The Holy See is seeing red

Heavy personnel costs
Vatican experts blame the deficit on heavy personnel costs — 2,674 people work in Holy See offices, more than half of them lay people. But the Vatican also greatly expanded its diplomatic activity during John Paul’s papacy and now has a costly network of representatives in 174 nations.

In presenting the financial report, the chief of the Holy See’s economic affairs office cited Europe’s sluggish economic recovery, a poor investment climate and the rising strength of the euro against the dollar. Salaries are paid in euros.

“Our financial statement could not help but reflect all of this,” said Cardinal Sergio Sebastiani.

The College of Cardinals, which is running the church until a new pope is elected, said in its daily report Tuesday that Sebastiani briefed them on the 2004 statement and several details of the 2005 budget. No details were given.

The sex abuse crisis has taken a heavy financial toll, particularly in the United States and Ireland. The payout to victims of clergy sex abuse in the United States has climbed to a total of $840 million since 1950, with three dioceses — Spokane, Wash., Portland, Ore., and Tucson, Ariz. — seeking bankruptcy protection.

The Vatican doesn’t bail them out, but the payouts raise questions about the ability of American dioceses to keep up financial contributions and could discourage individual faithful from giving through what is known as Peter’s Pence — donations offered directly to the pope that the Vatican has said totaled $55.8 million in 2003, up 5.7 percent from the previous year.

U.S. chief source of donations
Vatican officials say the United States remains the main source of donations, followed by Germany. Because of the dollar’s weakness, the value of assistance from dioceses worldwide dropped from 85.4 million euros in 2002 to 79.6 million euros in 2003, the July financial statement said.

Experts say the Vatican has dollar-denominated stocks in its portfolio, making sure the Holy See avoids investments in companies that manufacture contraceptives or armaments.

While providing no list of holdings, Vatican accountant Paolo Trombetta said during the presentation of the most recent financial statement that the Holy See seeks “safe if low yield” investments, much of it in government bonds.

John Paul ordered an annual financial disclosure in 1981 as part of his efforts to debunk ideas that the Vatican is wealthy. He set up a financial committee of cardinals, which presents the figures for examination by a panel of international auditors.

The pope also shook up the leadership of the Vatican bank after it was stung by dealings with Italy’s Banco Ambrosiano, which collapsed in 1982 with its president, Robert Calvi, found hanged under a London bridge.

Banco Ambrosiano was $1.3 billion in debt, much of which had been loaned to a series of shell companies in Panama and Luxembourg that were controlled by the Vatican bank. The Vatican did not acknowledge any wrongdoing but agreed to a goodwill payment of about $250 million to creditors.

MORE FROM POPE REMEMBERED

Pope remembered Section Front

Images: Final farewell for Pope John Paul II   Images: A historic papacy   Images: Paying respects to late pontiff   Images: Mourning Pope John Paul II Pope John Paul II remembered NBC: Perhaps ‘Saint John Paul? Benedict watches movie about John Paul II Live Vote: Sainthood for John Paul? Quiz: How much do you remember? Pope remembered Section Front   Add Pope remembered headlines to your news reader: