Category: Legal Shenanigans

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Catholic church used $400m in Irish bank loans to pay U.S. sexual abuse victims

More than $400m of compensation to American victims of sexual abuse by Catholic priests was paid with loans and guarantees from Allied Irish Bank, it has ben revealed.

The funds, in the form of loans, guarantees and lines of credit, were given specifically to pay clerical abuse victims, and led to AIB being dubbed the ‘Vatican’s banking arm’ in U.S. legal circles.

The revelation that a comparatively small Irish bank based on another continent was used to pay off victims will raise questions about AIB’s links to the church.

One of the payments, of $250m to the Los Angeles diocese, emerged in a new book entitled ‘Render Unto Rome: The Secret Life of Money in the Catholic Church’, by Jason Berry, which outlines extraordinary links between the bank and the church.

But an investigation by the MoS has established that in a few short months in 2007 AIB emerged as the lender behind abuse settlements for four separate dioceses, and the true figure was almost twice as high.

It also emerges that while AIB was used to pay the bulk of the Church’s abuse claims, the dioceses were able to hold on to most of their properties.

Berry also claims that out of 194 Catholic dioceses in America, 45 banked with AIB.

In the book, he asks: ‘Was AIB a pass-through for Vatican funds to help certain dioceses while others had no such advantage?’

Many American dioceses, confronted in recent years with compensation cases, have filed for bankruptcy and negotiated settlements with victims.

But instead of being funded by the Vatican, which is fighting court cases by denying any legal responsibility to pay, almost half a billion of the money paid out in America was borrowed from AIB in Dublin.

Many other agreements may have been made out of court, in secret.

The MOS has confirmed that all of the loans were agreed by the bank’s headquarters in Dublin, and amount to as much as a quarter of AIB’s €2bn exposure in America the following year.

The MoS has also discovered that the loans are now being quietly repaid.

In a revelation that will prompt further questions about whether the Vatican is behind the international deals, the supposedly-indebted dioceses have begun to pay off the AIB debts with money from other, unnamed, institutions.

Just last month a $40m line of credit to the Diocese of Portland in Oregon was taken over by an un-named creditor.

Bob Krebs, a spokesman for the diocese for many years, declined to name the new lender.

Asked why AIB had been used to help fund its abuse compensation cases, he said he did not know who ‘found Allied Irish for us’.

Of the deals, by far the largest line of credit was for Los Angeles, for $256m.

The diocese avoided going into court with abuse victims by reaching a settlement in advance.

It emerged afterwards that AIB loans and guarantees accounted for almost half of total settlement.

The deal included $175m in cash and another $25m to pay the interest, and helped Los Angeles avoid selling the bulk of its properties or reveal the true value of its total assets.

In San Diego AIB gave cash and credit of some $100m, almost half the $198m paid out to 144 victims.

That diocese filed for bankruptcy on the eve of the first civil trial against it, a case involving Monsignor Patrick O’Keeffe, originally from Kilkenny.

The Diocese of Portland, in Oregon, also filed for bankruptcy because of compensation actions.

Of a $129m settlement for victims $40m came from AIB.

The loan effectively allowed the diocese to close the bankruptcy proceedings without selling any assets.

A loan document obtained by this paper details the loans in Portland.

On AIB headed paper, it details how the loans were being specifically made to trusts set up to pay known and future abuse claims for the diocese.

The letter was written one day before a similar letter giving credit to the Diocese of Los Angeles, again signed by its LA-based senior vice president Charles Lydon and London-based vice president John McGrath.

U.S. lawyer Jim Stang, who sat on nine bankruptcy committees charged with looking after victim creditors, said: ‘We joke that AIB is the bank of the Catholic Church.’

The bank is still exposed on some of the loans. It is owed almost $10m by the diocese of Wilmington in Delaware.

An AIB spokesman said: ‘AIB’s business focus in America was in the ‘Not for Profit’ areas and this included churches.

‘Any loans advanced were approved in accordance with AIBGroup policy.’

An AIB source said they were ‘standard commercial loans’.

A spokesman for the Archdiocese of Los Angeles said the allegation of Vatican involvement ‘is complete rubbish’.

‘The Archdiocese initiated the loan discussions with AIB and other potential lenders in the summer of 2007. An arrangement was closed with AIB in November 2007,’ he said.

‘Settlement related financing was undertaken as a way to allow an orderly liquidation of surplus assets by the Archdiocese, and provided time for the Archdiocese to formulate a post-settlement recovery plan. Financing arrangements with AIB or any other potential lender had no impact on the settlement timing or terms. The AIB loan was repaid in full during the 2011 fiscal year.’

