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.’

http://tinyurl.com/3qbgozr

U.S. lawyer says Vatican knew of priest’s sex abuse

A lawyer representing a victim of priest abuse in a lawsuit against the Roman Catholic church said on Monday Vatican documents show the church hierarchy and the pope were ultimately responsible.

A lawyer for the church disagreed, saying the newly released documents show the Holy See was not involved in the offending priest’s transfer from Ireland to Chicago and then to Portland, Oregon, where the victim was a minor in the 1960s.

In April, U.S. District Judge Michael Mosman in Oregon ordered the Vatican to produce documents in the case that alleged a cover-up of priest sex abuse.

At the time, the judge’s order was termed a “historic step” by attorney Jeffrey Anderson, who sued the Holy See in Rome and U.S. archdioceses and church officials on behalf of an unnamed man in Oregon.

Anderson said on Monday an analysis of the 1,856 documents written in Latin, Italian and English showed the Vatican had direct control over the placement and laicization of Rev. Andrew Ronan, who left the priesthood in 1966 and died in 1992.

“At all times, Father Andrew Ronan’s life from profession to dismissal was under the control of the Holy See,” a report released by Anderson said.

One document from early 1966 showed that Ronan had asked the Holy See to remove him as a priest. The request was granted that year.

Also among the documents was a letter from a Provincial Minister to the Prior General in Italy in 1966 that said “we believe it will be possible, if the Holy Father will grant Father Ronan’s request, for him to leave quietly and without any open scandal.”

When confronted, Ronan admitted the abuse to his superiors at Our Lady of Benburb, Ireland, according to the documents, but was transferred to a Chicago high school anyway. He abused children there, the documents show, then was transferred to St. Albert’s Church in Portland.

On Monday, Anderson said the documents showed authority stems from “the top of the hierarchy, and that is to the papacy.” He said he would ask for additional documents.

“This is a selective, deceptive, incomplete production at best and in my view typical of the Vatican’s view that they are above the law,” Anderson said.

Jeffrey Lena, a lawyer for the Roman Catholic church in the United States, said the accusations of Vatican involvement in Ronan’s transfers were groundless. The Vatican has long held that its priests are under the local control of bishops.

“Like the documents previously released — and contrary to the plaintiff’s lawyers’ long-standing accusations — the written responses confirm that the Holy See was not involved in Ronan’s transfers and had no prior knowledge that Ronan posed a danger to minors.

“The responses also show that there is no support for the plaintiff’s lawyers’ spurious theory that Ronan was ever the Holy See’s employee,” Lena said.

The case is John V. Doe v Holy See et al, 3:02cv00430MO.

http://tinyurl.com/445ws5l

Philadelphia priests gather amid abuse crisis

Roman Catholic priests in the conservative Philadelphia archdiocese have formed an independent association amid “a vacuum of information” with the latest clergy-abuse scandal, the Rev. Chris Walsh confirmed Friday.

Father Walsh, one of the organizers of the Association of Philadelphia Priests, said the group was created for priests to learn more about how the archdiocese is handling the problem. The association is still finalizing its bylaws.

A grand jury in February charged three priests and a teacher with rape and a monsignor with endangering children by reassigning priests. Prosecutors found that 37 suspected abusers remained on duty. The archdiocese later suspended about two dozen of them.

The grand jury report stunned priests across the five-county archdiocese, which has about 500 active priests.

“How could this be happening again? The guys, they were at a loss,” Father Walsh told The Associated Press.

In 2002, U.S. bishops ordered reforms in how dioceses handle abuse complaints. And in 2005, priests endured a blistering grand jury report that 63 Philadelphia priests had been credibly accused of sex assaults over several decades.

The Philadelphia Inquirer first reported Friday on the Association of Philadelphia Priests.

Father Walsh, who also is pastor of St. Raymond of Penafort, said that over several meetings this spring, concerned priests decided to form the new group. About 100 priests have attended each of three meetings held at various parishes. Also, two archdiocesan officials have attended a meeting, including the Rev. Daniel Sullivan, the vicar for clergy.

But no one wants to challenge incoming Archbishop Charles Chaput on priest celibacy, the ordination of women or other hot-button issues.

“They are, like most Philadelphia priests are, very orthodox men who love the church,” Father Walsh said. “We’re not looking to be adversarial. We’re part of the church. We respect and look forward to working with Archbishop Chaput.”

Father Walsh said priests in the diocese are struggling, along with the laity and non-Catholics in the region, to understand how the sex-abuse problem was allowed to fester. They also want to protect the rights of the suspended priests whose cases are now under review.

