The prefect of the Secretariat for the Economy says the latest “serious irregularities” show “the moment of truth” in the Vatican’s economic reforms is approaching.

The Vatican body responsible for managing the Vatican’s real estate has been accused of far exceeding its authority by unilaterally telling Vatican departments to supply their financial information to an outside auditor.

The surprise move by the Administration of the Patrimony of the Apostolic See (APSA) which came in the form of two letters on May 3 and 5, was firmly rebutted by Cardinal George Pell, prefect of the Secretariat for the Economy (SPE), and the Holy See’s auditor general, Libero Milone, who wrote a reply saying “with deep regret” they had to intervene to refute the APSA letter.

In both of his letters, APSA’s Secretary, Msgr. Mauro Rivella, had asked dicasteries of the Holy See, as well as institutions associated with them, to “pass information to their banks (including the Institute for Works of Religion), legal and fiscal consultants, so that the data could be transmitted directly to the external auditor, Price Waterhouse Coopers (PwC).”

Despite the Secretariat of State suddenly suspending the PwC audit last April and then ending it two months later, leaving it just with a consultancy role, Msgr. Rivella stated that PwC was carrying out the auditing activities of the Holy See.

He said that on Feb. 20 the Council for the Economy, the body set up to oversee financial reform, had authorized APSA to undertake such a “revision procedure”, but this has been checked and found to be untrue, sources close to the issue have told the Register.

In their letter of reply sent to all dicasteries May 8, Cardinal Pell and Milone reminded APSA of its limits and operational boundaries, saying it had “no authority, nor the prerogative, to request institutions of the Holy See and the Vatican to undergo audit activities, nor to send information pertaining to your authority to the external company, PwC, or to other parties.”

They said that “with deep regret” and “in accordance with institutional duties and having the obligation to protect the Holy See and the Holy Father” they had to intervene to put things in their place.

The cardinal prefect and auditor general stressed that since the PwC audit was ended last year, “there is no ongoing audit” by the international accountancy firm, “something that was clarified in the press release of 10 June 2016, in which it was stated that the task of auditing is entrusted to the Office of the Auditor General.”

They also specified that APSA is subject “to the control and supervision of the Council for the Economy and the Secretariat for the Economy, and subject to the review of the Office of Auditor General.”

“In light of the incorrect content and claims APSA raised,” Cardinal Pell and Milone asked the organizations in question “not to follow what was requested by APSA.”

APSA's lack of cooperation

In addition to this latest incident, the Register has also learned that Cardinal Domenico Calcagno, president of APSA, has yet to present Cardinal Pell with a memorandum on Vatican property, despite the Pope telling him to do so.

Cardinal Pell has said he believes these “serious irregularities” in the APSA show that the Vatican could be approaching the “moment of truth” in the economic reforms.

This latest move by APSA is not the first time events surrounding Vatican reform have taken the SPE by surprise. Set up to bring greater financial control and vigilance to Vatican finances, the Secretariat was not consulted about the ending of the PwC audit last year, nor was it informed in advance about the motu proprio released last June, removing the power of the SPE to supervise the administration of the Vatican's financial assets. Those were returned to APSA.

But this latest incident is being viewed as an extraordinary encroachment not only on the authority of the Secretariat for the Economy and the auditor general, but primarily that of the Secretariat of State. Unlike the surprises of last year, inside Vatican sources say this did not come from a higher authority, and is therefore being read as a provocative move by APSA in a bid to “claw back” some of its powers.

The Vatican is officially saying that this is all part of a process of fine tuning, that it is merely confusion and that reforms take time to shake out, but others say it is clearly a sign of resistance.

In the past, the Secretariat of State has withstood some reform efforts because it has wanted to keep control over Vatican finances, but APSA has been arguably the most resistant to the reforms because, in the words of one source close to the issue, “they don’t want scrutiny — either because they’re up to no good, or were up to no good in the past.”

The Vatican body’s judgment has been called into question in recent months after it allowed a McDonald’s to rent Holy See-owned premises close to the Vatican, upsetting some cardinals who live in the same building, and permitting a Hard Rock shop to rent Vatican property on the Via della Conciliazione, the central boulevard leading to St. Peter’s basilica.

This rare public rebuke of APSA, allegedly approved this time at the highest levels, possibly shows a more concerted attempt to reform the Holy See’s finances than some thought after the unexpected cancellation of the external audit last year.

But just how true that is will be seen in how the next stage is played out and how APSA responds.

The Register contacted Cardinal Calcagno for comment but his office passed us to the Holy See Press Office which declined to comment at this time.