Vatican police raided offices of the Secretariat of State and the Financial Information Authority, the Vatican’s financial “watchdog” agency, on Tuesday, Oct. 1.

“They seized documents, computers, telephones and passports and blocked bank accounts,” Edward Pentin reported.

Five employees were suspended, including a priest. The police issued a circular to all security personnel, including the Swiss Guards, that the four lay persons were banned from entering the Vatican City State. (The priest resides in the city.)

The circular had photographs of the five employees “designed in the manner of a ‘Wanted’ poster or mugshot.”

Two days later, “Pope Francis named a top anti-Mafia prosecutor, Giuseppe Pignatone, as president of the Vatican criminal court over the alleged financial wrongdoing.”

Many Questions

The action was the result of complaints made months ago by the Vatican Bank and the Office of the Auditor General about financial transactions that had already been concluded. Therefore, this was not a crisis situation.

So why the drama of a police raid – the first in Vatican history – during business hours and not when the offices were closed? “Could not these documents and electronic devices have been requested and reviewed through ordinary channels?"  asked Vatican reporter, Dr. Robert Moynihan.

The raid was authorized by the Vatican prosecutor, Gian Piero Milano, and his deputy, Alessandro Diddi.  “Why was the authorization not signed by the adjunct prosecutor Roberto Zannotti, who chairs the specific section on financial crimes?” asked Vatican reporter Andrea Gagliarducci. “Possible answer is that the green light came directly by the Pope to the prosecutor, and did not pass through the Vatican tribunal,” he speculated.

In fact, “the investigation was prepared directly by the Pope,” the newspaper, Il Secolo XIX, stated.

“Two top-ranking officials, but also minor officials” were suspended. “If there was corruption, can this corruption be attributed to all of them? Low ranking officials have no power ... They can implement or propose, but they can never decide,” observed Gagliarducci.

The day after the raid, the Italian press widely reported that the "alleged financial wrongdoing" involved the purchase of London real estate by the Secretariat of State and the use of funds from the annual “Peter’s Pence” collection - contributions from Catholics for the pope’s charitable activities – to partially finance the deal. (here, here, here, here and here.)

On Oct. 20, journalist Emiliano Fittipaldi confirmed that these reporters were all essentially correct based on confidential reports he received from Vatican investigators. "A $200 million purchase of a swanky 183,000-square-foot apartment building in the Chelsea district of London” was made in 2012 by the Secretariat of State," John L. Allen Jr. wrote.

Questionable outsiders were used as intermediaries.

Fittipaldi also wrote that the Secretariat of State controls $725 million in funds from the Peter’s Pence collection. “Fittipaldi cites Vatican investigators charging that the use of roughly $560 million [of Peter's Pence funds] have been marked by ‘garish irregularities’ and ‘worrying scenarios.'" Allen noted.

“In any event, a formal complaint was lodged on July 2” with the chief prosecutor Gian Piero Milano - appointed by Pope Francis - “leading to the suspension of the five employees,” Allen stated.

So what is known so far from the pope’s own investigators is that there has been a perhaps ill-advised real estate investment and “garish irregularities and worrying scenarios” concerning misappropriated funds, but no indications that anyone in the Vatican profited personally. Considering the murder and brutality of organized crime, was Pope Francis grandstanding when he announced he hired a Mafia prosecutor?

WHY THE SECRETARIAT OF STATE  

Why target the Secretariat of State when the Administration of the Patrimony of the Holy See (APSA) is the pontiff’s most corrupt financial department?

APSA has “large amounts of unregistered cash in offshore accounts” according to a report by Edward Pentin, the most reliable English-language Vatican reporter with the most impeccable sources

APSA has two Swiss bank accounts that hold “as much as €7 billion …. There is a hub of corruption within APSA” related to these banks, a source told Pentin.

Cardinal George Pell, Prefect of the Secretariat for the Economy, had "identified money laundering and fraud risks related to APSA’s use of foreign bank accounts,” reported Pentin.

(Pope Francis gave the Secretariat of the Economy supervisory responsibilities over APSA in 2014. Pell was convicted in 2018 by an Australian court of sexually assaulting two boys.)

Pope Francis appointed Archbishop Nunzio Galantino – a “loyal ally” -  as APSA president in 2018. Galantino has done nothing to reform APSA.

Four of the suspended employees, including Msgr. Mauro Carlino, worked in the First Section of the Secretariat of State which directs the activities of the Curia and acts as the Vatican’s civil service. (The Second and Third Sections handle diplomatic relations.)