“Speaking for some of the [priests] who have been removed, they don’t know what’s next or how long it will take,” Father Walsh said. “In the criminal process, it’s pretty clear. … With the case of these guys, it’s really nebulous. Many of them feel very uninformed.”

Priests in other dioceses have long formed independent organizations, and many dioceses contribute $30 per priest annually to the National Federation of Priests’ Councils, a Chicago-based group that serves as a liaison between priests and the dioceses they serve.

But priests in the famously insular Philadelphia archdiocese have never joined the 43-year-old group, according to the Rev. Richard Vega, the federation president.

“Their bishops never wanted them to belong. We were seen as too radical,” Father Vega added.

http://tinyurl.com/3cs7do6

Pope In Spain: Good Catholics Use Condoms

COMMENTARY

No, Pope Benedict didn’t really say that, but there are really interesting developments coming out of this trip for World Youth Day. Thanks to Bridget Mary’s blog for alerting us to these developments.

The poster below was to have appeared on billboards and buses across Spain, until municipal authorities, bowing under pressure from the Cardinal of Madrid, rescinded the permission.

Maybe it’s just me, but there is something amusing about the way Catholics for Choice have taken Benedict’s quite timid and tentative statement last year (If condoms are not “a real or moral solution … in this or that case, they can be nonetheless, in the intention of reducing the risk of infection, a first step in a movement toward a different way, a more human way, of living sexuality.”) and run with it all the way to the goal post. Maybe this is the way change always comes to the church, timidly at first, with many reversals, fits and starts. Of course, as you can see from the press release below, Catholics for Choice’s ingenious plan to place their slogan – Good Catholics Use Condoms – on billboards and buses throughout Spain during the Pope’s visit, first met with approval, then censorship, thanks to the intervention of Cardinal Antonio Ruoco of Madrid.
FROM CATHOLICS FOR CHOICE BLOG
POPE ARRIVES IN SPAIN AMID CENSORSHIP CONTROVERSY
International Youth Coalition Seconds Archbishop’s Affirmation of Freedom of Expression
The World Youth Day 4 All coalition welcomed the remarks from Archbishop Braulio Rodriguez of Toledo, Spain, who pointed out that the Catholic World Youth Day celebration is taking place in a country where freedom of expression is protected.

“Spain’s openness to freedom of expression is something Catholics for Choice took for granted when we arranged, months in advance, for the display of our Condoms4Life ads in Madrid’s transit system to coincide with World Youth Day,” said Marissa Valeri, a lead organizer of the coalition. “We were surprised, then, when the message ‘Good Catholics Use Condoms’ was deemed too offensive for Madrilenos. In reality, the best interests of the public was not the issue. Instead, it was a move made by ultraconservatives to stifle the many diverse voices of Catholics at World Youth Day, which should be a place where, as Archbishop Rodriguez affirmed, ‘we can all say what we want to say.’

The municipal authorities did a disservice to all visitors and to all Spaniards by stepping between the life-giving message that condoms save lives, on the one hand, and the individual’s right to make up his or her mind about that message, on the other.”

Condoms are apparently not the only topic that is too hot to handle in Madrid this August. Patrons at the Madrid public library have allegedly complained they were unable to access Web sites providing information on protests being organized against World Youth Day.

One of the hallmarks of the Catholic tradition is unity in diversity. Like the World Youth Day 4 All coalition, the event itself is made up of participants from all over the world, people who may speak different languages and come from different cultures, but who find kinship on the level of faith. The church hierarchy obviously feels that Spain’s respect for freedom of expression gives them room to express their viewpoint—Archbishop Rodriguez even decries those who think that certain points of view are “more right than others.” Spain’s civic freedoms should be able to include the voices of the Catholic people—including those who support the use of condoms—as well as the perspectives of non-Catholics. Otherwise, the “world” part of World Youth Day goes missing, and those from a tiny, easily ruffled minority within the Catholic hierarchy and the Spanish authorities are the only ones celebrating.

Luckily, diversity is not so easily squelched—the Condoms4Life message has been making headlines all week (see the blog, and pilgrims have encountered stickers and projections on walls around the city.

http://tinyurl.com/3myc8vg

Ireland Faces Down Vatican as Kenny Demands $1 Billion Abuse Compensation

Ireland is squeezing the Roman Catholic Church to hand over cash and real estate toward a 1.4 billion-euro ($2 billion) child-abuse bill amid the bitterest stand-off yet seen between the Vatican and the government.

In the sharpest language an Irish leader has ever used against the church, Prime Minister Enda Kenny said last month the Vatican’s handling of the scandals has been dominated by “elitism and narcissism.”

