Cardinal discovers Vatican’s lost hundreds of millions

Discovery means finances are healthier than they first appeared

A cardinal charged with Vatican financial reform has discovered hundreds of millions of euros that did not appear on the Holy See’s balance sheet.

Australian Cardinal George Pell says that the discovery means that the Vatican’s finances are healthier than they first appeared.

The cardinal suggests that for centuries unscrupulous figures took advantage of the Vatican’s financial naivety and secretive procedures.

Vatican finances were unregulated and allowed to “lurch along, disregarding modern accounting standards”. But no longer: new structures and organisations are bringing Vatican finances into the 21st century, and making their workings transparent, with full accountability.

The cardinal told The Catholic Herald: “it is important to point out that the Vatican is not broke. Apart from the pension fund, which needs to be strengthened for the demands on it in 15 or 20 years, the Holy See is paying its way, while possessing substantial assets and investments.

“In fact, we have discovered that the situation is much healthier than it seemed, because some hundreds of millions of euros were tucked away in particular sectional accounts and did not appear on the balance sheet. It is another question, impossible to answer, whether the Vatican should have much larger reserves.”

Cardinal Pell was appointed prefect of the newly created Secretariat for the Economy in February, making him the most senior English-speaking official in the Vatican.

He explains that reformers had to tackle an ingrained sense of independence among Vatican departments.

“So it was with the Vatican finances. Congregations, councils and, especially, the Secretariat of State enjoyed and defended a healthy independence. Problems were kept ‘in house’ (as was the custom in most institutions, secular and religious, until recently). Very few were tempted to tell the outside world what was happening, except when they needed extra help.”

The cardinal writes: “a German princess once told me that many used to think of the Vatican as being like an old noble family slowly sliding towards bankruptcy. They were expected to be incompetent, extravagant and easy pickings for thieves. Already this misapprehension is dissolving.

“Donors expect their gifts to be handled efficiently and honestly, so that the best returns are achieved to finance the works of the Church, especially those aimed at preaching the Gospel and helping the poor escape from poverty. A Church for the poor should not be poorly managed.”

Cardinal Pell says the involvement of lay experts is a fundamental part of the financial reforms. In the New Year, the Vatican will name a layperson as auditor general. This new figure will be answerable to the Pope, but autonomous and able to conduct audits of any agency of the Holy See at any time.

“These reforms are designed to make all Vatican financial agencies boringly successful, so that they do not merit much press attention,” the cardinal writes. “Such ambitions cannot ensure that we will not find some static on the lines in the next year or so. But we are heading in the right direction.”

The cardinal also discloses that bishops around the world are eager to learn lessons from the Vatican’s financial overhaul.

“The responsibilities of the Secretariat for the Economy are limited to the Holy See, Vatican City State and the almost 200 entities directly answerable to the Vatican,” he writes. “But already some cardinals and bishops have wondered aloud whether the new set of financial procedures and chart of accounts, introduced in November this year in the Vatican, might be sent to bishops’ conferences for consideration and use. This is something for the future.”