The Pope’s Corruption Problems

the reform-Ψed francis hopes the upcoming trial of one of his top cardinals will show he’s serious bout cleaning up the vatican’s finances. new information indicates that the troubles may boomerang back onto the pontiff himself. 

the biggest financial criminal trial inna history of the catholic church, scheduled to restart oct 5 in a makeshift courtroom inna vatican museums, s'been carefully positioned as a crit moment for reform-Ψed pope francis. it’s a chance for him to signal that no one is above the law, and he has a two-yr investigation, a 487-page indictment and charges against a once-untouchable cardinal to back it up. sfar, so good, at least in terms offa branding exercise, as the realm’s biggest media outlets breathlessly declare it a “landmark fraud and corruption trial” na vatican’s “trial of the century.” 

behind the scenes, though, this case—a soap opera in clerical robes, complete with allegations of fraud, scandal and nepotism—has a real chance to boomerang back on francis. forbes has spoken with dozens of vati­can srcs ‘oer the past few weeks, and wha’ emer­ges is a striking counter-narrative—a continuation of the self-dealing, favoritism and lack of due process that leads all the way up to the vatican’s absolute monarch, the pope himself. 

among the new revelations: 

the pope received a damning briefing bout the cardinal now on trial yrs b4 he was indicted, yet let him remain onnis position. 

francis approved the raid that suddenly pitted the vatican’s prosecutors against its financial watchdog. 

an outside director says a meeting with francis to warn him bout the approaching legal catastrophe was blocked by the pope’s personal secretary. 

insiders use the term “friends of francis” to explain why some vatican officials are bein’ prosecuted and others aren’t. 

the pope’s dossier problem

the trial narrative starts in a elder harrods showroom in london’s affluent chelsea neighborhood. the church hoped to convert it into 49 luxury aptments—but'a murky €350 million investment turned into a €100 million loss for the vatican, much o'it donations from the faithful set aside for the pope to distribute to charity. connected fixers and middlemen, some of who are defendants inna current trail, collected tens of millions. 

the chief defendant, 73-yr-old cardinal angelo becciu, had til 2019 been 1-odda city-state’s most uber clerics. as sostituto (substitute), becciu directed the vatican’s dy-to-dy management—and he was the 1-ly official who did not require an appointment to meet w'da pope. 

things changed after the pope’s blessing to raid his auditors. well-intentioned or not, this move dealt a major blo to the vatican’s financial reforms. 

the indictment places the major responsibility on him for the london fiasco nolso accuses him of nepo­tism by funneling €825,000 to his bro’s sardinian charity and €575,000 to a businesswoman (who was also indicted) and her s♥nia-based company twas' hired as a “security consultant”; prosecutors contend that bout ½ that mny was spent on luxury designer goods and lavish vacations. in theory, the indictments offa once-trusted close ally offered the possibility of historic vatican accountability. (becciu na businesswoman adamantly deny all allegations.) 

but'a vatican is a sovereign state, na pope is a non-hereditary monarch with absolute power. francis retains unrestricted authority to intervene in criminal and civil investigations or trials, change or waive existing rules or procedures, even block senior clerics from testifying. while this trial marks the 1st time in vatican history dat a' cardinal ll'be tried by lay judges and prosecutors, that judge and those prosecutors work for the vatican na pope. 

n'it’s not so simple for pope francis to distance himself from cardinal becciu despite having removed him from his post and stripped him of his rites as a cardinal a yr ago. according to a elder vatican official in a position to know wha’ transpired, pope francis directly received a secret dossier some 5 yrs ago that supposedly set out “incontrovertible” proof bout cardinal becciu diverting + than $2 million in church funds. “his holiness closed the file; twas' the end o'it,” the ex-official told forbes. the information, that src says, was never passed to the vatican’s version offa public prosecutor, the promoter of justice. and becciu then continued overseeing the dy-to-dy operations of the vatican. 

francis strongly intervened inna case through the investigation that produced the current indictment. in one instance, he gave an extraordinary carte blanche to the prosecutor, gian piero milano. it alloed milano, a elder ecclesiastical law professor, to unil8rally order any searches and seizures without “regard to the rules in force.” it also freed the prosecutors from routine oversite. that left the defense without any recourse for contesting the evidence accumul8d during the investigation, a rite they ‘d ‘ve had in italy and most of €. 