“The relationship between the state and the Vatican has never been worse,” David Quinn, a religious commentator who is also director of the Dublin-based Iona Institute, which promotes religion in society, said in an interview. “I struggle to think of a stronger attack by a Western European leader on the church than Enda Kenny’s.”

Kenny said the church needs to be “truly and deeply penitent for the horrors it perpetrated, hid and denied” after three government reports on clerical abuse and cover-ups rocked one of Europe’s most devout societies. With the focus now moving to who compensates the victims in talks starting next month, the church’s riches and dominance of Ireland’s educational system face their most direct threat in the country’s modern history.

“The speech was a seminal moment in that Enda Kenny made clear that the state sees local bishops as the Vatican’s foot soldiers, but it’s the Vatican that is directing policy and practice,” Tom Inglis, a sociology professor at University College Dublin, said in an interview. “He’s following public opinion, not molding it, but it takes an adroit politician to know when the timing is right.”

Compensation Meetings
Kenny’s education minister, Ruairi Quinn, will begin meetings in September with 18 religious orders to call on them to pay half the compensation bill for abuse in children’s homes they ran. The 2009 government-commissioned Ryan Report said abuse in those homes was “endemic.”

The orders have paid or offered about 300 million euros to date in cash and real estate, and Quinn is proposing that they hand over control of more land, including schools. About 90 percent of elementary schools remain Catholic-run, according to the Education Ministry.

“Quinn knows that control of the education system is key now and control is about both land and patronage,” said Inglis. “He’s now making the running, not the church.”

Constitutional Role
For much of Ireland’s history since independence from Britain in 1922, it was the other way around. In 1937, the government consulted the archbishop of Dublin while drafting the constitution, which recognized the special position of the Catholic Church “as the guardian of the faith of the great majority of the people.”

Though that clause was later removed, Catholic thinking continued to underpin Irish legislation. Up to 1985, condoms couldn’t be bought without a doctor’s prescription. Divorce was only legalized after a 1995 popular vote, and abortion still isn’t allowed in most circumstances.

As revelations of abuse and the church’s concealment of it have emerged, the relationship has soured. Last month, a government-commissioned probe into the handling of abuse allegations in Cloyne in southern Ireland concluded that the Vatican “effectively gave Irish bishops freedom to ignore” state guidelines, prompting Kenny’s intervention.

Prosecution Halted
The report examined the handling of allegations against 19 clerics between 1996 and 2009. To date, one priest from the diocese has been convicted of child sex abuse, while a second prosecution was halted on the grounds of ill health, delay and age.
“The rape and torture of children were downplayed or managed, to uphold instead the primacy of the institution, its power, standing and reputation,” Kenny said in parliament on July 20.

The Vatican pledged to respond “expediently” to the report in an e-mail sent by a spokesman, Federico Lombardi, the day after Kenny’s remarks. Four days later, the Vatican recalled its ambassador to Dublin citing the “reactions” that followed the Cloyne report, in what David Quinn said he interpreted “as a pretty strong protest.”
Eighty-five percent of the Irish population are nominally Catholic, according to the Central Statistics Office. Mass attendance was around 78 percent in 1992, falling to about 65 percent in 1997, according to Diarmaid Ferriter, author of “The Transformation of Ireland: 1900-2000.” A poll conducted for the Iona Institute in 2009 found that 65 percent go to church at least once a month.

Payments to Victims
The government has made about 14,000 payouts averaging 62,878 euros to victims of abuse in residential homes, according to the agency which handles the awards. A further 157 million euros have been paid been out in legal fees.

In 2002, the government agreed to cap the religious orders’ contribution at 128 million euros. Now, with the bill rising and a budget deficit forecast at 10 percent of gross domestic product this year, ministers are pushing for a 50-50 contribution, amounting to about 680 million euros. The shortfall on what’s been offered so far is about 350 million euros.

Already, some orders are resisting. The Sisters of Mercy, which controls schools across the country, refused to attend a meeting with Quinn last month. The order, which said it had been “misrepresented and demonized,” said it never agreed to the 50-50 split.
“It has been wrongly suggested that the congregation has disadvantaged the state in that it has failed to honor a debt,” the Sisters said in a statement on July 22. “The congregation has met and will continue to meet all of its commitments to former residents and to the state.”

The order may be fighting against the weight of public opinion.
“I’m disappointed with the Vatican’s handling of it,” said Anne McCarron, 71, a retired nurse from Inishowen in northwest Ireland. “The Vatican has been too aloof, I share Enda Kenny’s anger. The church should pay more money to victims.”

http://tinyurl.com/3h5skt7