Church sins and secrets exposed in battle with Vatican `mafia'

EXCLUSIVE

PAOLA TOTARO

First published in The Australian newspaper, Friday, November 11, 2022

The Vatican's first auditor-general, Libero Milone, has launched a multi-million-euro lawsuit against the Holy See, warning he will not be intimidated or silenced by an internal power lobby that behaves like the "mafia and use every method including blackmail and dirty dossiers" to impede financial reform.

In an unprecedented move, the Dutch-born, ex-Deloitte partner and his deputy, Ferruccio Panicco, have accused the Vatican of wrongful dismissal and are seeking nearly €9m ($14m) in compensation for moral and reputational damage, lost earnings and "an effective death sentence" in the wake of delayed cancer treatment.

Mr Panicco, a former senior financial officer with the Italian automotive giant Fiat, has been diagnosed with stage-four prostate cancer.

He had been monitored regularly and treated for a prostate condition by Vatican medical teams, but this stopped abruptly in June 2017 when the two men were accused of embezzlement and spying, and forced to resign after several hours of aggressive interrogation by Vatican gendarmes. When Pope Francis appointed Mr Milone to a five-year contract in 2015, he became the Holy See's first independent auditor, working with a wider, high-powered team, including Cardinal George Pell, charged with leading an overhaul of the Vatican's antiquated financial systems.

Since his sudden sacking, Mr Milone and his lawyers have spent nearly five years trying to unearth details of the charges made against him. "It is unimaginable that charges against an individual be kept secret or confidential - even totalitarian regimes don't hide the nature of legal accusations," Mr Milone said.

"I have had cardinals and bishops tell me 'Be careful what you say, what you speak of, out of place'. In the Vatican, we know there is a power lobby that impedes every type of reform, and they use every method and every excessive power to block change. It's a small mafia in the Vatican and the gendarmerie through their system of blackmail and preparing dirty dossiers keep everything under control."

News of the lawsuit could not have come at a worse time for the Holy See as officials brace for the appearance later this month of Monsignor Alberto Perlasca, a key suspect, turned star witness, in the so-called Vatican "finance trial of the century".

Monsignor Perlasca, a senior prelate who once controlled the purse strings of the Vatican state department known as the Secretariat of State, was at the heart of the controversial €35om purchase of a property in London's Sloane Ave. Bought in 2018, it was sold earlier this year at a loss of an estimated €136m amid a complex web of lucrative secret commissions paid to Italian financiers who now also face charges of fraud and money laundering.

Monsignor Perlasca answered directly to Angelo Becciu, the cardinal believed to be the alleged mastermind of Mr Milone and Mr Panicco's forced resignations and who is also charged with embezzlement and abuse of office.

The auditors' 53-page statement of claim for damages, filed last Friday with the Vatican's Chief Prosecutor in Rome, contains a damning list of 20 "strange and unusual" transactions, acquisitions or financial cover-ups, which were flagged by the auditors in a number of formal reports presented to senior Vatican officials but were not followed up.

The document does not name the cardinals and officials involved but makes clear they can divulge these if needed. The document suggests that Pope Francis himself has been subject to a campaign of "disinformation, lies and omerta".

Time of reckoning

The claims in the legal document filed by the former auditors include:

·  Cybersecurity tests conducted as part of a risk assessments by the auditors' team revealed hackers easily gained access to Vatican email systems, including the Pope's own.

·  A note co-signed on April 5, 2017, by Mr Milone and Cardinal Pell alerting the Pope to "grave and evident irregularities in APSA's conduct". APSA is the arm that administers the Vatican's enormous global property assets. The note further warned that this was a "time of reckoning and truth for the economic reforms". Mr -Milone was forced to resign on June 20, 2017, while Cardinal Pell returned to Australia 10 days later to face allegations of child sexual abuse.

