Where Failure Is Rewarded

By John Plender
Times Literary Supplement
April 10, 2012

http://www.the-tls.co.uk/tls/public/article1009146.ece

T he finances of the Church of Rome are notoriously opaque, but at least one thing about them is clear. The ability to deploy the large contributions of the Catholic laity for charitable purposes has been seriously impaired as a result of huge payments made to the victims of sexual abuse by the clergy. The bill in the United States alone is close to $2 billion. So a scandal which has severely undermined the credibility of the Church in the US and Ireland, while causing considerable embarrassment elsewhere, has cast a spotlight on the lack of transparency and accountability in the Church’s handling of the regular donations of the world’s 1.2 billion Catholics.

The charge sheet outlined in Jason Berry’s exploration of the financial impact of this crisis, which looks primarily at the US, is not pretty. His starting point is Boston, where the former Archbishop, Cardinal Bernard Law, and a clutch of auxiliary bishops failed to act against child-molesters while reaching court settlements that muzzled the victims. The predatory priests were given psychiatric therapy and then recycled to other jobs where they had access to more potential victims. When details finally emerged in 2002 courtesy of the Boston Globe, Pope John Paul II felt obliged to apologize, but exonerated the bishops, declaring that “a generalized lack of knowledge, and also at times the advice of the clinical experts, led bishops to make [the wrong] decisions” – a notably slithery shifting of blame. The Pope also turned down a request by US bishops for permission to defrock severe sex offenders. When Cardinal Law finally resigned as Archbishop, he landed a plum church job in Rome.

There followed an ineptly conceived and even more ineptly executed plan to sell off assets and close parishes under Law’s successor, Sean O’Malley, and his Vicar-General, Richard Lennon. This prompted a vigil movement. Angry parishioners occupied churches, many of them financially viable, that were scheduled for closure. In Boston, O’Malley was reluctant to bring in the police to eject them. Not so elsewhere. And when Richard Lennon subsequently became Bishop of Cleveland, Ohio, a diocese plagued by financial scandal under his predecessor, he had to have a police escort when saying final Masses at closing churches. The Boston vigilantes, meanwhile, took their case to Rome, where it became lost in a canon law hall of mirrors.

This broad theme was repeated with variations across the US, with some dioceses seeking protection from creditors under Chapter 11 bankruptcy. In other cases, most notably Boston’s, parishioners’ donations for clergy pension funds were diverted into meeting the cost of legal settlements, leaving the pension funds with big deficits. Nobody told the parishioners.

The reason for this lack of transparency is that bishops in the Catholic Church enjoy huge unaccountable power, especially in relation to money. The funds provided to them by the parishes are not subject to audit. Disclosure requirements of the diocesan finances are minimal. The attitude of the Catholic hierarchy to the laity is summed up in the old adage: pray, pay, obey. As for the bishops’ accountability to the Holy See, it is rudimentary, consisting of an unaudited five-year statement of financial condition.

Some of the biggest sums in the system come from Peter’s Pence. This is provided by parishes across the developed world and is billed as the pope’s fund for assisting people in dire need. Yet in practice it has been used for many other purposes, such as plugging operating deficits and making good losses from Vatican blunders, including the Vatican Bank’s involvement in the collapse of Banco Ambrosiano in the 1980s. There is little disclosure of the uses to which the Holy See puts the contributions, which in 2009 amounted to $82.5 million. And Jason Berry rightly describes the Vatican bank, which was involved in money laundering for the Mafia at the time of the Ambrosiano debacle, as a black hole, making no appearance in the financial statements of the Holy See. The Vatican bank remains controversial as a tax haven, which once again attracted the attention of the Italian authorities in 2010 over alleged breaches of money-laundering rules.

A curious feature of the Catholic hierarchy is the extent to which it operates as a cash economy, with envelopes full of notes constantly changing hands. This can extend right to the top. According to John Paul II’s biographer George Weigel, cited by Berry, it was not unusual for the Vatican bank to receive a call from the papal apartment in the morning, saying that the Pope needed a certain number of envelopes containing $20,000 or $50,000 by noon – gifts to bishops from Africa, Latin America and Asia. Or, to put it less kindly, perhaps, personal slush funds to be used at their complete discretion. Sometimes the direction of trade was the other way round. The lay faithful who were lucky (and rich) enough to attend John Paul II’s daily private Mass often left thousands of dollars in cash with a Vatican official. How this was accounted for one can only wonder.

Some of the book’s most damning allegations turn on the way the Vatican’s culture gave rise to more sinister dealings as the firesale of church assets accelerated. An important figure in the drama was Cardinal Angelo Sodano, the former Vatican Secretary of State, who ran the Holy See. Sodano, a militant anti-leftist and, like John Paul II, a scourge of liberation theology, had been papal nuncio in Chile, where he befriended the Pinochet family and openly supported the dictatorial regime. Of all the cardinals in the Curia, he was closest to Marcial Maciel Degollado, the charismatic Mexican founder of the Legion of Christ religious order. Maciel, who was eventually exposed as a serial paedophile and father of four children by two different women, was enthusiastically backed by John Paul, who saw his conservative brand of Catholicism as a valuable counterweight to liberation theology.

