Vatican caught up in money laundering scheme involving hospitals and charities
02/01/2020 // Cassie B. // Views

It appears that the Vatican used a respected charity to bail out a Church hospital plagued by corruption in a transaction that may have violated European regulatory commitments.

Leaked documents show how Vatican officials used expensive and apparently deceptive means of diverting 50 million euros from the Bambino Gesu, a children’s hospital in Rome, to a bankrupt Italian dermatology hospital, going against warnings not to go through with the transaction from a cardinal who had been put in charge of financial transparency.

Documents seen by the National Catholic Register showed that officials worked with two cardinals to arrange for the children’s hospital, which falls under Vatican authority, to guarantee the loan in question to the dermatology hospital, which is known as the Istituto Dermopatico dell’Immacolata (IDI). Two lay consultants who were involved were given six-figure commissions in addition to their other salaries for their work on the transaction.

At the time, the IDI was facing closure and debts of more than 600 million euros. A foundation was set up in 2015 in an effort to save the hospital and keep it as part of Catholic health care.

The loan was strongly opposed by Cardinal George Pell at the time, but Pope Francis overrode him and let the Administration of the Patrimony of the Apostolic See (APSA) move forward. Although the pope later canceled the hospital’s loan guarantee when he realized his mistake, APSA has yet to return the 50 million euros to the children’s hospital.

Vatican officials reportedly used APSA to hide the origins of the loan. They had the Bambino Gesu deposit the funds with APSA in the form of an APSA-issued certificate of deposit, which was used as collateral for guaranteeing the IDI loan. This made it appear that the financing came from APSA rather than the respected children’s hospital, which is mostly state-funded.


One source told the Register that the move was “all smoke and mirrors,” and the paper saw documents showing the funds’ transfer to the foundation from the congregation.

In a statement, the head of APSA, Bishop Nunzio Galantino, acknowledged that the central bank of the Vatican had loaned 50 million euros for the purchase of the IDI despite APSA being prohibited from making loans for commercial transactions by policies that exempt it from external oversight.

Scandal-plagued Vatican can't stay out of the headlines

It’s not the only money laundering scandal to hit the Vatican recently. Reports emerged last fall demonstrating the movement of Vatican money though European slush funds, along with a $250-million-plus Vatican investment into luxurious London apartments through a financier who raked in profits while the Vatican investment tanked. Italian media outlets also reported that prosecutors found evidence of fraud, money laundering, embezzlement and abuse of office among the higher tier of Vatican management.

Although Pope Francis made some strong initial moves toward cleaning up Vatican finances, seasoned Vatican bureaucrats always seem to be one step ahead of the group he assigned to reform their bureaucracy thanks to their immense influence and support. A powerful Vatican official canceled an external audit that had been planned for April 2016; the Vatican’s auditor general was forced out the following year after allegedly discovering financial improprieties carried out by his superiors.

A report by the anti-corruption authority of the Vatican last year showed that the Secretariat of State used around $725 million for off-book operations, most of which came from the pope’s charity fund.

The Catholic Church has suffered scandal after scandal in recent years, and news like this won’t do much to repair its reputation. It’s time for the Pope to use his power to get serious about cleaning up the corruption in the Vatican and provide greater transparency about how funds are spent and improper behavior is addressed.

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