Financial Improprieties – Page 21

October 21, 2013

Finance scandal spurs German bishops to reveal secret funds

File under: Follow the money! Truth is, all bishops have huge slush funds and these guys are showing us only what they want us to see.

By Tom Heneghan

German Catholic bishops are scrapping centuries of secrecy and reporting the value of their private endowments as a scandal caused by a free-spending prelate puts pressure on them for more financial transparency.

Limburg Bishop Franz-Peter Tebartz-van Elst – dubbed “the luxury bishop” – has shocked the Church by admitting six-fold cost overruns on construction of his luxurious new residence, which is now priced at 31 million euros, most of which will be paid from his ample reserves.

She's got the bling! — She’s got the bling!

His lavish spending clashes with the humble style of Pope Francis, who urges bishops to turn away from wealth and pomp and get closer to the faithful. Francis has also promised to clean up the murky finances of the Vatican’s own bank.

The Limburg scandal has also prompted worried German Catholics to ask what their dioceses were doing.

“We take these concerns very seriously,” Bishop Karl-Heinz Wiesemann of Speyer said in a communique revealing his 46.5 million euro reserve.

German dioceses have secret reserves called the “bishop’s chair” known only to the bishop and a few advisors. Run as a diocesan nest egg and source of funds for special projects, they are not taxed and not listed in the annual balance sheets.

In some older dioceses, “bishop’s chair” reserves include age-old property holdings, donations from former princely rulers and funds from German states over the past two centuries. Their make-up and value vary widely from diocese to diocese.

RICHES AND MORE RICHES?

Cologne, the largest and reportedly richest diocese in Europe, announced on Tuesday “in connection with the current discussion about Church finances” that its archbishop had reserves amounting to 166.2 million euros in 2012.

It said the 9.6 million euro earnings from its investments were, as in previous years, added to the diocesan budget of 939 milllion euros in 2012, three-quarters of which was financed by the “church tax” levied on churchgoers.

A critic of church financial secrecy, Berlin political scientist and journalist Carsten Frerk, said Cologne’s total should be about 1.1 billion euros because its large real estate investments were listed at only nominal values.

“They don’t pay tax so they don’t update their assessments,” he told Reuters. “It’s not in their interest to publish these amounts because then they wouldn’t get as many donations.”

Dioceses also had holdings in other accounts and some even have their own private banks, somewhat similar to the Vatican’s bank, so their full wealth is hard to calculate, he added.

Cologne diocesan officials were not immediately available for comment. Cathedral Provost Rev Norbert Feldhoff told the diocesan radio station it would be hard to explain some aspects of Church finances if all details are published.

“There are big sums and there are problems,” he told Domradio. “We can explain it all to experts, but it could be difficult for the average housewife in Cologne to understand.”

TIGHT-LIPPED

At least six of the country’s other 26 dioceses also opened their books, several showing much smaller “bishop’s chair” reserves but some revealing quite large amounts.

The small diocese of Trier, Germany’s oldest, had a reserve of 84 million euros and said part of its earnings went to pay damages to victims of the clerical sexual abuse scandals that rocked the German Church in recent years.

Limburg, where Tebartz-van Elst’s lavish spending has led to loud calls from priests and parishioners for his resignation, has not posted its reserves. Media reports have estimated the sum at about 100 million euros.

German dioceses have traditionally been tight-lipped about their “bishop’s chair” reserves. In 2010, 25 of the 27 dioceses refused to discuss them when asked by Der Spiegel magazine.

Last week, four of the five dioceses in North Rhine-Westphalia – including Cologne – declined to give any information to the local West German Radio station. By Tuesday, only Paderborn diocese had still not published its details.

Germany’s church tax, collected by the state and handed over to the churches, raised 5.2 billion euros for the Catholics and 4.6 billion euros for Protestants in 2012, making them major economic actors at home and abroad.

Complete Article HERE!

