VATICAN CITY (VATICAN CITY)
The Pillar [Washington DC]
November 10, 2022
By The Pillar
Former Vatican auditors say they have evidence of widespread financial corruption – and a new lawsuit will surface it.
Two former Vatican officials say their newly filed lawsuit will prove widespread financial corruption among both Vatican cardinals and the leadership of the Vatican’s national police force.
The former Vatican staffers say they were appointed by Pope Francis to get Vatican finances in order, and were fired when they discovered corruption, and saw Cardinal Angelo Becciu falsely accuse them of spying.
Libero Milone, the first person to hold the position of Vatican auditor general, filed suit Nov. 4 against the Vatican’s Secretariat of State, claiming he was unjustly fired and unfairly threatened with criminal prosecution, because of discoveries he made while doing his job.
The Vatican’s ousted auditor was forced from his post in 2017 under threat of prosecution for spying and misappropriation of funds, although there were three years left on his contract.
Milone and a former deputy are suing for more than 9 million euros in compensation for loss of earnings, damage to their reputations, and emotional suffering
Speaking at a press conference Nov. 8, Milone and former deputy Ferruccio Panicco told journalists that they jointly filed a lawsuit only after Milone spent years asking Vatican officials to clear his name.
Milone alleged that Vatican prosecutors have retaliated against his efforts by opening a new investigation into allegations of “spying” and abusing his office.
The former auditors said that when their Vatican City lawsuit gets underway, they will submit Vatican records detailing financial misconduct, misappropriation of funds, and embezzlement by senior Vatican officials.
Among those implicated will be curial cardinals and the former head of the Vatican’s Gendarmerie police force, the former auditors claimed.
Milone was appointed by Pope Francis as the Vatican’s auditor general in 2015, and held the post until June 2017.
He was ordered to resign by Cardinal Angelo Becciu, who was then sostituto of the Secretariat of State — serving effectively as papal chief of staff.
The Dutch-born businessman came to the job with sterling credentials: he was previously chairman and CEO of Deloitte’s Italian operation, and a member of the firm’s global management board in New York. Before he took the Vatican job, he had spent 32 years at Deloitte, with stints managing the firm’s global HR and aviation divisions.
Milone also had non-profit executive audit experience when he came to the Vatican. He had served on the audit committee of the U.N.’s World Food Program, and expected that would translate well to his work in the Roman Curia.
But while Milone was appointed to pore over Vatican financial records, Becciu accused the accountant of exceeding his mandate — of “spying” on the private finances of senior curial figures, including Becciu himself.
Speaking to The Pillar this week, Milone said that he only decided to sue after years of trying to persuade the Holy See to vindicate his reputation.
“I did my job to the best of my ability, and I think I did a good job,” Milone told The Pillar. “I believed in a code of ethics — and I respected the code of ethics as laid down by the U.K.’s Institute of Chartered Accountants, of which I am still a member.”
“I’m not the sort of person who bends at the first turn. I was kicked out, if I can use that expression, simply because I came across things someone didn’t want me to see.”
“I had a right to understand why a criminal decree was presented to me on June 19 [2017], saying I was spying on cardinals, mishandling money, and all this sort of stuff — but this never came about.”
Instead of getting answers, Milone said, he was put off at every turn.
Becciu, the cardinal who had Milone fired, was himself sacked from his curial roles in September 2020, and forced to resign the rights and privileges of a cardinal.
The cardinal’s firing reportedly came after Pope Francis was presented with a dossier of evidence that Becciu had committed serious financial crimes. In July 2021, Becciu was indicted for financial crimes, along with nine other individuals connected with the Secretariat of State, and he remains on trial.
Milone said he was fired because he was digging for the kind of records which eventually got Becciu indicted – looking in Becciu’s department for records of questionable investments and illicit financial practices.
“When we started to examine the financial statements of the Secretariat of State in March 2016, we were handed a piece of paper showing roughly 800 million euros in investments. So we asked for the information and for a good many months I never got the information.”
“Now I know why they weren’t giving it to me, on the basis of what happened with [London investment property] Sloane Ave.”
Milone explained that he believes Becciu and his collaborators in the Vatican were especially afraid after he discovered that APSA, the Holy See’s property portfolio and sovereign wealth manager, had already violated curial regulations while speculating on the London property market.
