After real estate scandal, pope tightens control over money

VATICAN CITY (Reuters) – Pope Francis has issued a new decree making charity funds more transparent and tightening controls over Vatican finances after a scandal over a luxury real estate deal in London.

The main target is the Secretariat of State, the most important part of the Vatican administration, which must relinquish the management of its funds, investments and real estate and submit to the supervision of two other economic offices.

Published on Monday and signed by the pope on December 26, the decree takes effect for two months from January 1.

In 2014, the Secretariat invested approximately €200 million ($244 million) as a partner in a deal to buy a luxury building in London. As the deal got onerous, he paid tens of millions in fees to intermediaries to try to change the terms.

Cardinal George Pell, a former Vatican treasurer, told Reuters earlier this month that there had been “enormous losses”. In September, the pope fired Cardinal Angelo Becciu, a former high official in the Secretariat.

An investigation into the London deal led to the suspension last year of five Vatican employees, including four from the Secretariat. The Vatican has also accused the intermediaries of extortion.

‘PETER’S PENCE’

The assets of the Secretariat of State are being transferred to a department called the Holy See Heritage Administration (APSA) and will be overseen by the Secretariat for the Economy.

The Secretariat of State also lost control of “Peter’s Pence”, a fund to which the faithful could contribute and which was intended to help the pope manage the Church and finance his charitable works.

In recent years, the Vatican has dipped into Peter’s Pence to cover budget shortfalls. The fund’s reputation has suffered from reports that it may have been used for questionable investments, such as the London building.

The executive order creates three new accounts — one for Peter’s Pence, another for a “papal discretionary fund,” and a third to hold funds that donors wish to use for specific purposes. To ensure transparency, they will be part of the Vatican’s budget, the pope said in the decree.

A statement from the Vatican said the changes to Peter’s Pence were intended to reassure donors that contributions were being used correctly.

Reporting by Philip Pullella; Editing by Andrew Cawthorne

James V. Hayes