July 20, 2013

Pope’s bank clean-up man ‘found stuck in lift with rent boy’

As the man charged with cleaning out the stables at the scandal-struck Vatican bank, Monsignor Battista Ricca will need Machiavellian cunning, good fortune and a whiter-than-white record to have even a fighting chance.

But Pope Francis’s new banker appears to possess none of these attributes after it was reported yesterday that he was found stuck in a lift with a rent boy. Msgr Ricca, as Francis’s new primate with responsibility for the troubled financial institution, known officially as the IoR (Institute for Religious Works), is supposed to usher in new transparency and badly needed reforms after years of financial scandal.

Earlier this month, a major report from finance police and magistrates warned that a lack of checks and controls by the IoR and the Italian financial institutions it had dealings with made the Vatican’s bank a money-laundering hot spot.

It is claimed that Msgr Ricca, 57, impressed Francis with the way he ran three key residences used by cardinals, bishops and priests visiting Rome. But detailed claims have emerged detailing how in 1999, Ricca took a Vatican diplomatic posting in Uruguay and moved his lover, Patrick Haari, a Swiss army captain, in with him, to the outrage of church figures and locals in the conservative South American nation. Captain Haari was forced out by the hardline Polish nuncio Janusz Bolonek in 2001.

But there were more problems for Ricca when he was attacked in a cruising ground that year, and soon after firemen had to rescue him from a broken lift, in which he was trapped with a youth known by local police. The weekly news magazine L’Espresso claims that Msgr Ricca was able to get the position as IoR prelate because the supposedly powerful “gay lobby” in the Vatican airbrushed his colourful CV.

Gay sex scandals at the Vatican have made the headlines before. In 2010 it emerged that one of Pope Benedict’s ceremonial ushers and a member of the Vatican choir were involved in a gay prostitution ring.

Vatican spokesman Padre Federico Lombardi sought to dismiss the claims about Msgr Ricca’s private life. “What has been claimed about Msgr Ricca is not credible,” he said. Msgr Ricca himself has not yet responded to the allegations. But La Repubblica noted that the Vatican had emphasised that his appointment as prelate for the IoR was technically an interim one, thus raising the possibility that the job might not last long.

Complete Article HERE!

July 1, 2013July 1, 2013

Archdiocese of Milwaukee faces Monday deadline to make public clergy sex abuse documents

The Archdiocese of Milwaukee was expected to release thousands of pages of documents related to clergy sex abuse on Monday, including the personnel files of more than three dozen priests and the depositions of church leaders including New York Cardinal Timothy Dolan, the former archbishop of Milwaukee.

A deal reached in federal bankruptcy court between the archdiocese and victims suing it for fraud called for the documents to be made public by July 1. Victims say the archdiocese transferred problem priests to new churches without warning parishioners and covered up priests’ crimes for decades. Many pushed for the documents’ release in the belief that it would be an important part of their healing.

Similar files made public by other Roman Catholic dioceses and religious orders have detailed how leaders tried to protect the church by shielding priests and not reporting child sex abuse to authorities. The cover-up extended to the top of the Catholic hierarchy. Correspondence obtained by The Associated Press in 2010 showed the future Pope Benedict XVI had resisted pleas in the 1980s to defrock a California priest with a record of molesting children. Cardinal Joseph Ratzinger led the Vatican office responsible for disciplining abusive priests before his election as pope.

The Milwaukee collection has drawn interest because of the involvement of Dolan, the president of the U.S. Conference of Catholic Bishops and the nation’s most prominent Roman Catholic official. Dolan has not been accused of transferring problem priests. He took over as archbishop in mid-2002, after many victims had already come forward. But there have been questions about his response to the crisis, including payments made to abusive priests when they left the church.

The archdiocese has characterized the money, as much as $20,000 in some cases, as a kind of severance pay meant to help priests transition out of the ministry. Similar amounts were made to men leaving the priesthood long before allegations of sexual abuse surfaced in the Catholic church, spokeswoman Julie Wolf said last year, when the payments came to light.

