Pope's Finance Chief Talks Vatican Reform

By Francis X. Rocca
Catholic News Service
August 8, 2014

http://www.catholicnews.com/data/stories/cns/1403285.htm

Cardinal Pell (CNS/Paul Haring)

VATICAN CITY (CNS) -- Pope Francis wants a "poor church for the poor," but that "doesn't necessarily mean a church with empty coffers," said Cardinal George Pell, "and it certainly doesn't mean a church that is sloppy or inefficient or open to being robbed."

A month after unveiling a "new economic framework for the Holy See," including a host of changes to the Vatican's financial structures, the cardinal discussed the meaning of those reforms and the challenges to their implementation in an interview with Catholic News Service.

Cardinal Pell, a former archbishop of Sydney whom the pope named in February to the new office of prefect of the Secretariat for the Economy, spoke to CNS about a range of issues, including Vatican financial scandals; the need for more transparency, "checks and balances" and oversight by laypeople; efforts to internationalize the Vatican bureaucracy while reducing its overall size; and the relative importance of his own role in the church's central administration, the Roman Curia.

The cardinal, who sits on the nine-member Council of Cardinals advising Pope Francis on reform of the Curia and governance of the universal church, also spoke more generally about what the church can learn from, and teach to, organizations in the secular world.

The interview took place Aug. 5 in the cardinal's office in St. John's Tower in Vatican City.

Q: Let's say that a Catholic parishioner, someone who contributes to the church financially and in other ways but doesn't have any specialized knowledge of finance or the history of the Vatican in that area, were to come to you and say, "Your Eminence, would you explain to me generally what it is you're doing now in Rome and why is it necessary?" What would you say?

A: I'd say we're attempting to put into place the best available set of management practices. There are international standards for accounting and money management. It wasn't as though there was nothing here; there obviously was. The Holy See has very significant financial strengths. But all the appropriate, prudential systems and procedures that are acceptable across the world, we're introducing here. What might be some of those things? Regular audits: Before the end of the year we hope to appoint an auditor who'll be completely independent here and to whom anybody can have recourse. We're clarifying even further what I believe they call the "four eyes" principle, so that any significant piece of business cannot be conducted only by one person. We will be streamlining and improving budget procedures, we hope returning, within financial parameters, a whole lot of authority to the different congregations and councils. None of this is rocket science but we're very well aware that when people donate to the church they expect the money to be used wisely, for good purposes. Often, organizations grow and the sort of systems that were suitable in the past might no longer be suitable for the future.

Q: These are not small changes, these are big changes, and they are happening, a number of them, in a short period of time, as you well know. There was a pressing need now, right?

A: The cardinals before the conclave made it -- because of the unfortunate developments, leaking of documents, things like that -- the cardinals made it quite clear -- and the Holy Father is now backing our project completely -- that they wanted a re-systemization of the way things work.

Q: Is what's happening now what you envisioned and hoped for then, or have there been surprises?

A: It's much better than I'd hoped for.

Q: Any particular features that have been a particularly pleasant surprise?

A: The whole new system that we've introduced, whereby the secretary for finances reports directly to the pope, not via anyone else, and that the senior level of management, we have laypeople with the cardinals as full and equal voting members. And we have the Holy Father who is completely backing the project.

Q: You report directly to the pope.

A: That's right.

Q: But you also report to the Council for the Economy.

A: I report directly to the pope but the council is the policymaking body. I can't take initiatives which either they haven't proposed or will not validate. It's a little bit like a university senate, and then the chief executive of the university has got to persuade the senate, and they're quite capable and do give explicit direction to the executive officer. And once again, that is another example of the separation of powers, diffusion of authority, so it would be quite impossible for any one person, myself included, to have some sort of dictatorial control.

Q: And of course that council is almost half composed of laypeople.

A: Eight cardinals, seven laypeople, both cardinals and laypeople from many different nations.

Q: Why did Pope Francis choose you, do you think?

A: You'd have to ask him. I was on the old committee, there were 15 cardinals, and you might say I'm the last man standing, because many of the others who were, like me, battling very seriously for reform, are now retired: Cardinal (Joachim) Meisner, Cardinal (Roger) Mahony, Cardinal Francis George is finishing up, Cardinal (Antonio Maria) Rouco Varela in Madrid. And I'm still going.

Q: Pope Francis said, practically at the start of his pontificate, that he wanted a "poor church for the poor." Do the internal reforms in the Vatican in this area tie in somehow with this evangelical emphasis? Is it simply that the church needs to get its house in order so that it can be credible in calling for charity and social justice? Or is there even more to it?