“An informed source said the main target of the Oct.1 raid was not primarily the five suspended officials, nor the current leadership in the Secretariat of State … but rather Cardinal Angelo Becciu,” reported Pentin.

Pope Benedict XVI appointed Becciu as sostituto (second in charge) of the Secretariat of State in 2011. Becciu was head of the First Section when the London real estate was purchased.

The suspension of Carlino, Becciu’s personal secretary for many years, was “to distance him from highly confidential material,” said Pentin’s source.

WHY THE FINANCIAL INFORMATION AUTHORITY

The fifth employee suspended was Tommaso Di Ruzza, the Financial Information Authority’s No. 2 official. Di Ruzza is described as “devoted to transparency and control to prevent illegal actions” by Vatican reporter Francesca Bernasconi.

The Financial Intelligence Agency (FIA) “shares financial information with counterparts in dozens of countries as part of global efforts to crack down on money laundering, tax evasion and terrorist financing,” explained Nicole Winfield.

"Under the direction of Di Ruzza, in particular, the role of the Holy See in international relations was strengthened,” Gagliarducci noted.

(It is Di Ruzza’s boss, René Brülhart, a Swiss lawyer and president of the FIA, who has come under suspicion because of his personal business ties to a company accused of embezzlement and money laundering, reported Manfred Rist.)

"According to the search warrant [for the raid on the FIA office] which was seen by The Associated Press, prosecutors only alleged that the FIA's actions in the real estate operation were 'not clear' and faulted Di Ruzza for being in contact with a London law firm. Prosecutors appeared to have misunderstood that the FIA was working with Britain’s financial intelligence unit to try to catch the businessmen who were fleecing the Holy See in the real estate deal," Winfield stated.

“Fittipaldi’s report suggests that an ongoing internal investigation may be motivated less by an honest desire to get to the truth and impose transparency, and more by a desire to settle accounts and alter the balance of power within the Vatican, especially with regard to the FIA, a [financial] watchdog unit created under Pope Benedict XVI,” wrote Allen.

The "complaints" against the FIA leading to the raid were lodged by the Vatican Bank, formally the Institute of Religious Works (IOR),  and the Office of the Auditor General.

“The IOR was constantly monitored by the FIA” noted Vatican reporter Francesco Peloso. This “resulted in a reduction in customers and capital” at the bank.

“The latest rumors” are that the FIA council is “convinced that an attack by groups of interests is underway that did not like the attempt to make the IOR accounts more transparent.” wrote Massimo Franco. The raid is considered an attempt to “delegitimize the agency.”

A “SHOCKING EPILOGUE”

“The head of the Vatican police, Domenico Giani could be replaced,” a “shocking epilogue” and “the last act of an internal war that has been going on for months,” Fiorenza Sarzanini reported on Saturday Oct. 12.

Pope Francis was upset that the circular with the offensive “Wanted” photos had been leaked to the press. Although “no one believed that Giani was responsible," nevertheless he was “embittered” that he would be held responsible, Sarzanini wrote.

Giani, appointed by Pope Benedict XVI in 2006, had a “not idyllic” relationship with his deputy, Gianluca Gauzzi Broccoletti, appointed by Pope Francis last December, Sarzanini noted.

On Monday, Oct. 14,  the Vatican announced Giani resigned. “Giani understood that he was being ordered to submit his resignation letter,” noted Dr. Robert Moynihan. “Was not Giani acting under orders to carry out the Oct. 1 raid"? Moynihan asked.

Giani is in the “sights of a Vatican power game that needs to be deciphered,” reported Edward Pentin.  Giani’s “closeness to Cardinal Becciu and collaboration with him is a focus of discussion, as are other elements connected with the former Vatican police commander, namely that he had become ‘too powerful,’” noted Pentin.

“Numerous sources” told Pentin that “Giani knew ‘everything about everyone’ and was widely reputed to be the ‘most powerful man in the Vatican’ - so much so that some Vatican insiders would say even the Pope and Cardinal Pietro Parolin, the Vatican secretary of state, were ‘scared of him.’”

The day after Giani's resignation, it was announced that his deputy, Gianluca Gauzzi Broccoletti, had replaced him. “The man who now becomes Pope Francis’ main bodyguard” worked in the Operations Center of Security in the Vatican from 2010 until his appointment as Giani’s deputy. “In those years he established a relationship of trust with the private secretaries of Pope Francis as well as with the top authorities of the Governorate of Vatican City State and the Secretariat of State,” Gerard O’Connell reported.