Charles Linneman, 45, of Sugar Grove, Ill., was among the abuse victims who spoke out against the payments and pushed for the archdiocese to release its records. Linneman said he was an altar boy when he met Franklyn Becker at a Wisconsin parish in 1980. He read the priest’s file several years ago when it became public during litigation in California, where Becker also served.

“It helped me move on,” Linneman said. In particular, he was relieved when the file showed no reports of children being abused after him, he said. He had long wondered if coming forward before he did in 2002 would have kept other children from being hurt.

Abuse victims have long sought to hold the church accountable, but most didn’t come forward until well into adulthood, when it was too late under Wisconsin law to sue the church for negligence in supervising its priests. A 2007 Wisconsin Supreme Court decision gave them a window, saying the six-year limit in fraud cases didn’t start until the deception was uncovered. The archdiocese filed for bankruptcy in 2011, once it became clear that it was likely to face a slew of lawsuits.

Complete Article HERE!

June 28, 2013

Senior Vatican cleric arrested in money smuggling case

File under: Sex (particularly gay sex) is sinful. Money laundering and corruption, not so much. Gay mafia in Vatican = BAD! Regular mafia in Vatican = business as usual.

By Philip Pullella

A senior Catholic cleric with connections to the Vatican bank was arrested on Friday for plotting to help rich friends smuggle tens of millions of euros in cash into Italy from Switzerland, in the latest blow to the Vatican’s image.

Monsignor Nunzio Scarano, 61, who worked as a senior accountant in the Vatican’s financial administration, was arrested along with an Italian secret service agent and a financial intermediary in a tale that reads like a spy novel.

It involves police wiretaps, a private plane rented to collect the cash from Locarno, burned cell phones, an allegedly corrupt secret services agent who promised to get the money past customs and a shady financier.

Details of the case against Scarano will come as an acute embarrassment to Pope Francis, who, since his election in March, has pointedly eschewed many of the trappings of office and sought to stress the importance of a simple life of devotion.

Only two days ago, the Vatican announced he had set up a commission of inquiry into the Vatican bank, formally known as the Institute for Works of Religion (IOR), which has been hit by a number of scandals in the past decades.

Scarano, who was arrested in a Rome parish and taken to Rome’s Queen of Heaven jail, had hatched a plot to bring up to 40 million euros ($52 million) into Italy for a family of shipbuilders in his hometown of Salerno in southern Italy, magistrate Nello Rossi told reporters.

Rossi is already investigating the Vatican bank for money laundering, and the latest arrests stemmed from that.

Rossi and fellow magistrate Stefano Pesci said there was no indication so far that the bank was directly involved in the attempt to bring the money into Italy, but that the investigation was continuing and more searches were underway.

Scarano is under separate investigation in southern Italy in relation to his accounts in the Vatican bank.

CELL PHONES DESTROYED

According to Rossi, in July last year Scarano engaged Giovanni Zito, a paramilitary Carabiniere policeman on loan to the secret services, to help him get the money, which was in a Swiss bank, into Italy without tax and customs controls.

The third person arrested was Giovanni Carenzio, a financial broker with offices in Switzerland and the Canary Islands and who was acting as the fiduciary for the owners of the money.

The three originally planned to bring back 40 million euros in cash but later reduced it to 20 million euros.

A private plane went to Locarno from Rome and waited several days before returning to Rome without the money.

The cash never left Switzerland because of disagreements and nervousness among the three, Rossi said, adding that cell phones that were used were later destroyed by being burned.

Zito had promised to use his position in the secret services to avoid customs controls. The plane was to have been met on the runway of a Rome airport and the cash taken under armed escort to Scarano’s home in Rome, Rossi said.

Even though the money never left the Swiss bank, Zito demanded the payment he had been promised for his services.

