Pope Leo XIV inherits Vatican’s shoddy finances and its efforts to clean them up

ROME – Along with the spiritual leadership of the world’s 1.4 billion Catholics, Pope Leo XIV now inherits oversight of the Vatican’s shoddy finances – and his predecessor’s efforts to clean them up.

The dire state of the Holy See accounts was among the topics cardinals tasked with choosing a successor to Pope Francis discussed ahead of the conclave, according to the Vatican.

Their pick, American Robert Francis Prevost

– now Pope Leo XIV – is likely to continue Pope Francis’ push to bring some order, said the chairman of the Vatican’s bank, known as the Institute for Works of Religion (IOR).

“Francis has started the process, I’m sure Leo XIV will continue,” Mr Jean-Baptiste de Franssu, a French businessman who was appointed to the role by Francis in 2014 as part of a radical overhaul of the Holy See’s economic framework, told AFP.

The Vatican fills its coffers by running hospitals, museums, and owning a vast real estate portfolio, together with donations from the faithful.

Yet, its finances regularly are in the red.

In 2023, it reported a consolidated loss of almost €70 million (S$102 million) on revenue of €1.2 billion.

The Roman Catholic Church’s economic affairs have long been murky and scandal-prone.

In a telling example, in 1982, the Banco Ambrosiano – a bank majority-owned by the IOR – collapsed amid accusations of money-laundering mafia money.

Its director, Mr Roberto Calvi, was found hanging that same year from London’s Blackfriars Bridge.

Resisting resistance

When Pope Francis became pope in 2013, things were not much improved.

Italy’s central bank had recently suspended all bank card payments in the Vatican over its failure to implement anti-money laundering laws, and a year earlier, the US had added the tiny city-state to its list of countries of concern for money-laundering.

In 2014, Pope Francis created a special secretariat for the economy, clamping down on corruption and stepping up scrutiny of investments.

“There was no strong governance, the rules were not respected, we did not have the right competence,” Mr de Franssu recalled of his early days at IOR.

Pope Francis once likened the effort to fix and bring transparency to the books to “cleaning the Sphinx of Egypt with a toothbrush”, but the efforts produced some results, including the closure of nearly 5,000 suspect bank accounts.

The Vatican’s reputation improved. It joined the Single Euro Payments Area and was later commended by the Council of Europe for its fight against money laundering.

“We have been more resistant than those that wanted to resist,” said Mr de Franssu.

Yet problems persist.

Italian Cardinal Angelo Becciu – a former adviser to Pope Francis – who was once one of the most powerful figures in the Vatican, was sentenced to five years and six months’ jail for embezzlement in 2023.

He was one of 10 defendants in a trial that began in 2021 focused on a disastrous investment by the Vatican in a luxury building in London.

The accused included financiers, lawyers and ex-Vatican employees accused of a range of financial crimes in what prosecutors called a “rotten predatory and lucrative system”.

The trial involved the risky purchase of a building in London’s upmarket Chelsea neighbourhood that resulted in major losses for the Vatican.

The scandal was particularly embarrassing because Church funds used for such ventures also came from Peter’s Pence, money donated by the faithful for the pope’s charities.

Becciu – who was earlier removed from office and stripped of his cardinal “rights and privileges”, and thus did not take part in the conclave that elected Pope Leo XIV – lodged an appeal.

Among the ongoing financial challenges facing Pope Leo are a decline in donations from the faithful, rising staff costs and a fragile retirement system. Pope Francis said in 2024 that the latter currently “cannot guarantee in the medium term the fulfilment of the pension obligation for future generations”. AFP