Church Coffers: Pope Francis and Financial Reform

WARNING: the structure of the Catholic Church, the Vatican State, and the Holy See is one of the most complex governing bodies you will ever come across. Before proceeding to read the following article, I strongly recommend this short video by CGP Grey as an entertaining and highly informative summary of the structure of the Vatican. You’ll learn a lot (the Pope’s chair is a legal, corporate person! the Vatican is the only country in the world with no female citizens!) and it will make every future article you read about the Catholic Church miles easier to understand.


    On a list of the 21st century’s most groundbreaking figures, Pope Francis I would undoubtedly pop up somewhere near the top. His installment in 2013 as head of the Catholic Church marks a heap of firsts for the papacy: first Jesuit in the role, first from the New World, first from the Southern Hemisphere, and first non-European since the 8th century. Add to this his controversial stance on homosexuality, involvement with the restoration of US-Cuban relations, and refusal to stay in the traditional papal apartments, and Pope Francis stands apart as the remarkably fresh and unconventional leader of a 2000-year-old institution. But despite all his radical trailblazing, this Argentinian successor to St. Peter isn’t the first papal bull to see Vatican reforms bogged down by infighting, scandal, and the messy politics of the Roman Curia.

    Upon ascendancy to the Holy See, Pope Francis was charged with reforming the Catholic Church’s notoriously secretive and inefficient financial affairs. The project showed great promise when, less than a year after his installment, he formed the Secretariat of the Economy, a committee dedicated to oversight and reform of ecclesiastical finances. This step was followed up by a series of rapid changes at the Vatican Bank, an institution designed to protect the savings of Catholic dioceses around the world. Jean-Baptiste de Franssu, a Frenchman whose resume is stacked with positions at weighty financial institutions, was hired on as president with the mandate of improving transparency, accountability, and efficiency. According to this Bloomberg article, more than 750 illegal accounts belonging to non-Vatican persons were shut down as of 2014, as well as a host of stale accounts belonging to deceased cardinals. The Bank’s financial intelligence unit also looked into more than two hundred shady transactions throughout 2013, whereas only one had been checked out previous to Francis’s reforms.

    That wasn’t the only financial front against which Francis appeared to be making headway. In December 2015, the Secretariat of the Economy announced that PricewaterhouseCoopers (PwC), a massive accounting firm, would be coming alongside the Church for a full audit of its 136 financial divisions. It looked like a huge leap forward, which would bring the Vatican more in line with international standards—as well as silence rumours of corruption that had surfaced a year before, when Cardinal George Pell, head of the Secretariat, disclosed the discovery of almost 1.4 billion euros “tucked away” in the muddle of various accounting departments (Wall Street Journal).

Cardinal George Pell | Photograph: La Stampa

Cardinal George Pell | Photograph: La Stampa

    But nothing good lasts forever. In an unforeseen move last April, the Vatican released news that the PwC audit would be suspended until further notice. This came as a huge shock to advocates of reform, notably Pell, who laconically admitted he was “a bit surprised” and hoped that things would resume promptly (Financial Times). They didn’t. Two months later, the partnership was officially severed, redirecting the audit’s assignment to the Vatican’s own Office of the Auditor General. Little explanation was given, other than that internal (rather than external) auditing is “normally the case for every sovereign state,” and PwC was better suited to an assistive, not directive, position. The Church pointedly remarked that, “contrary to what has been reported by some sources, the suspension was not... attributable to the desire of one or more entities of the Holy See to hinder reforms” (Catholic Herald).

    Not everyone is willing to swallow that story. In an interview with the Wall Street Journal, Pell said rather vaguely that, as to the reasons behind the external audit cancellation, "some people don't like change, some people don't like a diminished authority… and there's always a hypothetical possibility that you've got some people who have something to hide." Despite the Vatican’s firm insistence that Francis’s financial reforms are fully supported by the Roman Curia, it seems that bureaucratic red tape has bound his hands.

    But if the Curia find PwC’s audit too invasive and rigorous, can anything be done to push the Pope’s reform agenda?

    The answer is a theoretical yes. Although the Curia hold a lot of power, in that their various administrative bodies direct almost all aspects of the Catholic Church, their official mandate is still to “perform their duties in [the Pontiff’s] name and with his authority for the good of the churches and in the service of the sacred pastors” (Vatican). The Pope is not only the head of the Church, but also—and this is an official title—the King of the Vatican. He has unlimited authority not only in spiritual matters, but in every financial, administrative, and legislative issue that may arise. Theoretically, Francis can sign off on any executive order and it has to be carried out; not to do so would entail both disobedience to God and treason against the State. Of course, the chances of him doing something so radical and autocratic are highly unlikely, but it’s a good reminder of exactly how much weight his words hold. The Pope’s opinion carries a great deal of significance for 1.2 billion Catholics, and their opinion can create a lot of noise about the actions of the Curia.

    In the face of so many setbacks, a few words from the papal throne may make a difference. Nothing is more terrifying to the catholic Catholic Church than an appearance of disunity, so rather than accede to the dragging feet of his Curia, Francis may well do better by expressing a few hints of displeasure. Although the humble pope is known for his gentleness and accommodating nature, a sharp reprimand to ecclesiastical stallers could create enough of a stir that things will begin moving forward once more.