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Judge halts release of cardinal’s secret testimony

A judge on Monday halted the release of 1,200 pages of grand jury testimony of a Roman Catholic cardinal relating to his handling of priest sex-abuse complaints in Philadelphia.

Prosecutors filed Cardinal Anthony Bevilacqua’s secret testimony from 2003 to support conspiracy charges filed this year against a high-ranking church official, they said in court papers filed Friday.

Monsignor William Lynn, 60, is charged with conspiracy and child endangerment for allegedly transferring priest-predators without warning. Lynn served as secretary for clergy from 1992 to 2004, mostly under Bevilacqua.

The Philadelphia Inquirer reported Sunday that Bevilacqua, the former archbishop, had testified that accused priests “would not be able to function” at new parishes if people were warned of their backgrounds.

Grand jurors found the leader of the Philadelphia archdiocese “excused and enabled” the attacks, and was “not forthright” and “untruthful” during 10 grand jury appearances over eight months, the newspaper reported.

He was not charged because the statute of limitations had run out.

Common Pleas Judge Lillian Ransom put a hold on the further release of the grand jury testimony and other documents filed Friday.

She did not immediately return a call for comment on her action Monday.

Neither side asked to have the documents sealed, and the court docket did not list any such seal.

Lynn is the only U.S. church official ever charged in the sex-abuse scandal for his administrative actions.

Four others — two priests, an ex-priest and a former teacher — are charged in the same criminal case in Philadelphia with raping boys.

The prosecution filings Friday came in response to Lynn’s motion to have the charges dismissed.

The motion will be argued at a key hearing Friday.

Defense lawyers assert that he had no children in his care and cannot therefore be charged with endangering them.

In their 65-page response, obtained by The Associated Press, prosecutors argue the charge can apply to anyone with a duty to protect the general “welfare” of children, and not just those with direct supervision of them.

The archdiocese was charged with protecting children at its schools and parishes, prosecutors
wrote.

They said Lynn and other church officials did not necessarily seek to harm children, but “knowingly put them in harm’s way.”

Lynn’s lawyers declined comment Monday, citing an ongoing gag order in the case.

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Catholic church’s plea could rule out damages for priests’ abuse

Victims’ lawyers condemn ‘scandalous’ defence that Catholic priests are not legally employees of the church

Victims of sexual abuse by priests will no longer be able to sue the Catholic church for damages if a landmark judgment rules that priests should not be considered as employees.

In a little publicised case heard this month at the high court, the church claimed that it is not “vicariously liable” for priests’ actions. The church has employed the argument in the past but this was the first time it had been used in open court and a ruling in the church’s favour would set a legal precedent.

The use of the defence raises further questions about the church’s willingness to accept culpability for abuse. It follows a damning report into abuse at the diocese of Cloyne in Ireland which prompted the Irish president, Mary McAleese, to call on leaders of the church “to urgently reflect on how, by coherent and effective action, it can restore public trust and confidence in its stated objective of putting children first”.

Those planning to bring claims in relation to the high court case expressed dismay. “As children, we weren’t given an innocent, carefree and safe environment,” said one. “We weren’t given a peaceful structure in which to grow and develop normally. By some miracle, some of us are still here to voice the words of so many who can’t. Only a small number of victims ever come forward. The full potential of who we could have been as adults has been stolen.”

The church’s defence has been condemned by lawyers. “I think the Catholic church’s attempt to avoid responsibility for the abhorrent actions of one of its priests is nothing short of scandalous,” said Richard Scorer of the law firm Pannone, which specialises in abuse cases. “The Catholic church would be better served by facing up to its responsibilities rather than trying to hide behind spurious employment law arguments.”

The ruling is being made as part of a preliminary hearing into the case of “JGE”, who claims to have been sexually abused while a six-year-old resident at The Firs, a children’s home in Portsmouth run by an order of nuns, the English Province of Our Lady of Charity. “If we fail, it would mean that no other victims of Catholic priests would be able to be compensated,” said Tracey Emmott of Emmott Snell, a specialist in working with sexual abuse claims who is representing JGE.

JGE alleges that she was sexually abused by Father Wilfred Baldwin, a priest of the Roman Catholic diocese of Portsmouth and its “vocations director”, who regularly visited The Firs during the 70s. Her legal team claim the nuns were negligent and in breach of duty, and that the diocese was liable for Baldwin’s alleged abuse as he was a Catholic priest engaged within the work of the diocese.

