Vatican’s Suspension of Major Pwc Audit Exposes Internal Rift

By Stephanie Kirchgaessner
The Guardian
April 21, 2016

http://www.theguardian.com/world/2016/apr/21/vaticans-suspension-of-major-pwc-audit-exposes-internal-rift-george-pell

Pell is a controversial figure who was hand-picked by Pope Francis to lead the drive for reform. Photograph: Alessandro Bianchi/Reuters

The Vatican has suspended its first audit by a major accounting firm in a move that raises new questions about the Catholic church’s commitment to cleaning up its finances. The Vatican’s chief spokesman, Federico Lombardi, said the audit by PricewaterhouseCoopers had been halted pending an analysis of “certain aspects” of the auditing arrangement.

The surprise decision has exposed a deep rift between the church’s old guard – a powerful Italian bureaucracy resistant to greater transparency – and supporters of financial reform, led by the Australian cardinal George Pell. Pell, a controversial senior figure, was handpicked by Pope Francis to lead the drive for reform.

The Holy See’s finances have long been seen as a mystery, with Pell himself acknowledging in 2014 that “hundreds of millions of euros” had been discovered “tucked away” and off the city-state’s balance sheets.

In 2014, when Pell was chosen to become secretariat of the economy, a new role, Francis endorsed a plan for the Vatican to adopt globally accepted accounting standards and better internal controls, transparency and governance of the church’s vast finances. That included a decision to allow “senior and experienced experts” in financial administration to help manage and oversee the church’s finances.

But what was then seen as the first major structural reform of Francis’s papacy is facing stiff headwinds, despite a recent spate of embarrassing revelations about the alleged mismanagement of church funds by senior officials, including claims in two recent books that describe lavish living arrangements for senior clergy members in Rome.

On Thursday the Vatican was forced to confirm that the audit was being suspended after the news leaked that an archbishop named Angelo Becciu had written a letter to every Vatican entity on 12 April announcing the pause in proceedings. The Becciu letter instructed the Vatican entities that PwC had been given authority to collect financial information from the groups, but that the authority, issued by Pell, had since been revoked.

Pell’s office said the Australian cardinal was “a bit surprised” by the Becciu letter and that he fully expected the audit to resume once certain issues were clarified.

A person familiar with the issue inside the Vatican, who requested anonymity, said the fight over the PwC audit pointed to a broader power struggle between senior Vatican officials who wanted to ensure that details of the church’s finances were not exposed to outside scrutiny and those who wanted to pursue reform. The letter was sent at the behest of Italian cardinal Pietro Parolin, the secretary of state.

Those who opposed the audit were alleged to be concerned that the Vatican might be exposing itself to too much outside scrutiny, and whether it could trust PwC to keep the information confidential.

The fight also reflects doubts and speculation about Pell’s future within the church hierarchy. The Australian cardinal was appointed as the church’s top financial official by Pope Francis following the latter’s election in 2013. In Rome, Pell is seen by the Italian bureaucracy as a brusque figure and an outsider, Vatican watchers say.

But a separate controversy related to Pell’s history in Australia, and allegations that he ignored the widespread sexual abuse of minors in his native Ballarat in the 1970s and 1980s, have opened the door for his critics in Italy to question whether Pell will remain in his position.

On 8 June Pell will turn 75, the age when, under Vatican rules, he must submit his resignation. It is unclear whether the resignation will be accepted by Francis or not. The secretariat term was supposed to be five years, which would keep Pell in that post until 2019, but an article in Italia Oggi this week suggested that Pell would leave, and that his departure would also trigger the ousting of Jean Baptiste de Franssu, a French businessman brought in by Pell to lead the Vatican bank.

Pope Francis met Pell on Thursday morning, but no details of their discussion have yet been revealed.

Inside a church where political moves can be difficult to interpret, the decision to disrupt the PwC audit could be viewed as an attempt to signal that Pell is on his way out. Adding to the intrigue, veteran Vatican watcher John Allen said in a report on Catholic news website Crux that Parolin had discussed his concerns about the PwC audit with Pope Francis and that Francis had probably approved of the Becciu letter.

Edward Pentin, a Vatican journalist for the conservative National Catholic Register, which is supportive of Pell’s reform efforts, said: “It’s becoming clear that the rigour of the audit in an effort to raise its financial transparency to international standards is unnerving some in the Vatican.”