Scarano gave Zito two checks, one for 400,000 euros and another for 200,000 euros. Zito cashed the first check but Scarano blocked the second before Zito could cash it by filing a false report that it had been lost.

VATICAN READY TO COOPERATE

Asked if money laundering was involved, Rossi said that would depend if the continuing investigation determined that the original source of the money was criminal activity.

“We are trying to determine the origin of the vast amount of money that was at the disposal of Scarano, who is the holder of several accounts at IOR,” Rossi said.

Vatican spokesman Father Federico Lombardi said Vatican authorities stood ready to cooperate with the Italian investigation, but had so far received no official request.

He said the FIA, the Vatican’s own financial intelligence authority, was following the case and would take action if necessary.

Scarano worked for years as a senior accountant for a Vatican department known as APSA, whose official title is the Administration of the Patrimony of the Apostolic See.

He was suspended from his duties several weeks ago when he was placed under investigation by magistrates in Salerno.

In that investigation, his lawyer Silverio Sica said wealthy friends had donated money to Scarano in order for him to build a home for the terminally ill.

According to Sica, his client wanted to use that money to pay off his mortgage so he could sell a property in Salerno and use the proceeds to build the care home.

Apparently to cover his tracks, Scarano has been accused of taking 560,000 euros in cash out of his account in the Vatican bank and giving various amounts to friends who gave him checks in exchange.

He then deposited the checks into an Italian bank account to pay off the mortgage. ($1 = 0.7691 euros)

Complete Article HERE!

June 27, 2013

Philly Archdiocese grappling with pensions for clergy

File under: Say it ain’t so! Financial irregularities? In the Catholic Church? Can’t be!

By John P. Martin

A pension fund for priests cited as a priority in a $200 million fund-raising campaign by the Archdiocese of Philadelphia has fallen precariously short of money, and church officials want parishes and retired clergy to help cover the shortfall.

In meetings this spring, Archbishop Charles J. Chaput told priests the plan had been underfunded, poorly managed, and was spent on rising health-care costs for clergy, according to three priests who attended or were briefed on the talks. Chaput said the fund needed $90 million to be solvent but had less than $4.5 million, they said.

Clergy living at the archdiocese’s Delaware County retirement villa and other church-owned facilities are expected to contribute 40 percent of their pensions to the archdiocese, the priests said. And parishes’ annual assessments to the pension fund will rise from $6,700 to about $9,300 per priest, they said.

The changes come two years after the archdiocese ended a fund-raising campaign that made shoring up the priests’ pension plan one of its goals.

Kenneth Gavin, a spokesman for the archdiocese, said the policy requiring priests in church-owned facilities to refund portions of their pensions started in April. He would not discuss other changes or aspects of the pension plan, including what the archbishop said in his private meetings with clergy.

Gavin said the archdiocese planned to release “detailed financial reports” about its spending and costs this summer.

Rumblings about the pension troubles started last year, catching some priests by surprise.

“I was certainly horrified to learn that our pension fund was not secure, as would be any person who works in any organization,” said the Rev. Christopher Walsh, pastor of St. Raymond of Penafort in Mount Airy.

Walsh, who helped organize a fledgling association for archdiocesan priests, did not attend the meetings but said he learned about them from others who did. He said he hoped Chaput and his staff would “quickly establish a secure pension fund as a matter of justice.”

Dioceses across the country have faced similar financial struggles in recent years, compounded by dwindling attendance, aging clergy, and the economic downturn. But the impact has been acute in Philadelphia, where more than a million Catholics and hundreds of priests are also grappling with the fallout from clergy sex-abuse allegations. “The caveat for priests was always that the diocese was going to take care of you,” said one Philadelphia pastor nearing retirement who asked not to be identified discussing his employer’s finances. “None of us knew when Chaput arrived here 20 months ago that the diocese was in this bad of shape.”