A: All of those things are there. As one Protestant leader from the United States said to me, he said he was praying for us so that we would be a model and a good example and not the cause for occasional scandal. And I agree with that. But if we are going to help the poor we need to have the wherewithal, and the better we manage our finances, the more good works that we can do. I remember Margaret Thatcher's comment, that the Good Samaritan, if he hadn't been a little bit of a capitalist, had his own store of money, he couldn't have helped. We can do more if we generate more.

Q: A poor church doesn't mean a church with empty coffers?

A: It doesn't necessarily mean a church with empty coffers, certainly not, and it certainly doesn't mean a church that is sloppy or inefficient or open to being robbed.

Q: You mention scandal. A lot of people today, when they think about scandal in the church, they think not about money but about the sexual abuse of children, and the mishandling of those sexual abuse accusations by bishops. And of course, these scandals have had a huge financial impact on many local churches, including in Australia. One of the first concrete reforms the pope made, at the suggestion of the Council of Cardinals on which you sit, was to establish a panel on child protection. What has the church learned from these sexual abuse scandals, and do those lessons inform the financial reform you're implementing now?

A: When I was in Australia as archbishop of Sydney I would sometimes say to people when we were moving through a problem area: "Anything we do, we must realize that it can appear -- that it is likely to become available to the press." Now, that's a negative reason for doing something, but generally we're committed to the principle of transparency, and we need to have clear, just procedures and to follow them, and we no longer live in an age when we can bury most of what we're doing.

Q: You talked about "separation of powers," and you've said that what's so new about these financial reforms are the structural changes, establishing different focuses of authority and checks and balances in the Vatican financial system. Could you give an illustration of how these will work under the planned reforms, precisely the kinds of mishaps or improprieties that the checks and balances are supposed to prevent?

A: We'll start with the IOR, the (Vatican) bank. That's had a checkered history. It's certainly moving in the right direction now. But many years ago, those two bankers (Roberto) Calvi and (Michele) Sindona were brought in. They'd done a lot of good work for the church but they had criminal connections. Now, for example, we have a body called the AIF, Autorita di Informazione Finanziaria (Financial Intelligence Authority), and so before anyone now is appointed to the Vatican, these experts check out their financial background. So this is one practical improvement.

Q: Peter Drucker, the eminent management thinker, once wrote that there were two "basic solutions to the problem of institutional organization for survival and efficiency." One of them, he said, was exemplified by the United States Constitution, with its "system of checks and balances between organs constructed upon contrasting principles of rule." That sounds a bit like what you were talking about. But he said the other kind of system was based on a "central organ of coordination, decision and control" that delegates executive work to smaller, specialized bodies. And his prime example of that was the Catholic Church, along with the Prussian army and General Motors. If he was right about that dichotomy, are we seeing something like a fundamental constitutional shift in the governance of the church, at least with regard to finance?

A: Well, I'm not sure that technically he is right to describe the church as being like the Prussian army. Because you see the bishops' powers are not delegated from the pope; the bishops have their own powers as successors of the apostles. And secondly, the Catholic Church is most unusual because it's so flat. Now, I'm sure the Prussian army had those generals in charge of regiments, then deputy commanders and commanders. Well, we don't have any. Even the archbishops have very, very limited powers to intervene when they're metropolitans. We're a very flat organization. The individual bishops respond to the pope, and I fully understand this and I want to maintain this authority and independence; I think it's more congenial to, you might say, the flowering of the prophetic spirit, rather than having individuals smothered regularly by national or continental conferences.

Q: To be fair to Drucker, he also wrote that "no other organization to this day equals the Catholic Church in the elegance and simplicity of its structure. There are only four layers of management: pope, archbishop, bishop and parish priest. Armies have 10 layers, and General Motors close to 20. And what in business is called 'central staff overhead' -- for the most transnational of organizations and one serving close to a billion members worldwide -- numbers 1,500 people in Rome, far fewer than are employed in the headquarters of the large American corporation."

A: Sure, and I'm very keen -- and I suspect the Holy Father is -- to keep it that way. We don't want big Roman bureaucracies, apart from the fact that we couldn't pay for them. But I think as a matter of principle, practical authority should be exercised by bishops. And the principle of subsidiarity -- it's a concept that's not much used in the English-speaking world -- is a result of Catholic thinkers -- it's talked about quite significantly here in Europe, especially the German Catholic thinkers -- but it has some very real significance in the Catholic Church. So there's got to be scope for intervention, assistance, suggestions from the center, but many, many things that can be done locally should be done locally.

Q: In the short term, during this reform process, we're seeing a net increase in the number of offices and officers, but can we be confident that when it all shakes out the end result will be a leaner Vatican?

A: Well, it's difficult to achieve those things; that's certainly the ambition. And we will retrain and try to incorporate. But certainly, for example, we've got a big number of people in many different places working under the heading of human resources. We've got quite a number of people in different groups working on investment strategies. They are the two immediate areas where slowly and over the long term there will be reductions in staff. There'll be new departments, new areas, some of the new bosses will come from outside, but over all, in the longer term, and we'll move very sensitively and in consultation, the idea is that we'll have fewer rather than more staff.

