God’s Bankers

The Economist
July 5, 2012

http://www.economist.com/node/21558249


FEW things annoy Vatican officials more than lurid novels that depict the papacy as the secretive heart of a global conspiracy. Pope Benedict XVI’s most senior official, his secretary of state, Cardinal Tarcisio Bertone, this month accused journalists of trying to imitate the American writer, Dan Brown, author of the preposterous—and bestselling—“The Da Vinci Code”. But it was not reporters who put the papal butler, Paolo Gabriele, in a four-by-four-metre cell, accused of leaking a stream of confidential letters. Nor was it they who, the next day, fired the head of the Vatican Bank, Ettore Gotti Tedeschi, and published a blistering statement accusing him of failing to do his job. An Italian police investigation, in which documents were seized from Mr Gotti Tedeschi on June 5th, has stoked fears of more scandal. He has since been quoted as saying he fears for his life.

Behind the rows is an intense and vituperative power struggle to determine the nature of the next papacy. It is largely waged in and around the Vatican’s financial institutions. The Institute for the Works of Religion (IOR), to give the Vatican bank its formal title, is no stranger to controversy. In the 1980s it was accused of involvement in financial skulduggery and responsibility for the still-mysterious death of a prominent Italian banker, Roberto Calvi.

Now it is seeking to clear its name of involvement in money laundering. According to La Repubblica, a newspaper, a draft report of the Council of Europe gives the Vatican a clean bill of health on all but eight of 49 criteria. More than ten objections would expose the Vatican to the risk of being blacklisted by the Financial Action Task Force, a body that polices banks. (A Council of Europe meeting in Strasbourg on July 4th reviewed the report; the Vatican now has a month to respond.)

Mr Gotti Tedeschi had originally been brought in with Cardinal Bertone’s blessing. But he opposed a new law, backed by the cardinal, that increased the secretary of state’s powers at the expense of the existing—independent—oversight body, the Financial Information Authority. The change fitted a wider pattern. Since returning to the Vatican six years ago, Cardinal Bertone has won ever-greater clout.

Stumbling on a rock

The 77-year-old prelate is not a true Vatican insider. He was the pope’s right-hand man when the then Cardinal Joseph Ratzinger headed the department that enforces doctrinal orthodoxy. For the rest of his career Cardinal Bertone was a pastoral cleric. Underlings in the secretariat resent the vigorous, soccer-loving former archbishop for his lack of diplomatic experience.

Intrigues are not unusual in the Vatican. What makes this conflict special, however, is Cardinal Bertone’s repeated grabs for the levers of financial control—and perhaps, his foes say, for the patronage that goes with them. Last year he tried to make the IOR rescue a renowned but debt-stricken hospital. Mr Gotti Tedeschi’s refusal to do that heralded their later rows. The leaked papal letters also show that Cardinal Bertone tried unsuccessfully to bluff the then archbishop of Milan into resigning a post that controls the city’s Catholic University.

To strengthen his position further, Cardinal Bertone promoted close associates and former subordinates from the region around his former diocese of Genoa and his native Piedmont, also in the north-west of Italy. He put one in charge of the Vatican’s treasury and appointed another to run its central bank (not the same as the IOR). A third Bertone confidante has been made governor of the Vatican City State, the Holy See’s temporal power-base. That also carries great financial clout. All three men were made cardinals in February.

These promotions intensified suspicion among Cardinal Bertone’s critics that he was trying to pack the next conclave: the assembly of cardinals that will elect the next pope. Sombre hints suggest that this vote may come sooner than expected. According to another leaked document, the cardinal archbishop of Palermo had said that the 85-year-old Benedict would be dead by November.

For a secretary of state to ascend to the throne of St Peter is rare: the only example since 1667 was Pius XII, in 1939. Whatever his ambitions, Cardinal Bertone has proved a singularly divisive figure. The early years of Benedict’s papacy saw a stream of diplomatic gaffes, which many Vatican officials blamed on his secretary of state’s lack of experience. Little has improved. Some had hoped that, as a semi-outsider, he would bring innovation and transparency to a central bureaucracy last reformed in 1967. But the leaked correspondence suggests that, on the contrary, he has acted to protect vested interests, for example dismissing a prelate who had helped save more than ˆ40m ($50m) by scrapping cosy procurement arrangements.

Some unconfirmed reports suggest that the cardinal has offered his resignation but the pope has refused to accept it. On July 4th, before going to his summer retreat, Benedict issued a rare public statement decrying “unjust criticism” of Cardinal Bertone and praising his “discreet support” and “enlightened counsel”, which were “of particular help in recent months”. The pontiff may fear that, by dropping his chief aide, he would be tacitly admitting to poor judgment in appointing him. But as long as the secretary of state stays, the infighting in the Vatican seems likely to continue, and the outside world’s grave concerns about its administration will remain.