No matter how it’s framed, the Vatican reform bulletin is a mixed bag
ROME – Every child knows that bringing a report card to their parents is, to a large extent, a challenge to frame things their own way.
A disappointing C in English?
“Everyone knows Mrs. Smith is the toughest grader in school… it’s like an A to anyone else. “
A surprising B + in math?
“It’s because of all your help, dad. By the way, can we talk about my allowance? “
With that in mind, the Vatican did a heroic job yesterday in trying to write its latest newsletter for Moneyval, the Council of Europe’s financial crime watchdog unit. He praised the positive things the Moneyval team had to say, including building a legal framework now in line with best practices and generally high levels of international cooperation.
When it came to something critical, a lengthy interview with Italian banker Carmelo Barbagallo, chairman of the Vatican’s Financial Supervisory and Reporting Authority since 2019, described the findings optimistically as “an encouragement to do even better “while noting that even the Vatican’s lower,” moderate “efficiency scores on only six of the eleven key measures compare favorably to other states, including some that are much larger and more financially advanced.
This is all fair as far as it goes, and the Vatican certainly deserves credit for participating in the Moneyval process in the first place. When this decision was taken under Pope Emeritus Benedict XVI, it was the first time that the Vatican submitted to an independent external review of its financial operations – a step forward, in other words, from the historical fetish of the Vatican. to protect its own sovereignty.
(Okay, the Vatican didn’t have much of a choice. Right now, any state that refuses to participate in such external reviews is likely to be considered a financial pariah, which could mean being excluded from the currency markets and investments or pay much more transaction costs to cover the presumed risk. Nevertheless, the Vatican accepted the reality and began to revise its financial rules.)
Yet there are troubling elements of Moneyval’s findings that cannot simply be hijacked or attributed to “areas of growth,” particularly for financial reform under Pope Francis that is said to have been underway for almost a decade. decade.
On the one hand, the Moneyval team found that the Vatican still does not have a clear idea of the risk it faces. He correctly identified the danger that his bank could be used to launder the proceeds of crimes committed by foreign entities, Moneyval said, but still underestimates the risk of such crimes by insiders – that is, insiders. middle and senior officials, including bishops and cardinals – seeking personal gain or other benefit.
A financial regulator I spoke with yesterday said this was a serious red flag.
“We live in a world of limited resources,” he said. “If you haven’t honestly identified the risks you face, you can’t properly allocate your resources to deal with them. What people in my job want to know when looking at a report like this is, “Do they have an honest risk assessment, yes or no?” “”
The most chronic source of frustration for Moneyval evaluators, however, is that the speed with which the Vatican passed new legislation has not been matched by a similar aggressiveness in the prosecution.
If it was a “Law and Order” episode, the Vatican would probably get an A for “law” but a D for “order”.
Moneyval found the Vatican prosecutors’ office to be understaffed and understaffed, and said it was slow to bring cases to court. He also warned that because some Vatican prosecutors also practice law in Italy, they may have conflicts of interest and recommended hiring lawyers who work exclusively for the Holy See.
Only a handful of cases have been tried in the past decade, the report notes, and also concludes that in those rare cases, the penalties imposed were so weak that they created no real sense of deterrence.
To date, not a single Vatican prelate, that is, someone in the rank of archbishop or cardinal, has ever been charged with a financial crime. In the rare cases where lower level figures have been prosecuted, most of the clergy have not even been called to testify. Instead, what we’ve seen is typically the age-old pattern of little fish taking the tumble while top officials are sheltered from blame.
Pope Francis recently took a step toward ending this pattern by depriving cardinals and bishops of immunity from criminal prosecution, but the ability to do something is still not the same as actually doing it.
The Moneyval valuation comes as the Vatican continues to grapple with the fallout from its London real estate scandal, a $ 425million debacle that saw several Vatican members fired and a pair of Italian financiers indicted for allegedly billing excessive fees. Although there is a written record showing that the transactions were approved by two successive “substitutes” in the Secretary of State, i.e. the archbishops, and by the Cardinal Secretary of State himself, To date, there is no indication that any of these clergymen are under investigation, let alone. likely to be charged with a crime.
Many years ago I remember asking a veteran clergyman what it would take to achieve real Vatican reform.
“Head on pikes along Via della Conciliazione,” he replied, referring to the wide Rue de Rome that leads to St. Peter’s Square.
“That,” he said, “they would understand. “
Although perhaps a little overestimated, the point is understood: until people see someone high up in the system held accountable for financial crime, the result is probably that the “reform” is solid. and that fury means relatively little.
As for London, the Moneyval report says the suspects are expected to be brought to justice by summer 2021. It is now early summer 2021 and so far no date has been set. for legal proceedings.
You could tell people are watching… and, so far, Moneyval’s note for Francis’ financial reform can probably be described as “incomplete.”
Follow John Allen on Twitter: @JohnLAllenJr