Following the conviction of the former head of the Institute for Religious Works (IOR), colloquially known as the Vatican Bank, on charges of embezzlement, and the removal of Cardinal Becciu as deputy head of the Vatican’s Secretariat of State, following widely reported allegations of financial misappropriation, Pope Francis has instituted a major reform of the Vatican’s finances and its administration.
The reform was made public in a release from the Holy See’s press office, and is described as an Apostolic Letter, a formal exercise of the Pope’s administrative authority.
Because the letter was published between Christmas and the New Year, little attention has been given to its important content.
The main effect of the reform is to transfer the administration of all the Vatican’s financial functions from the Secretariat of State, the central department of administration that had control of the finances, to the Administration of the Patrimony of the Holy See, with oversight provided by the Secretariat of the Economy, a department of state announced by Pope Francis in 2014.
Its first head was Cardinal George Pell, who held the post until he voluntarily returned to Australia to answer sex abuse charges in 2017. Cardinal Pell was ultimately exonerated by Australia’s highest court in 2020.
Although the Secretariat of the Economy was intended to exercise financial authority, it was fiercely resisted by leaders of the Secretariat of State, including its head, Cardinal Parolin, and his deputy, Cardinal Becciu.
Nonetheless, it uncovered undisclosed bank accounts held by the Secretariat of State, and separately, that thousands of bank accounts had been opened in the Vatican Bank without proper authorisation, potentially making the Holy See complicit in money-laundering activities by Italian criminals, including the Mafia.
When the Secretariat of the Economy brought in external auditors to examine the bank accounts and titles held by the different dicasteries (departments) of the Vatican, the Secretariat of State vetoed it without explanation, causing consternation in the financial world.
There were frequent reports of conflict between the Secretariat of State and the Secretariat of the Economy, as then-Archbishop Becciu fought to prevent any oversight of the Secretariat of State.
Becciu was consistently supported by the head of the Secretariat of State, Cardinal Parolin.
Born and educated in the Netherlands, he became a chartered accountant in Britain before joining the global accounting firm, Deloittes, in 1975. He worked for Deloittes for 32 years, rising to the highest levels in the company, with particular service in the company’s audit division.
He became managing director of Deloittes’ Human Resources Worldwide from 1998 to 2003. From 1998 to 2003 he was a member of the company’s Worldwide Executive, from 1996 to 2007 he was also the managing director of Aviation and Transport Industry Worldwide.
In 2003 he became president and chief executive of Deloittes Italy, a role he held until 2007. During the same period he was also a member of the Deloittes Worldwide Board and Governance Committee.
Yet, within two years of his appointment as the Vatican’s independent auditor, Mr Milone was forced to resign by Cardinal Becciu, after being arrested by the Vatican’s police, and threatened with being charged with criminal offences.
Having got rid of Cardinal Pell and Libero Milone, Cardinal Becciu had uncontrolled power over the Vatican’s finances, until the following year when he was “kicked upstairs”, being appointed head of the Vatican’s dicastery of the Causes of Saints, effectively removing him from his key role in the Secretariat of State.
After his removal, Vatican investigators were able to unravel the full extent of Cardinal Becciu’s abuse of power, and prompted the Pope’s reorganisation.
The removal of the Secretariat of State from control of the Vatican’s finances is a first step towards resolving deep-seated problems in its administration. But the key remains in who is appointed to oversee the Vatican’s financial affairs.