Previous hearings in the House of Lords and the court of appeal relating to other church organisations have found that ministers should be treated as employees. But there has been no judgment yet on whether the relationship between a Catholic priest and his bishop is akin to an employment relationship.

“They claim that the relationship between the bishop of the diocese and the parish priest in question does not amount to anything akin to a relationship of employment, and therefore there cannot be any ‘vicarious liability’ for the priest’s acts,” Emmott said.

“That is to say, whatever sexual abuse their priests might commit, it is not their responsibility. They are absolved of blame. We need to show that, while Father Baldwin wasn’t strictly an employee of the church, he was acting on the bishop’s behalf and that the bishop clearly had a degree of control over his activities.”

Criminal proceedings against Baldwin, who was the subject of a police investigation, concluded when he died of a heart attack in 2006.

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Cloyne facts expose the pathology of the church

Unless the Catholic hierarchy examines its obsession with power it cannot reform itself

MUCH OF the Cloyne report brought no surprises to the people of Ireland and those of us in other countries who had anticipated its publication. In many ways it was a continuation of the revelations that came with the three commission reports that preceded it.

The report was met with the expected “heartfelt” expressions of regret, apology and even shock by officials of the Catholic Church, followed by promises of reform and the promulgation of yet more procedures, policies and boards. By now the Irish people, however, are beyond suspicion and cynicism. They have broken through another layer of the protective clerical veneer and have named the responses for what they are: a mendacious smokescreen.

It is no consolation to the Irish people but they are certainly not alone. This debacle in the Diocese of Cloyne is reflected in the recent publication of the report of the grand jury in Philadelphia, Pennsylvania. Five years after a first jury exposed widespread cover-up and shameful treatment of victims, followed by the usual promises to clean up the mess, a second grand jury found that the expressions of regret and promises of reform were a deceptive cover for an intentional lack of commitment to bring justice to victims and protect children.

Cardinal Seán Brady said that “grave errors of judgment were made and serious failures of leadership occurred”. Bishop John Magee admitted that the diocese “did not fully implement the procedures set out in church protocols”. What happened in Cloyne and in Ferns, Dublin, and the institutions cannot be dignified as “grave errors of judgment” or incomplete implementation of church protocols. The systemic sacrifice of the emotional, psychological and spiritual lives of innocent children for the sake of the image and power of the hierarchy was no error.

The commission of investigation into abuse in the Cloyne diocese learned that the destructive response to the reports of sexual abuse was not accidental or isolated but embedded in the fabric of the clerical culture. The members of all four commissions are to be highly commended for their courage in rising above the long-standing tradition of unquestioned deference to the hierarchy to reveal in detail the disgraceful and infuriating systemic disregard of the innocent children.

The three preceding reports were indeed shocking and scandalous. But the report carries the revelations even further in three important ways: naming the Vatican as an integral part of the problem; exposing the cynical use the concept of “pastoral care” as an excuse for obstructing justice; and acknowledging that the church cannot be trusted faithfully to comply with its internal regulations, much less the demands of the civil law.

When the reality of widespread sexual violation of the young by clergy was first exposed in the US in 1985, Pope John Paul II and the Vatican remained mute for six years. When questioned, Vatican spokesmen distanced not only themselves but the rest of the world by asserting it was an “American problem”. In his first public statement on June 11th, 1993, the pope tried to shift the blame to the secular media, whom he accused of “sensationalising” evil. He concluded his letter with: “Yes dear brothers, America needs much prayer lest it lose its soul.”

It was not long before tragic events in Newfoundland, Austria and Ireland clearly dislodged the papal efforts at denial. The recognition of widespread sexual molestation by clerics in several continental European countries, in South America and most recently in the Far East, have confirmed this is a worldwide problem not only of sexual violation by dysfunctional clerics but, even worse, a problem of intentionally self-serving and destructive responses by the bishops.

THE DIRECT ROLE of the Vatican in enabling and even directing the cover-up, stonewalling and obstruction of justice has been suspected for years. The report made a vitally important breakthrough by describing in concrete detail the essential role the Vatican played in the disgrace of the diocese.

The report points to two serious deficiencies in the Vatican response. The first is the papal nuncio’s refusal to co-operate with the commission during the Dublin and Cloyne investigations, as well as his lukewarm response to the horrific contents of the report. The second and far more treacherous aspect is the direct attempt to sabotage the Irish bishops’ 1996 policy document Child Sexual Abuse: Framework for a Church Response .

