute for Works of Religion, or IOR, was for decades embroiled in numerous financial scandals.