Maciel, a brilliant raiser of funds from rich Latin Americans, sought to buy support in the Vatican by distributing cash-filled envelopes and lavish gifts. When Sodano was appointed Cardinal, Maciel’s Legion of Christ paid for a party for 200 members of Sodano’s family. Equally important, the Cardinal used his power of patronage to help his nephew Andrea Sodano, an engineer who was a vice-president of the Follieri group which set out to buy church property on the cheap. The Cardinal busily glad-handed guests at the launch party for Follieri’s US business, while Raffaello Follieri, the colourful chief executive whose girlfriend was the film star Anne Hathaway, used his ties to the Vatican to help raise money from private equity investors. Follieri was further helped by a Vatican official who had been appointed to a post giving access to all documents on property from dioceses around the world.

When Follieri’s business ran into trouble and his backers suspected fraud, an FBI investigation established that Andrea Sodano had received $800,000 from the company for worthless engineering reports. Large sums had also been paid to Vatican officials for inside information about property sales. What they did with this money remains unknown. The FBI thought, no doubt correctly, that it would be a waste of time and resources to try to pursue them, but an FBI agent described them to Berry as “unindicted co-conspirators”. Follieri was sentenced to fifty-four months for fraud, money laundering and conspiracy. The Cardinal has not explained his involvement in this unsavoury tale, and has never given his side of the story in public.

An underlying problem here is that the Catholic Church, the biggest organization in the world, suffers from a fundamentally flawed system of governance. This problem is not, admittedly, confined to Catholicism. Many of those who make a career choice to eschew worldly goods are understandably uninterested in money, and impatient with the notion that priestly behaviour should be subject to the kind of internal controls that are normal in business. In the case of the Catholic bishops, they see themselves as spiritual successors to the apostles. For some, in the light of their management of predatory priests, apostolic succession is a laissezpasser which puts them above the law and accountable chiefly in the afterlife, which is not much consolation to the victims of abuse.

This emphasis on apostolic succession may also explain why the Vatican hierarchy has been so soft on cardinals and bishops complicit in cover-ups. What emerges clearly from Render unto Rome is that in the Catholic Church failure is constantly rewarded. In a particularly egregious case, Cardinal Francis George of Chicago, three years after the American Church’s introduction of a youth charter, put an accused paedophile back in ministry despite warnings from his advisory board. The priest reoffended, went to jail, and the archdiocese had to stump up for the victims. Cardinal George was promptly elected president of the United States Conference of Catholic Bishops.

In any commercial organization, a key to ensuring ethical behaviour is “tone at the top”. The same is surely true of any religious organization. And the question has to be asked: how could men of such strength of character as the present Pope and his predecessor have been so deficient in leadership and morally flabby in their handling of the sexual abuse scandal? As Prefect of the Congregation for the Doctrine of the Faith, the future Benedict XVI was initially slow in responding to the crisis. While brutal in his handling of some errant Catholic theologians, he found it hard to punish cardinals and bishops, as exemplified by his refusal to accept the resignations offered by two Irish bishops for their complicity in harbouring predators. As for John Paul, Berry refers with some justice to his “surreal dissociation” from the crisis and to his apparent indifference to traumatized abuse victims. There may be no wholly satisfactory answer to this fundamental question, but the corrupting effect of power without accountability in a flawed governance structure must be an important part of it, especially when, as in the old Soviet Union, death is the only form of succession planning for the man at the top.

Jason Berry, who clings to his Catholic faith notwithstanding, offers a narrative that is compelling and, in the main, convincing. He acknowledges the steps taken by the US bishops to improve protection for children. That said, he provides no hard evidence for what he calls the burgeoning gay culture in seminaries, or for the assertion that in some American dioceses, priests who are not part of the sexual culture are not promoted. Nor does he mention or criticize the report commissioned by the US bishops from the John Jay College of Criminal Justice, which saw no causal link between celibacy and sexual abuse. It argues that the problem was partly a reflection of the general increase in sexual licence in the 1960s and 70s. The implicit assumption that we can expect no more of the clergy by way of moral example than we can of the population at large has caused critics to call this “the Woodstock explanation”. The report also gives statistics suggesting that abuse has substantially declined. Yet a grand jury report in Philadelphia last year raised the possibility that predatory priests might still be serving in parishes with open access to the young.

On the prevalence of sexual abuse, time will tell. What is beyond doubt is that an organization whose governance is so hopelessly devoid of adequate checks and balances will inevitably be prone to further scandal, not least in matters of money. It is a depressing prospect for ordinary Catholics, who have been singularly ill served by their hierarchy in this squalid saga.

John Plender is a Financial Times columnist. His books include Going Off the Rails: Global capital and the crisis of legitimacy, 2003.