Under pressure, pope moves to rein in unregulated Vatican foundations

ROME — When most people say “the Vatican,” they correctly have in mind the central government of the Catholic Church under the pope. Few, however, could tick off more than a handful of its component parts.

Catholic insiders probably could name the Secretariat of State as the 800-pound gorilla of the Vatican scene, or maybe the dicastery formerly known as the Congregation for the Doctrine of the Faith as the dogmatic watchdog agency. Fueled by potboiler novels and movies, others probably could tick off the Vatican bank (if likely not its actual name, the “Institute for the Works of Religion”), or maybe the Vatican Secret Archives.

Almost no one, however, probably could name the “Good Samaritan Foundation,” or the “St. Matthew Foundation,” or “STOQ,” which is an initialism standing for “science, theology and ontological quest.” They’re all Vatican entities in their own right, and all are basically vehicles for raising money to support some cause or activity that’s connected, at least loosely, to some Vatican office or personality.

The Good Samaritan Foundation, for example, was created in 2004 under the auspices of the late Mexican Cardinal Javier Lozano Barragán, who led the Pontifical Council for the Pastoral Care of Health Care Workers. The idea was to generate funds to treat diseases such as AIDS, malaria, and tuberculosis common in Africa and other parts of the developing world.

Tellingly, virtually nobody seems to have a comprehensive list of these outfits, but there are dozens. While the intent in virtually every case is noble, precisely because these operations are so little known, the prospects for abuse are also palpable.

Consider the “Bambino Gesù Foundation,” created in 1996 to raise money to support the papally sponsored pediatric hospital. (As a footnote for American readers, the hospital is located adjacent to the Pontifical North American College, the American seminary in Rome). In 2017, a Vatican tribunal convicted a former president of the foundation of diverting a half-million dollars intended to provide care for sick children and using it instead to remodel the Vatican apartment of an influential cardinal.

Or, to take another example, consider the “Monitor Ecclesiasticus Foundation,” which was launched by an elderly Italian monsignor and canon lawyer to publish the decisions of the Roman Rota, the Vatican’s main working court, and distribute them for free to the world’s bishops. In a turn of events worthy of Dan Brown, the foundation became involved in a multi-million dollar insurance scam in the United States engineered by a con man named Martin Frankel. 

In this case, the foundation was not actually based in the Vatican but rather sponsored by the Archdiocese of Naples. Nonetheless, it had a Vatican bank account, which Frankel used to try to hide assets from insurance commissioners in the States looking to get their money back in the early 2000s.

All of this is background to a Dec. 6 decision by Pope Francis to require all Vatican entities, including this sprawling and largely unregulated galaxy of foundations, to be subject to governance, administrative, and accounting requirements imposed by the Secretariat for the Economy.

The new law also specifies that the books of these entities will be subject to review by the Vatican’s auditor general, a position created by Pope Francis in 2014 to provide an independent review of financial procedures.

The decrees came in the form of a “motu proprio,” meaning an amendment to Church law on the pope’s own initiative, and they took effect on Dec. 8, the feast of the Immaculate Conception.

“Although these entities have a formally separate juridical personality and a certain administrative autonomy,” the “motu proprio” states, “it must be recognized they are instrumental in the realization of the proper ends of the curial institutions at the service of the ministry of the Successor of Peter, and, therefore, they too are … public entities of the Holy See.”

As a technical matter, the new rules apply to what are known as “instrumental juridical persons,” meaning entities sponsored by some organ of the Vatican as an instrument to achieve one of that organ’s aims.

In part, the moves represent a logical continuation of the press for financial reform that’s characterized Pope Francis’ papacy from the beginning, albeit with what many observers would regard as somewhat mixed results.

More specifically, however, the “motu proprio” is a response to external pressure, specifically from Moneyval, the Council of Europe’s anti-money laundering watchdog group. In a 2021 report on the progress of the Vatican’s reforms, Moneyval evaluators had flagged the lack of oversight over the foundations as a serious concern and specifically cited the Bambino Gesù case.

Although the Holy See has been a permanent observer of the Council of Europe since 1970, it was only in 2011 that Pope Benedict XVI decided to open the Vatican to a Moneyval review. At the time, that decision was driven by the very real prospect that if the Vatican didn’t do something to signal its commitment to playing by internationally accepted rules, it could be “blacklisted,” meaning frozen out of markets and forced to pay exorbitant due diligence costs on transactions.

In other words, it was a classic example of how reform so often works in the Catholic Church — one part genuine desire for change, and one part strong external pressure.

The same analysis probably can be applied to the latest move by Pope Francis to bring the Vatican’s foundations under control — a move many will consider long overdue, but perhaps better late than never.