Q: Is it fair to assume that in a pontificate headed by Pope Francis we're not going to see any Jack Welch-style layoffs?

A: I'm not sure who Jack Welch is, but the Holy Father doesn't want that and we won't work like that. It is possible -- possible, not decided -- there will be natural (attrition) as there is in any organization -- and we might offer early retirement packages for those who want to take them. No, there'll be no big purge.

Q: Is it reasonable to assume that the current reforms in your area, including this emphasis on checks and balances, a heightened leadership role for the laity -- that these changes exemplify the spirit of the broader reforms that you're working on now as a member of the Council (of Cardinals), which will take the form of a new apostolic constitution for the Roman Curia eventually? In other words, are we getting a sort of preview at all of what the Vatican as a whole is going to look like once Pope Francis and his collaborators are done?

A: Well, we haven't made a whole list of particular recommendations; the pope, only one man, can make those decisions. And also, of course, in different roles, clergy, the religious and laity assume a different importance. And in the English-speaking world it's quite customary that the overwhelming majority of people on the finance councils are laypeople, and laypeople with expertise. So I wouldn't anticipate, in those areas where the teaching role of the bishop as a custodian of the tradition is absolutely central, I wouldn't anticipate that there would be lay voting members there; for example, in the (Congregation for) the Doctrine of the Faith. But on the International Theological Commission there are, I believe, a number of lay theologians.

Q: But this idea of balance of powers or checks and balances, is this a principle maybe that is somehow in the spirit of the broader reform?

A: There's a great deal of that already in the Roman Curia, as well as in the dioceses. The diocesan structure is the first example of that, but there are different congregations, councils in Rome. There's sometimes a creative tension between them. You know, the church has been going for 2,000 years and has survived so it's not as though we're starting from scratch. Nobody's wanting to reinvent the wheel.

Q: One question about the structure of the Vatican. The Secretariat of State has long been considered the top body in the Roman Curia.

A: Which it remains, as such.

Q: And its head is typically called, at least by journalists, the prime minister of the pope, the highest Vatican official under the pope. But now that the vital area of finance has been handed over to your office, and you have even said that you'll be setting the budget for the Secretariat of State.

A: Only in consultation with them.

Q: But, as you know, some in the Italian press are saying now Cardinal Pell is the "numero uno," the pope's No. 1. What do you say about that?

A: I'd say that's nonsense, from every point of view. I don't think money is the most important work of the church. If you're looking for inadequate political analogies, you might look at, say, the Westminster system, as something like a prime minister and a treasurer. But that's an analogy, it's not an exact model.

Q: But on an organizational chart now, the Secretariat for the Economy is now likely to appear alongside the Secretariat of State as kind of a peer, parallel office, which is certainly new. Does that mean anything for the internal dynamics of the Vatican now or in the future?

A: I'd imagine it will mean continuing creative dialogue. But the church is not first of all about money. Nearly every other area of life is more important than the money. Which is not to say that money is unimportant; it's got to be properly managed. But we money people should know our place, and in the Catholic, Christian hierarchy, money, that tainted thing, is far from the top of the list.

Q: You mentioned a moment ago that, in the English-speaking world, laity take a big role in the financial area. And it's evident to everyone that the reforms under Pope Francis in the financial area have coincided with a marked reduction of the previously heavy Italian presence in the relevant offices and bodies. For instance, the financial watchdog agency that Pope Benedict established had five members, all Italians, until two months ago; now it only has one Italian. You and your secretary general, Msgr. (Alfred) Xuereb, are native English-speakers. The Council for the Economy has only two Italian members and its secretary is English. And so forth. How much about the reform process is about, in effect, reducing or moving away from Italian influence on Vatican finances?

A: I wouldn't put it quite like that, but we're internationalizing. Considerable progress was made under the Italian Paul VI and John Paul II. I think one of the less desirable developments -- I think it had nothing to do with Pope Benedict -- was that this process of internationalization in a certain sense went backward in the time of Pope Benedict. For example, there were more Italian cardinals at the election of Pope Francis than there were at the election of Pope Benedict. Now in this day and age I think you'd need to establish that this was appropriate.

Q: So it's not so much a problem with Italy per se, just a question of becoming more international.

A: Exactly.

Q: But does the fact that the Vatican is located inside, surrounded by, Italy, pose a special problem, dangers of conflict of interest?