Chaput himself didn’t know it, he conceded in an interview with The Inquirer in the fall. Only after moving from Denver in 2011, he said, did he realize that his predecessors in Philadelphia had relied on deficit-spending budgets for 15 years.

His tenure since has included a drumbeat of grim financial decisions: shuttering schools, closing or merging parishes, and selling off assets, including the cardinal’s residence on City Avenue and an oceanfront home for clergy in Ventnor, N.J.

The archdiocese has 425 active priests, most living in rectories and other church-owned facilities across the region. It also counts 161 retired priests on its rolls, and cares for many of them. If they remain healthy, priests typically retire at age 75 and qualify for an annual pension worth half their final salary, usually about $12,000, clergy members said.

Some leave to live with relatives or on their own in private homes. Others live in parish rectories, or at Villa St. Joseph, a church-owned retirement complex in Darby. But some of the older archdiocesan priests never registered for Social Security, and they end up retiring without a guaranteed government check or medical benefits, priests said.

Adding to the pension fund was one of six goals highlighted during the “Heritage of Faith, Vision of Hope” fund-raising campaign launched in 2009.

“Established in the early 1990s, the priests’ pension plan currently has over $10 million in assets,” literature for the campaign said. “In order to meet the anticipated needs of our retired priests, the pension plan requires an additional $40 million.”

That campaign sought $12 million for the pension plan and $3 million for renovations at Villa St. Joseph.

When it ended in early 2011, the campaign had yielded pledges of more than $220 million, church officials said. Earlier this year, they publicly acknowledged that collections on those pledges had fallen short, and they downgraded their projected receipts to less than $180 million.

Gavin, the spokesman, said $4 million in Heritage of Faith donations were transferred into the priest pension fund on Jan. 31. But he declined to elaborate or discuss updated totals for the rest of the money collected and spent, a topic the archdiocese is expected to address in its report this summer.

One suburban pastor said the redemption rate on pledges “took a dive” soon after the campaign ended, about the same time a Philadelphia grand jury report led to the arrest of four current or former priests and the suspension of two dozen others accused of child sex abuse or misconduct.

In his meetings with clergy, the archbishop specifically denied that their pension funds had been used to cover costs related to the suspensions or ensuing investigations, some of which are still open, the priests said.

Last year, Chaput reported that the archdiocese had spent more than $11 million through June 2012 related to those cases.

The abuse and misconduct allegations have had at least an indirect impact, pushing more priests into early retirement. Priests who have agreed to leave public ministry and accept a life of “prayer and penance” after being accused of sexual abuse or misconduct are eligible to collect their pensions, according to information on the archdiocese’s website. At least 19 priests are now living under such restrictions, most on the same campus as Villa St. Joseph’s.

At least 25 other priests from the Archdiocese of Philadelphia have been laicized or voluntarily left the priesthood in the last decade. Church officials have not disclosed how many of those defrocked priests, some of whom were in the clergy for decades, collect a pension.

Earlier this month, Gavin declined another request for that information.

One pastor who attended a meeting with Chaput said he believed the archbishop was doing everything possible to keep them informed and find solutions to the financial mess he inherited. “I have total confidence that we’ve been given a correct and honest appraisal of things,” the priest said. Rita Schwartz, union president for non-religious teachers in archdiocesan schools, said she had heard about the troubles with the priests’ pensions, but was confident that pensions for archdiocesan teachers, which are managed through a separate trust, were stable.

Clergy pension funds have plunged in Boston and other dioceses, according to Charles Zech, who directs the center for the study of church management at Villanova University. Zech said he had not examined the financial situation in Philadelphia but wasn’t surprised to hear about the pension-fund troubles.

This archdiocese, he said, seems to have been battered by “a perfect storm of bad things happening at once.”

Correction: This story was corrected to reflect that the $11 million cost to the Archdiocese stemming from the sexual abuse scandal was not covered by insurance.

Complete Article HERE!