Pope strips Vatican office of financial assets amid graft probe

ROME • Pope Francis has stripped the Vatican's most powerful office of its significant financial assets, after dubious investments squandered millions of euros in church donations and sparked off an embarrassing scandal that has prompted a corruption probe.

The Vatican said a new law enacted by the Pope on Monday orders the Secretariat of State - the diplomatic and administrative arm of the Holy See - to transfer all its financial holdings and real estate assets to the Administration of the Patrimony of the Apostolic See, which handles the Vatican's finances, by Feb 4.

The changes follow a Vatican investigation into the mismanagement of funds by the Secretariat of State. One of its most prominent investments involved the purchase of a London property that was bought in part with money donated by the faithful.

In 2014, the secretariat invested about €200 million (S$325.2 million) as a partner in a deal to buy a luxury building in London. As the deal became onerous, it paid tens of millions of fees to middlemen in attempts to change the terms.

Cardinal George Pell, the Vatican's former treasurer, told Reuters earlier this month there had been "enormous losses".

In October last year, Vatican prosecutors ordered a raid on the offices of the Vatican's banking regulator as part of an investigation into the purchase. That led to the resignation of the Vatican's chief of security, the removal of several Vatican employees and officials, and the arrest of an Italian banker involved in the transaction.

No one has been charged in the case, however, and the banker has been released.

The changes announced on Monday are also in line with Pope Francis' agenda to reform the Vatican's administration, a task that has proved to be a huge challenge in the nearly eight years since he became Pope, in part because of pushback from bureaucrats.

A preamble to the law said the decision to revoke the secretariat's funding was taken to ensure "better organisation of the administration, controls and supervision of the economic and financial activities of the Holy See", more "transparent and efficient management" and a "clear separation of responsibilities and functions".

It noted that other departments already handle financial and economic matters.

The law also calls for the creation of a new fund for donations to the Pope that had previously been managed by the Secretariat of State, to ensure "greater control and better visibility".

The Vatican's Economy Ministry will oversee spending.

NYTIMES, REUTERS