A: No, there's a lot of loose talk about conflicts of interest. Conflicts of interest disappear when they're declared or people don't vote or they abstain from discussion. And then of course if there's an absolutely radical conflict of interest they might not join a body. But there's no doubt in the past, with a heavy centralization of authority, there were radical conflicts of interest. You know, "nemo iudex in causa sua": no person should be judge in his own case, if there's a problem. We need to continue to share out and avoid conflicts of interest.

Q: And the case with the IOR of Lux Vide might be an example of that?

A: Yeah, it might be.

Q: Is it reasonable to assume that this increased internationalization in your sector is also going to be happening throughout the Vatican?

A: I don't know, but I hope so. But you've got to find people who are prepared to work here. We have two official languages in the finance area, English and Italian, but the working language in most areas of the church, at least for the moment, is Italian. So you've got to have Italian speakers. And you've got to have expertise. One of the principles I hope we will be recommending is the presence of expertise in the leadership of the different areas of the church, say, councils and congregations. I won't give any examples.

Q: But given the location, given the history, is it reasonable to assume that for the foreseeable future the Vatican's overall staff will remain disproportionately Italian?

A: Well, I don't know whether "disproportionately" is the word. The pope is the bishop of Rome. Now, the vicariate runs the city of Rome, the church facilities there, but the pope lives in Italy. I think there will always be many Italians working in the Curia, and I think that's appropriate, so I would not call that disproportionate. But it doesn't correspond with the percentage of Catholics the Italians constitute.

Q: One of the initiatives of your office regards Vatican media. You have said there ought to be a greater emphasis on social media and at the same time a slimming down of certain Vatican media organs. So can we expect eventually cutbacks at some of the so-called old media entities, particularly the Vatican newspaper and Vatican Radio?

A: I'm not on the media committee. I stand by what I've said, but we'll just see. It's a sensitive area, but we'll just see what the media committee recommends, and no doubt if they recommend changes they'll be implemented sensibly and sensitively. But I think it's axiomatic if a disproportionate amount of expenditure is going on a form of information-giving that's not used much by people, that doesn't seem to me to be good business.

Q: Will the media reform committee at all deal with the question of the Vatican's dealing with outside media outlets?

A: Very possibly, but that'll be up to them.

Q: This is a parochial question of interest to my guild, but there's a question of whether the outside outlets will be consulted and asked what we think.

A: Could I suggest you write to Lord (Chris) Patten and request that?

Q: You've said these reforms are largely about bringing the best practices in administration and accounting to the financial activities of the Vatican. And, as we know, there's an increased role for non-clerics, for the laity, in leadership in this area. So it's clear that you and the pope think the church has something to learn from the secular world in these areas.

A: Yes, absolutely, but that's always been the case. Look at, right from the very start, what the church learned from Greek philosophy: Plato, Aristotle, the Socratic method. The then-Cardinal Ratzinger and Pope Benedict said that it was absolutely providential in the development of the church that there was this early marriage of reason with faith. Look what the church learned -- this is a little more controversial, and in many ways they didn't follow the model -- but the model of church government certainly learned a great deal from the Roman Empire. I think "diocese" was a secular Roman term for an area. Now, we will make every effort to make sure there aren't too many Anglos in the financial leadership; it will be international. But many people would claim, and it's for others to judge, that the Anglos do have some capacity for management. A church that is alive is always learning. Spectacular examples of that are the media. Another example of that I think is in finance. One of the great challenges for the future will be bioethics. The church has got to bring to bear its perspectives and moral teachings on these scientific advances. The church is a living institution, and it's certainly got a good deal of ancient wisdom to offer, but a good church is always learning.

Q: The church has to learn from the world of business about these matters, but does the church have anything to teach the business world, not only with regard to ethics, but even in the practicalities of administration? The Catholic Church, to put it in very mundane terms, is the largest and oldest operating organization of any kind on earth. It's a lot older than McKinsey & Co. Presumably it has some of its own organizational wisdom to impart.

A: For sure. We've got the book of Catholic social teaching; there's no equivalent to that anywhere. In the part of the world I come from there was one center where they were preparing young people for -- it was a very, very good center -- for participation in public life moving from a set of Christian principles. Now, it was sponsored by the evangelicals, but the only source for their social thinking which was readily available was the document put out by the (Pontifical) Council for Justice and Peace on Catholic social teaching. There's a lot of wonderful thinking. I mentioned subsidiarity. That was a concept that, both in 1891 with Leo XIII and then in 1931 with Pius XI, most of the thinking for both those documents was done by German Catholic thinkers. Catholic thinking on the just-war theory -- controversial but who's got a better framework for arguing the pros and cons of when you might or might not go into armed conflict? As a matter of fact, I saw one leader recently after he was being accused of war crimes, he said there's no such thing anymore as a just war. Well, we couldn't endorse that sentiment. So the church has a magnificent intellectual tradition, magnificent, but it only remains such if it continues in dialogue and continues to learn.

END