The commission found this document contained a “detailed and easy to implement set of procedures”. Yet, before it could adequately be put into practice, the papal nuncio, Archbishop Luciano Storero, sent the Irish bishops a letter passing on the concerns of the Vatican’s Congregation for the Clergy. The letter clearly reflected the reactionary attitude of Cardinal Darío Castrillón Hoyos, who was prefect at the time. He erroneously labelled the policy “merely a study document”.

This most outrageous and at the same time erroneous sentence gave the Irish bishops licence to ignore their own procedures but also the civil law.

The Vatican response has been the defence of the hierarchy and the scandalous lack of concern for the victims. There are the expected expressions of regret, sorrow and promise of prayers which serve only to confuse and even anger the victims and are a very thin cover for the consistent pattern of self-serving support and protection of the bishops.

The clerical culture that cannot comprehend the depth of evil and destruction it has enabled has failed to internalise the reality that in this 21st century sacrificing the welfare of innocent children to maintain the image and power of an ecclesiastical aristocracy is a disgrace that will be the catalyst for an inevitable and profound change in the nature of the institutional church.

The rapid disintegration of the absolute control of the Irish hierarchy over Irish society is the result not of the lack of faith of the Irish people, as some in ecclesiastical leadership would like to believe, but in the lack of fidelity of the leadership to the people whom they have sworn to serve.

Msgr Denis O’Callaghan, Bishop Magee’s point man, openly opposed the framework document because it did not provide an adequate pastoral response. This masks a fundamental misunderstanding and misapplication of an authentic expression of pastoral care which is not an excuse for minimising the fact sexual violation of a minor is a serious crime in both canon and civil law.

WORSE STILL WAS the use of pastoral care as a justification for protecting the accused priests at the expense of justice for the victims. The report saw the misuse of the pastoral concept as a “scheme whereby counselling was provided to the complainant in a manner which was hoped would not attract any legal liability to the diocese”.

There is no evidence of effective pastoral care in the past or even today, only crisis management. There is no evidence from any of the four reports that the overriding concern of the hierarchy and clergy has been the physical, emotional and spiritual welfare of the victims. What would true pastoral care have looked like? Upon receipt of a report of the sexual molestation of a child or adult, the bishop’s first (and often only) concern would not be the maintenance of secrecy and protection of the priest. Rather, he would immediately seek out the victim and the victim’s family to make clear to them that in their hour of pain, confusion and humiliation at the hands of a cleric, they and not the cleric are the most important people in the diocese and indeed in the church.

The third breakthrough is the realisation that any structures or policies created by the church depend on the commitment of the bishops and the support of the priests. In Cloyne and elsewhere the bishops made promises, created policies and appointed boards and then proceeded systematically to subvert their rules and those of society.

Marie Collins, in her recent interview on RTÉ’s Prime Time , spoke the truth when she said that the promises and policies that have streamed from the bishops mean nothing. The report clearly reflects this sad reality: “It seems to the Commission that continuing external scrutiny is required.” Outside monitoring with serious consequences for neglect, and mandatory reporting by all clergy with possible jail time as a consequence for failure, are necessary responses.

The commission has probed deeply into the dysfunctional clerical culture of the Cloyne diocese. With this report, the threshold to a new level of awareness has been reached. The findings and conclusions, as probing and shocking as they may be, are not enough. What we have seen exposed in all four reports but most shockingly in the Cloyne document is the toxic nature of the clerical culture at the heart of the institutional church.

We must demand answers to even more radical questions. What is it about this culture that justifies living in an alternate reality that places image and clerical security far above the welfare of innocent children? Why does the “people of God”, as Vatican II described the church, need to function like a monarchy with an attendant clerical aristocracy?

Why the narcissistic obsession with power, secrecy and control? Until the bishops and priests look deeply into this culture and acknowledge its pathology, the outrageous behaviour exposed in the report will be part of a shameful history.

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Clergy doing right thing is about timing not morality

Primate Sean Brady insists the long-awaited report into the mishandling of child sex abuse allegations by the diocese of Cloyne is “another dark day” in the history of the Irish Church. In this, as in so much else, he is entirely wrong. Any day on which light is cast on the obscure, murky workings of the Church is a day of illumination rather than darkness. That what it reveals is so utterly vile and contemptible is another matter altogether.

A previous such occasion, of course, was when Sean Brady’s own involvement in the cover-up of priestly perversion was revealed in 2009, when the faithful discovered how he had, 30 years earlier as part of an internal investigation into allegations against notorious paedophile Fr Brendan Smyth, made children sign oaths not to tell anyone that they had been abused.