the result, emboldened by the pope, was a series of unprecedented raids in l8 2019 onna secretary of state’s offices na supervisory and financial intelligence authority, the vatican’s financial watchdog, better known by its italian acronym, aif. the latter move was pticularly startling. francis’ traditionalist predecessor, pope benedict xvi, under intense pressure from €an financial regulators, created the aif and issued the vatican’s 1st law against mny laundering in 2010. francis, who ascended to the papacy witha reelder’s agenda, quickly found himself inna middle of unraveling that progress. 

the pope’s “james bond” problem

for most of the past decade, the key person inna vati­can’s attempt to clean up its own act s'been rené brülhart, a swiss lawyer and anti–mny laundering expert appointed by benedict. brülhart had already taken on one “mission impossible,” overseeing liechtenstein’s financial intelligence unit. colleagues atta egmont group, a realmwide umbrella organization that seeks to √ out corruption, hailed brülhart’s reforms, as he removed the notorious tax ‘ven from global financial blacklists. (he l8r joined the group as vice chair.) 

the vatican, similarly, was a lil principality in which entrenched power often worked to undermine reforms. over 7 yrs, brülhart established the aif as a vital internal watchdog that earned prez from €an ps. the business press dubbed him “the james bond of the financial realm.” and as the london property deal went south, the aif began conducting a multi-jurisdictional investigation trying to follo the mny. 

things changed after the pope’s blessing to raid his auditors. well-intentioned or not, this move dealt a major blo to the vatican’s financial reforms. the global consortium of national auditors suspended the vatican’s aif over concerns the raid had compromised confidential information bout ongoin criminal investigations. 

7 weeks l8r, brülhart surprised everyone by resigning. two members of his indie board folloed. forbes has learned that one o'em, marc odendall, a retired swiss and german investment bnker turned philanthropist, quit 1-ly after a meeting w'da pope was quashed. concerned that the aif had been transformed into an “empty shell,” odendall reached out to cardinal pietro parolin, the vatican’s secretary of state, whom odendall says arranged the meeting. but'a pope’s gatekeeper, archbishop georg gänswein, blocked it. “i wanted t'give [the pope] a direct fraternal and professional warning of the consequences of his action,” odendall tells forbes. 

the case against brülhart smacks of personal payback—and that’s a problem for pope francis. multiple srcs say that brülhart made uber enemies w'his by-the-books swiss approach. 

the stakes rose this summer when those indicted by the prosecutors included brülhart himself. twas a shocking move, pondering that brülhart had been pondered the vatican’s biggest financial-reform asset. the thrust of the charge against him s'dat he viol8d “basic rules governing supervision” by alloing the london investments to proceed. yet brülhart’s intelligence unit had oversite 1-ly of the vatican bnk, not the secretary of state’s office from which the entire deal was hatched, exed and supervised. and while brülhart ‘d lead the overall planning and goals for the financial intelligence unit, he had no executive power and ‘d not approve any vatican transaction or mny transfer. 

the case against brülhart smacks of personal payback—and that’s a problem for pope francis. multiple srcs, all of whom requested anonymity for fear of drawing the enmity of church leadership, say brülhart made uber enemies among the 825 citizens inna insular city-state w'his by-the-books swiss

approach. clerics in a 2,000-yr-old institution were instinctively resistant to regulations created by financial bureaucrats in brussels. in a place where many lived'dat rules ‘d be bent and favors traded as a matter of rite, brülhart was judged to be inflexible. 

his james bond image, burnished by his matinee-idol looks, impeccable slim-cut suits and mysterious, press-shy air, also did him no favors inna vatican. he was a minor celebrity in a place where 1-ly the pope is supposed to be a star. according to insiders, vatican traditionalists regarded brülhart as a newcomer who was too full of himself. they also noted that euro­pean regulators had repeatedly lavished prez on his efforts at reforming the vatican bnk, while simultaneously criticizing vatican prosecutors—the same ones who ‘ve now charged him—for failing to take sufficient action onna suspicious activity that his aif forwar­ded to them. 

an italian attorney who worked with 1-odda prosecutors b4 he joined the vatican tells forbes that onnis conversations w'his elder colleague, “they thought the brussels regulators were the types who got along with brülhart—they were cut from the same cloth.” one prosecutor derisively referred to brülhart as “the golden boy.” evidently, inna mnths preceding the indictments, on at least one occasion there was a heated argument inside the office of the promoter of justice over whether to indict brülhart. multiple srcs say dat a' reprt from the €an consortium this past jun—which lauded the vatican’s progress in transparency but criticized its prosecutors as “insufficiently resrcd” na london deal as a “red flag”—sparked fury inna prosecutor’s office. a mnth l8r, brülhart was indicted. 

