A 50 million euro loan request to secure the purchase of a bankrupt hospital was vetoed by Cardinal George Pell and financial authorities at the Institute for Works of Religion, commonly called the Vatican Bank, before it was approved by the Holy See’s central bank, APSA, where the loan breached international regulatory agreements.
According to several Vatican officials, in late 2014 two cardinals requested that the IOR, the Vatican’s commercial bank, grant a 50 million euro loan to a for-profit partnership between the Holy See’s Secretariat of State and a religious order, which intended to purchase a bankrupt Italian hospital, then in government-administered bankruptcy.
The hospital, the Istituto Dermopatico dell’Immacolata (IDI), had been owned by the religious order, the Congregation of the Sons of the Immaculate Conception, which had formed a new organization with the Vatican Secretariat as its partner, in a complicated plan to unburden itself from the hospital’s massive debts.
Cardinal Angelo Becciu, then an archbishop, and Cardinal Giuseppe Versaldi were both involved in the plan, and requested the loan from the IOR, several Vatican officials told CNA.
Their loan proposal was rejected in 2015, when the IOR board determined that the IDI would never be able to repay the loan, senior sources at two Vatican financial agencies told CNA.
Officials at APSA and the Prefecture for the Economy told CNA that Pell was vocally opposed to the loan proposal. The cardinal was at that time charged by Pope Francis with reforming Vatican finances.
It was clear the proposal would have “been a case of throwing good money after bad. There was no question of a return to stability, let alone profit,” one official told CNA.
After the proposal was rejected at the IOR, a request for a 50 million euro loan was made at APSA, the Vatican’s central bank. The loan likely violated APSA's international regulatory agreements.
“They were desperate,” a senior source at the Prefecture for the Economy told CNA. “There was simply no other way to make it work.”
While the IDI loan was being considered at APSA, Pell’s office, which had been given oversight of the central bank’s portfolio, refused to sign off on the transaction, Vatican sources told CNA.
But Pell’s resistance was apparently not enough to stop the loan.
A senior source at APSA told CNA that “there was no taking ‘no’ for an answer,” and that the deal was “passionately” insisted on by Versaldi and Becciu. “It was never not going to happen,” the source told CNA, “the prefecture tried to block the agreement but it went ahead anyway.”
Vatican officials told CNA that Becciu, and Cardinal Versaldi, went to APSA for the loan because the central bank had already shown itself resistant to financial reforms at the Vatican. The Secretariat of State, where Becciu was the second-ranking official, was also reportedly resistant to Pell’s efforts at financial transparency and reform.
“The was a basic, point blank, refusal to share information, to collaborate, or to open the books to the Prefecture and the Council for the Economy,” one senior source at the Prefecture for the Economy told CNA. “This has been a consistent attitude from both State and APSA.”
After conflict over the loan, Pope Francis withdrew oversight authority over APSA’s investment decisions from Pell’s office. Multiple Vatican sources told CNA that decision was strongly influenced by lobbying from Becciu.
Cardinal Becciu was also responsible for the cancellation of a proposed external audit by Pricewaterhouse Cooper of all Vatican finances, and opposed to Cardinal Pell’s intention to end the practice of keeping some Holy See assets and funds “off books.”
Becciu and other officials at the Secretariat of State have explained that they objected to the external audit because of the confidentiality required to conduct their work. Recent reporting has also revealed that the Secretariat was then making unauthorized real estate investments with money borrowed from Swiss banks; a fact likely to have been revealed during an external audit.
Senior sources at the Prefecture for the Economy and APSA told CNA that the cancellation of the audit was also explained, in part, by promises that an independent audit of APSA was already planned.
But sources at both APSA and the Prefecture for the Economy said that no external or independent audit of APSA has actually been conducted, and that there has instead been a “good faith undertaking” between APSA and the Vatican’s Financial Information Authority (AIF).
Senior sources at the Prefecture for the Economy and APSA also told CNA that efforts to enforce transparency at the Vatican’s central bank and Secretariat of State played a decisive part in the ouster of the first Auditor General, Libero Milone, in 2017.
Milone has stated that he was forced to resign under threat of prosecution because he was pressing for information about the hundreds of millions of euros held off-books by curial bodies.
“Some people got worried that I was about to uncover something I shouldn't see," Milone told the Financial Times on November 2. “We were getting too close to information that they wanted to be secret, and they fabricated a situation for me to be thrown out."
At the time of Milone’s forced departure, Cardinal Becciu defended his role in removing the auditor, saying that he had exceeded his mandate.
“He went against all the rules and was spying on the private lives of his superiors and staff, including me," Becciu said in 2017. "If he had not agreed to resign, we would have prosecuted him."
Pell is now in prison in the Australian state of Victoria, following his 2018 conviction on five counts of sexual abuse. The cardinal could not be reached for comment.
CNA asked Cardinal Becciu for comment on his role in seeking an IOR loan for the purchase of the IDI. The cardinal declined to comment.