Smyth, one of the most repulsive characters ever to wear priestly garb, went on to abuse dozens more innocents before being finally arrested; but even then, Primate Brady refused to take full responsibility by resigning, claiming that he was, in effect, only following orders, and that this was how things were back then. He also claimed that the current climate was a “totally different one to that of the past”.

It was a line echoed by Ian Elliott, CEO of the National Board for Safeguarding Children in the Catholic Church, who also said in 2009 that the progress towards better procedure had been “truly remarkable” and that there were now “champions for children” in place who wouldn’t let the same mistakes be made. “Remarkable” was bad enough, as if now allowing children not to be abused was some massive achievement, rather than the absolute minimum anyone could expect from those entrusted with their care; but it now turns out that these lauded champions weren’t up to the job either.

The report by Judge Yvonne Murphy shows conclusively that, as late as 2009, the diocese of Cloyne was still not following proper procedures on the reporting of sex abuse which the Church was supposed to have adopted 12 years earlier. In fact, they went further and deliberately misled the State about what they were doing. Despite the fact an internal church report in 2003 had found that Cloyne was putting children in danger by not following up allegations thoroughly, Bishop John Magee still told the late Brian Lenihan, then minister for children, that they were fully compliant, when they weren’t even bothering to make private enquiries as to whether accused priests had targeted other children.

And what is the response to all this? John Magee has vanished into the mist, maybe America, no one seems to know — which is to say that the Vatican surely knows, but they’re not saying either — and all that’s come from him is a statement, issued through a PR company in Dublin, Young Communications, containing the usual blether about how sad it all is. The Archbishop of Cashel and Emly, for his part, merely said it would be “helpful” if Magee came forward to answer allegations fully.

It makes a slap on the wrist look like the Spanish Inquisition in comparison, not to mention a mockery of the Vatican’s promise last year that “civil law concerning the reporting of crimes … should always be followed.”

Those at the head of an organisation set its moral tone. They are the ones to whom those beneath look for guidance on how to behave. Practically the entire hierarchy of the Church in Ireland is made up of people who, in one form or another, have made excuses for not doing the right thing. The context changes, but the excuses remain the same. If they can keep wriggling off the hook, why shouldn’t Bishop John Magee, or any of the others? The only reason why they should act differently now seems to be because people further up the chain are telling them that they should. But why should they listen to people who themselves have ignored the suffering of children when it would have been too difficult for them to do what was right? It’s like the IRA lecturing the dissidents on why they should stop blowing up policemen. Take away the political waffle and what it amounts to is: You shouldn’t do it anymore, even though we did when we were in your place, because it’s inconvenient now. It’s about timing, not morality.

Priests and bishops ought to listen, it could be said, because they’re bound by obedience to do whatever the Church tells them to do. They don’t have the right to refuse because to resist is to defy God. That only makes it all the more revealing that, 12 years after the Church apparently told them to comply with the law of the land, they were still prepared to ignore their own guidelines. It suggests they didn’t believe the hierarchy really meant it; that they were still detecting ambivalence; they were still getting a nod and a wink that what they were up to was not that serious. Indeed that’s what the report into the cesspit that was the diocese of Cloyne under Bishop Magee finds to be the case. Silence was officially sanctioned by the Vatican at the time when they were insisting publicly that all had changed, changed utterly, that a nice new Church had taken the place of the old one. Nor has anything said last week exactly reassured the sceptics, even now, that the Church quite “gets” what all the fuss is about. Instead, they’re still arguing the toss about whether abuse revealed in the confessional should be covered by the requirement to report crimes to the police. The Government has been bracingly unwavering about this; but that the hierarchy is still prepared to engage in theological point-scoring about sacredotal privilege, and to warn that the Government risks “antagonising relationships” if they insist that priests have the same obligation as every other Irish citizen to come forward when they know that children are being abused, is not only disappointing, but frightening. It seems to suggest that it’s not a National Board for Safeguarding Children in the Catholic Church that we need, but a National Board for Safeguarding Children from the Catholic Church.

They’ve had ample opportunities to set their own house in order. Too many, perhaps. They failed the test every time, preferring always to run away and hide behind lawyers and PR companies and each other, issuing one sophistical press release after another about the difficulties of doing the right thing, and meanwhile pumping out Lord Haw Haw-style propaganda suggesting that the institutions under attack are nowhere near as black as they’re painted. Well, that part’s true enough. They’re far blacker.

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