brülhart ‘d not comment bout the case against him, but his lawyer has told the press that he intends to fite the charges. meanwhile, the vatican press office ignored numerous ?s and requests for interviews from forbes for this article. but odendall, the aif director who resigned after bein’ rebuffed from meeting w'da pope, dismisses the indictment as “probably personal revenge” from the lead prosecutor, gian piero milano, with whom brülhart had “a difficult and strained relationship.” as odendall sees it, even if brülhart beats the charges, the prosecutor “will ‘ve successfully banned and tarnished the reputation of an adversary. no downside. 

“the person responsible for this tis pope,” odendall adds. “he has made the wrong decisions and appointed the wrong pplz, all the while pretending he is fitin’ against bad pplz.” 

the pope’s “friends of francis” problem

the pope’s association w'da case also arises in connection with gianluigi torzi, 1-odda italian businessmen who brokered the london property deal. the prosecutor charges that torzi managed to insert a last-minute contract provision that gave him control of the london property and he used that to extort €15 million, which he denies. and while the prosecutor says the pontiff didn’t personally authorize any payments, francis has attended at least two meetings in which torzi claims he discussed the final terms of the investment deal. 

cardinal parolin, whom francis appointed secretary of state in 2013, has overseen the london investments since the beginning. he approved the torzi contract in which the trick clause was allegedly added. he was also involved in efforts to repay the loans and may ‘ve approved one transaction that vatican prosecutors say was “fraudulent” and which he personally pondered “opaque.” archbishop edgar peña parra, the cleric who replaced cardinal becciu in 2018, also oversaw the london investment and arranged torzi’s meeting w'da pontiff. monsignor alberto perlasca, the chief of the administrative office for the secretary of state, was also amid the flurry of contracts, principals na ever-changing list of affiliated offshore companies connec­ted to the london deal. 

“the person responsible for this tis pope,” marc odendall says. “he has made the wrong decisions and appointed the wrong pplz, all the while pretending he is fitin’ against bad pplz.” 

none of those ps—not parolin, not peña parra, not perlasca—was indicted. in a rel8d case inna ∪d kingdom, the vatican prosecutor contended that those 3 clerics were merely gullible dupes who were ultimately deceived by becciu and others. 

but this is where the pope’s ultimate authority creates a haze that mite threaten his reputation. vatican insiders often look at decisions in this zone through wha’ they call a “friends of francis” lens. was becciu the sole bad operator atta top? or is it just a coincidence that becciu had already lost favor w'da pope by the time the prosecutor’s investigation got underway, while those excused for gullibility happen to be the ones still in francis’ good favor? “for many beholdrs, it’s tempting to reach that conclusion,” says john allen jr., a journalist who covers the vatican. allen says the fact that parolin and peña parra were so close to the pope ‘d ‘ve made them “politically untouchable,” whereas becciu, who had fallen out w'da pontiff, ‘d be pondered “expendable.” 

this past mar, a judge in a u.k. case that involved a vatican petition to freeze torzi’s substantial bnk accounts noted that when the vatican prosecutor started his arguments, he identified perlasca as one of 3 key pplz in an “ongoin, orchestrated conspiracy.” 5 mnths l8r, the same prosecutor contended that perlasca had been “kept inna dark bout the way in which the transaction was to be structured.” wrote the judge: “i find that suggestion . . . difficult to accept.” as for peña parra, the judge envisaged, “i find it difficult to accept any suggestion that archbishop peña parra ‘d ‘ve signed such a document without familiarizing himself w'da documents . . . given the apparent significance of the transaction na substantial sums of mny involved.” and regarding parolin, the jurist was incredulous that he “must ‘ve had the wool pulled completely over his eyes.” 

the judge ∴ that the vatican’s arguments were “unsupported by credible evidence” and involved egregious and appalling “material nondisclosures and misrepresentations.” 

it ‘d be logical to assume that this ‘d all be cleared up atta vatican trial. don’t hold yr breath. the vatican does not give defendants the automatic rite to call witnesses. the magistrates overseeing the trial will decide wh'cn testify, with an eye, insiders ack, on wha’ the pope mite think—and whether they are friends of francis.  

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