UNINTENDED CONSEQUENCES

Emiliano Fittipaldi’s book Avarice: Papers that Reveal Wealth, Scandals and Secrets in the Church of Francis.and Gianluigi Nuzzi’s book Merchants in the Temple were both released on November 5, 2015. “Fraud, the machinations of the Vatican Bank, the true extent of the pope’s treasury, theft and trade scams” during the reign of Pope Francis were disclosed. The information had been leaked to Fittipaldi and Nuzzi by Vatican employees.

The first Vatican law Pope Francis enacted after his election was to criminalize leaks of Vatican information.

A Vatican trial began in November 2015. Pope Francis said he gave the court the “concrete charges” against five defendants. Three were “accused of forming a criminal organization” to “procure and leak confidential documents.” Nuzzi and Fittipaldi were “accused of publishing those documents.”

The International Press Institute, the NGO Ossigeno per l’Informazione (Oxygen for information), Italy’s National Order of Journalists, the Committee to Protect Journalists, Reporters Without Borders, the Organization for Security and Cooperation in Europe, the Foreign Press Association and AIGAV, the association of reporters accredited to the Vatican, condemned the journalists’ indictments.

In July 2016, the court found the Vatican employee and one of his co-defendants guilty, the other employee was “fully absolved.” As for Nuzzi and Fittipaldi, it was ruled that the Holy See could not pass judgement on them "since what they are accused of falls outside of Vatican jurisdiction," i.e. it did not occur inside the Vatican City State, a fact already obvious before the trial even began.

Similar to the condemnation he received from freedom-of-the-press organizations for his "get tough" treatment of journalists, Pope Francis has also received criticism for raiding the FIA.

“The FIA is recognized as a reliable partner both in its intelligence and supervisory function … It is recognized as a privileged interlocutor by a large number of global anti-money laundering actors with whom the Vatican institution has been cooperating positively,” wrote Francesco Peloso.

The “kidnapping” of FIA documents, “led by the prosecutor Gian Piero Milano, are evaluated as an intrusion … a violation of that golden rule of absolute confidentiality of the information held by these bodies and of the independence they enjoy,” observed Peloso.

Therefore, "national financial intelligence units might be unwilling to share sensitive information with the Holy See," Nicole Winfield explained.

Also, “the suspension of the director of the FIA raised concern among his counterparts. Can the Holy See system be effective if it infringes upon the autonomy of the intelligence authority?” asked Andrea Gagliarducci.

“The international aspect must not be underestimated,” Gagliaducci concluded.

MONEYVAL

“What happened in the citadel of the pope has raised alarm in some supranational institutions like MONEYVAL," the body of the Council of Europe which monitors the effectiveness of financial "watchdog" systems of the various States and which also monitors the Vatican,, wrote Peloso

“The last MONEYVAL report, published in 2017, noted that the effectiveness of the Vatican judicial system rested on the efficacy of the legal system.  The report complained that the Vatican tribunals were not as effective as they should be,” reported Gagliaducci.

The 2017 MONEYVAL report also noted, “the Holy See should present an update on action taken to implement the Committee´s recommendations by December 2019.”

“International observers do not hide amazement at the decisive action launched precisely against the FIA – an operation that arrives on the eve of the next evaluation by MONEYVAL,” noted Gagliaducci.

“This investigation has come at a sensitive time …. MONEYVAL in the past has faulted Vatican prosecutors for the relatively few financial prosecutions carried out based on FIA reports of suspicious transactions,” Winfield reported.

Was Pope Francis trying to show MONEYVAL that he was “getting tough” on Di Ruzza and the FIA by “taking action” before the December report?

Regardless of his motivation, the pope partially bowed to international pressure.

The FIA Board of Directors announced on Oct. 23 that neither Di Ruzza "nor any other employee of FIA improperly exercised his authority or engaged in any other wrongdoing.” The Board “reaffirms its full faith and trust in the professional competence and honorability of its Director and, moreover, commends him for the institutional work carried out in the handling of this particular case.”

This announcement appeared on the official Vatican News website signifying it has the backing of the Vatican.

So the upcoming trial will focus on the Secretariat of State. “Will the Vatican prosecutors prove that their juridical system is fit and that the tribunals have improved their work since MONEYVAL’s  2017 report?” Gagliarducci asked.

Based on the reporting of a dozen or so experienced Vatican reporters, nothing more nefarious than bad judgment in handling the London property and misappropriation (embezzlement) of funds marked by “garish irregularities” and “worrying scenarios” has been uncovered.

How will a famous anti-Mafia prosecutor adjudicate these crimes?

In the meantime, five employees remain suspended and one has “resigned."

Betty Clermont is the author of The Neo-Catholics: Implementing Christian Nationalism in America.