“We’d come across this, and so evidently [the Secretariat of State] were very worried we would find out about Sloane Ave. and a range of other investments,““ the former auditor explained.
In a statement issued through his lawyer, Cardinal Becciu told The Pillar: “At this time, His Eminence would like to confirm what he already told the court on the subject, which once again He confirms as truthful and an honest account of the whole story. He doesn’t feel the need to add anything to it nor would he like to further litigate the matter on the press, as he fully answered on it in court.”
Milone told The Pillar that even before he arrived at the Vatican, Becciu was skeptical of financial reform efforts, setting the stage for his own eventual ouster.
The former auditor said that in his view, Cardinal Becciu first “panicked” about Vatican financial reforms in 2015, when Cardinal George Pell, then-Secretary for the Economy, announced an external audit of all Vatican balance sheets. That audit was to be handled by PricewaterhouseCoopers (PwC).
Shortly after the PwC audit began, Cardinal Becciu issued a memo announcing it was canceled — a move Becciu lacked legal authority for, because the audit did not fall under the supervision of the Secretariat of State. The cancelation stuck anyway.
Milone said that Becciu canceled the PwC audit when the firm sent letters to banks and investment houses, asking for lists of Vatican accounts, deposits, signatories and similar details.
“When they saw this list [of requests], I think they panicked, because they realized these guys would discover a lot of things they didn’t want to tell them — that’s why PwC was sacked.”
After PwC’s dismissal and the audit’s cancellation, the Secretariat of State put Milone’s office in charge of conducting a new audit process.
“I was asked to take on the work by Becciu, not by Parolin. There was a statement recently made that Parolin decided [to ask Milone’s office to conduct the canceled audit] — Parolin decided nothing. Parolin was called in after Becciu had spoken to me about doing the work.”
Milone said he told Becciu, “I wasn’t hired to do this,” but that if necessary, he and his team were qualified to undertake the audit.
“But I also said, ‘By the way, you should know I will do exactly the same things that Pricewaterhouse would have done,’ which worried him.”
Eventually, Milone said, Becciu’s anxiety led to the false charges that he was spying.
While Becciu told a Vatican judge that the decision to oust Milone in 2017 was made by the pope personally, Milone said that Becciu had him pushed out.
In the lawsuit filed Friday, Milone argued that Becciu accused him of “spying” because his office was actually doing legitimate auditing work — and that he personally briefed Pope Francis on curial corruption.
“What it was,” Milone told The Pillar, “is that I discovered that there were cardinals putting money in their pockets, they were doing strange things, and my reporting line was to the pope, so I reported everything to the pope.”
Speaking at the Nov. 8 press conference, Milone said his work uncovered the misappropriation of hundreds of thousands of euros by individual cardinals and prelates, fictitious building projects, and the use of a Church institution to allegedly launder money to Italian political parties.
“Evidently, Becciu and his friends must have come across these reports because he was the pope’s chief of staff at the time, and got worried because ‘this guy’ was putting these cardinals in difficulty,” he told The Pillar.
“I spoke to Cardinal Parolin about this, because I was supposed to report to the pope, and the pope said he wanted me to make a report to Parolin as well, so I did. April 1, 2016, was the last time I met with the pope officially because they stopped me after that.”
“Regarding one cardinal, one in particular, who took a lot of money, when I informed the pope, the pope went through the roof and said to go to see him and get the money back. I said that’s not my job, and it wasn’t my job — my job was auditor, I’m not there to collect money.”
“But the pope said, ‘I’ll tell him, you just go and explain how you found out,’ and the cardinal did give the money back.”
“But these are the reasons for which I was apparently accused of spying.”
Milone told The Pillar that since his departure from the Vatican five years ago, he has been unable to secure another job because of the accusations Becciu leveled against him, and the attendant scandal.
“I can’t work because the executive search firms with whom I’ve worked before say, ‘Ah, but all you need to do is go on Google and they say you were spying — how can we present you as a candidate?’”
Milone told The Pillar that he maintained a “good relationship” with Cardinal Parolin after he was forced out, and that the two had met “12 or 14 times”.
“He apparently was trying to help me sort this thing out,” Milone said. “In the end, we asked for an amicable solution, because I have always claimed that I was forced to resign for reasons that were unfair.”
