In key reform, Pope Francis centralizes Vatican finances

ROME -- In the most concrete sign to date of his intention to reform the Vatican, Pope Francis announced the creation Monday of a single authority to handle all business, administrative and personnel management at the Holy See, a response to the rash of financial scandals that have tarnished the Roman Catholic Church’s reputation among believers and nonbelievers.

The new Secretariat for the Economy will draw up the Vatican’s annual budget, call on lay experts for advice and launch surprise internal audits. The body will help ensure “a more formal commitment to adopting accounting standards and generally accepted financial management and reporting practices, as well as enhanced internal controls, transparency and governance,” the Vatican said in a statement.

Heading the secretariat is Australian Cardinal George Pell, the archbishop of Sydney, who has been a critic of the Vatican’s lack of accounting transparency. Pell is a member of a group of eight handpicked cardinals whom Francis has tasked with advising him on how to reform the Holy See.

“If we make better use of the resources entrusted to us, we can improve our capacity to support the good works of the church, particularly our works for the poor and disadvantaged,” Pell, 72, said in a statement.

In a papal document known as a motu proprio, Francis decreed that Pell would work with a 15-member council made up of eight senior prelates from different parts of the world, as well as seven lay experts “of various nationalities, with financial skills and acknowledged professional status.” The pope has already hired independent firms such as Ernst & Young and KPMG to help shake up the Vatican’s complicated and murky bureaucracy.

Centralizing many financial powers under the new secretariat represents the biggest change to the Curia, the Vatican administration, since John Paul II overhauled operations in 1988.

The new arrangement also envisages an auditor general, to be named by the pope, who will “be empowered to conduct audits of any agency of the Holy See and Vatican City State at any time,” the Vatican said.

Allegations of corrupt purchasing practices at the Vatican surfaced in letters written to Francis’ predecessor, Pope Benedict, which were leaked by his personal butler in 2012. Archbishop Carlo Maria Vigano, formerly the deputy governor of Vatican City, denounced the signing by Vatican staff of inflated contracts with friendly companies. As proof, Vigano said he was able to cut 250,000 euros, or about $340,000, off the price of a Christmas Nativity scene in St. Peter’s Square.

Since those accusations were made public, a former accountant at the Vatican, Monsignor Nunzio Scarano, has been arrested and put on trial for allegedly plotting to smuggle the equivalent of about $27 million into Italy.

The Secretariat for the Economy will not oversee the Vatican bank, known as the Institute of Religious Works, which has been plagued for years by accusations of money laundering. The bank is now being scrutinized by another papal commission, and reforms -- including the closing of scores of accounts -- are being overseen by a Financial Information Authority, set up by Benedict.

Kington is a special correspondent.