But Milone said that, while Parolin initially seemed willing to help clear his name, nothing happened.
“Then, in 2020, the Becciu scandal came about, which highlighted one of the reasons I was kicked out. So I said to Cardinal Parolin: Either you find a solution, or I am going to present a formal claim at the [Vatican City] tribunal.”
In the end, Milone told journalists on Tuesday, “Cardinal Parolin always appeared to want to help, but never helped.”
Ferruccio Panicco is a co-plaintiff in Milone’s lawsuit against the Secretariat of State.
Panicco, a long-time professional collaborator of Milone, was recruited to work with him at the Vatican in 2015, and was fired with Milone in 2017. He told the press conference Nov. 8 that the circumstances of his departure had led to grave personal consequences.
The accountant said that when he was fired, medical records kept in his office were seized by Vatican police. Those records showed that Panicco had heightened PSA levels, a key marker for prostate cancer. They also showed the results of medical tests Panicco underwent in the Vatican’s clinics.
Without the records, Panicco had to find a new urologist after he was fired, and repeat the medical tests he had already taken.
“I estimate that the delay in the diagnosis could be at least 12 months, and I think that without this delay in the diagnosis it would have been early enough not to have an incurable disease,” he told reporters on Tuesday.
Panicco has stage 4 prostate cancer. Despite requests to Cardinal Parolin and other officials for the return of his medical records, the documents still have not been returned.
“I think they — the Vatican — are guilty, not maliciously, of sentencing me to death for no reason, after a slow and significant suffering,” Panicco said.
Speaking to The Pillar this month, Milone argued that Domenico Giani, former head of the Vatican City federal police, played a central role in his departure from the Vatican.
Milone argues that Giani engaged in his own financial misconduct, and that when Milone discovered it, the police agent formally accused him of illicit spying, and may have bugged his office.
On June 19, 2017, the day he was forced to resign, Milone said he was presented with a criminal indictment from the Vatican City prosecutor’s office, which accused him of spying.
The document, examined by The Pillar, was based on a report filed by the Gendarmerie, after a seven-month investigation.
Milone recalls finding that his Vatican offices had been bugged and his office’s computers hacked. He has also claimed that while he made several complaints to Vatican police, the security breach was never investigated.
Speaking to The Pillar, Milone noted that Giani “had a reason to get me out,” because he had uncovered evidence of corruption in the Vatican police force.
The auditor told The Pillar that in the spring of 2016, he instructed his team to look into the prospect of money-laundering in the Vatican City State’s governing offices.
“When we were doing this, we found a very strange file called ‘sponsorships,’ and it was the apparent sponsorship of the refurbishing of Giani’s [Vatican] apartment,” Milone said.
Individuals, usually cardinals, who have the use of Vatican apartments are normally required to pay around 25% of their own refurbishment costs, and to have a project budget approved before work begins, with the individual responsible to pay for overspending.
“In Giani’s case, he had set up an agreement to do the refurbishment with a company not on the list of approved vendors of the [Vatican] Governorate. It was a company in Milan. The estimate was for about 270,000 euros, which was a lot of money. It ended up being more than 400 [thousand]. The notes in this file, which we checked, showed that the amount he would have had to reimburse was 170,000.”
“What we [also] found in this file were three bank transfers from the IOR bank account of the Gendarmerie to the Governorate for 170,000 euros to pay for the refurbishments. That was a ‘sponsorship.’”
There was no evidence that Giani had personally covered the reimbursement costs, as expected by Vatican policy.
Milone said he sent reports of what he had found to the pope, after his dismissal: “I sent him seven or eight letters, but he’s never replied.”
Giani could not be reached for comment.
Speaking to journalists on Tuesday, Milone said he was not convinced his reports reached the pope after their face-to-face meetings ceased in 2016, and that he believed Francis was persuaded to fire him the following year.
In Francis’ annual Advent address to the Roman curia in 2017, Francis made a lengthy digression in which he spoke about “persons carefully selected to give a greater vigour to the body and to the reform, but – failing to understand the lofty nature of their responsibility – let themselves be corrupted by ambition or vainglory.”
In what was widely understood to be a reference to Milone, Pope Francis lamented that “when they are quietly sidelined, they wrongly declare themselves martyrs of the system, of a ‘pope kept in the dark,’ of the ‘old guard’…, rather than reciting a mea culpa.”
Milone has not seen fit to offer a mea culpa for his work in the Vatican. His lawsuit aims to see the Holy See affirm that he doesn’t need to.
In the years since Milone’s departure, Cardinal Becciu has repeatedly asserted, including during the current Vatican trial, that the Secretariat of State’s financial arrangements were outside the remit of the Office of the Auditor General, and that Milone’s repeated efforts to scrutinize the department’s investments and officers was a breach of his mandate.
Milone flatly rejected that claim.
“I had a list of all the entities I was to examine, which I received three or four days after I was nominated, and the first entity on the list of 136 was the Secretariat of State, full stop,” he told The Pillar.
“After I left, Cardinal [Reinhard] Marx [coordinator of the Holy See’s Council for the Economy] in September 2017 updated the list, reducing the number of entities to 120, but again first on the list was the Secretariat of State.”
On Tuesday, Milone produced and distributed copies of the formal lists of entities which his former office was meant to audit. Both listed the Secretariat of State.
“I don’t know what Cardinal Becciu was talking about. I was doing my job — I had my instructions and I was doing my job.”
“We met with Becciu in the spring of 2016, when he didn’t want to show us the investments, and if it was true what he said [about the secretariat being outside of the auditor general’s remit], why did he receive me? Why did he show me an Excel sheet showing 800 million on it? Why did he demonstrate how they organized their accounting?”
At the end of last year, Milone said he told Parolin that he was “tired of waiting” for the Vatican to resolve his situation, adding that he planned to file a formal legal claim.
Parolin, Milone said, undertook to lift the pontifical secret which had been placed on the investigation into Milone. The idea, Milone said, was that once the investigation’s allegations were cleared up, he could restore his reputation.
Instead, Milone told reporters on Tuesday, when he met with the Vatican’s new Promoter of Justice, Alessandro Diddi, he was informed that the investigation into him had been reactivated and assigned a new protocol number — bringing to life the dormant investigation.
According to Milone, Diddi produced papers apparently seized from his old office as proof of his “spying.”
But the paperwork produced was a record of Vatican contracts with an American lawyer, Jeffrey Lena, Milone said, which he had gathered when the pope asked him for a report on external contractors.
Lena, from California, was used as an attorney and consultant by the Vatican for many years, including during the reign of Benedict XVI, and he is widely believed to have been the principal author of the McCarrick Report released in 2019.
Milone said he could not understand what the record was supposed to prove about him.
“I told them if they would actually look carefully in all the papers they had, they would find the actual report I sent to the pope,” Milone said. “This was something which they stumbled over and got wrong, clearly.”
More puzzling, Milone said, was when the prosecutors produced a report which they claimed would prove Milone had tracked GPS signals from the cell phones of three Vatican officials: Gian Franco Mammì, director of the IOR; Daniel Casey, a lay adviser to Cardinal Pell at the Secretariat for the Economy; and Tomasso di Ruzza, director of ASIF, the Vatican’s financial watchdog.
“Why in the hell would I trace these three people?” Milone said he told prosecutors.
“First, it’s nothing like something an auditor would do. Second, I’ve no interest — and if I wanted to speak to these people I just picked up the phone or walked across the road and spoke to them.”
“And third, I would have no idea how to get a report of this nature,” he said.
The prosecutors also allegedly challenged Milone with another document, which they said was a non-disclosure agreement signed by Milone with an external contractor.
Milone said he examined the document closely when he failed to recognize it, and said it appeared to be a photocopy of his signature imposed on the page.
More interesting, he said, was the date on the page.
“I said ‘Have you noticed the dates? I was appointed on June 5, 2015. The date on this non-disclosure agreement is April 15.’”
“These are the sort of things that would happen” when he met with prosecutors, Milone told The Pillar.
“I am absolutely relaxed about my being innocent, although it’s obviously a big stress and strain.”
Asked why Vatican prosecutors had not called him as a witness during the ongoing Vatican financial crimes trial, Milone said: “Obviously, they are afraid that I would disclose other matters which have not come out yet. But they are going to come out anyway because they are all in the claim I’ve had to file now.”
Milone said he had a second interview with Vatican prosecutors, scheduled for Monday, to discuss their now re-activated investigation into his tenure in the Vatican.
After that, Milone said, he expects he’ll see them in court.