·  Acquisition of another, until now unknown, London property, on Kensington High Street. This €90m purchase by APSA in partnership with the Vatican's pension fund contravened explicit written opposition by Cardinal Pell, who warned London was in the throes of a property boom and the price was overvalued. Its approval by the then-APSA head also contravened Vatican money-laundering rules introduced by Pope Benedict which require the Holy See to clearly identify a seller. The property was bought from a trust in Jersey and, according to the auditors, "nobody knows who the seller was or how much went from the trust to the seller or if commissions were paid like Sloane Avenue".

·  Conflicts of interest between the cardinal who headed APSA and an agricultural estate on the outskirts of Rome rented by a company headed by a namesake who was unrelated and yet married to one of the cardinal's relative. Rental debts to the Vatican of more than €800,000 had accrued and remained unpaid.

·  The disappearance of €2.5 million donated to a Foundation Bajola Parisani to build a new wing in the Roman paediatric Hospital of the Baby Jesus. The auditors found only a "thank you" plaque for the new department, placed at the entrance of an old wing.

·  Rental of a sumptuous Vatican apartment to a prominent journalist and presenter with the Italian public broadcaster RAI. His "cut-price lease" suggested that any sponsorship or promotional fees earned would be "donated" to church charities, but no evidence of payments was found.

·  The "accidental, erroneous" transfer of €250,000 of Vatican funds to a cardinal's personal bank account which, when reported to the Pope by the auditors, resulted in an immediate repayment. An additional €250,000 was found in bank notes in his office. The lawsuit document states that Mr Milone was seen periodically by Pope Francis to report his findings and was always advised by the pontiff to resolve such problems with a "softly softly" approach.

·  Use of €170,000 in Vatican funds to renovate the apartment of the now disgraced head of the gendarmes, Domenico Giani.

·  Anomalies in refurbishment works to the Baroque San Callisto Palace in the Trastevere district of Rome. These included the use of a building firm that had worked for the Diocese of Terni and revealed quotes for amounts far higher than what subsequently appeared to have been invoiced and paid. The Bishop of Terni was one of 10 people previously investigated for alleged fraud over the purchase of San Girolamo Castle, on the outskirts of Narni.

`Put on the cross'

The auditors also revealed that a high-level review of APSA's payment systems, originally requested by Cardinal Pell, had revealed that the SWIFT system used by the Vatican entity had been manipulated to allow changes of payment destination after the fact.

This meant that the usual mandatory freezing of international payment data, designed to create a traceable electronic trail of payments between banks, did not work and APSA could amend and change these at will.

"We have never ever known of this anywhere else in the world. It makes money laundering easy. They could send money to Saddam Hussein's son without keeping track of it, they could finance terrorism, finance anyone without trace so it was very dangerous and very significant. It was reported and nothing has happened," Mr Panicco said.

Mr Milone told The Australian that many other issues uncovered during the auditing work, including the later unearthing of the anomalous Sloane Ave acquisition, have at last emerged into the open because "lies have short legs".

"I believe we did what was right but in the end, we uncovered things that were embarrassing for the Vatican. I did not know I'd find cardinals putting money in their pockets. I just did my job. I reported so why am I put on the cross for doing the right thing, for doing what I was appointed to do?"

Mr Panicco said the dangerous delay in identification of the escalation of his cancer meant there was now little that the Vatican could do to harm him further: "They've done their worst ... they are guilty, if not maliciously, of sentencing me to death and probably have taken 15 to 20 years of my life."

Espionage charges

In 2018, seeking answers to his dismissal, Mr Milone was offered a document signed by Gian Piero Milano, the chief prosecutor and then president of the Vatican Tribunal which stated all charges against him had been mothballed.

However, his employment file, deemed the subject of a papal secrecy decree, was never made available. Dissatisfied, his legal team persevered quietly and diplomatically behind the scenes until this year when the Vatican changed tactics and threatened Mr Milone with new espionage charges.

These include the alleged use of geolocation technology to track Danny Casey, the Sydney Diocese former business manager, who had worked with Cardinal Pell during his tenure reforming finances, and spying on Jeffrey Lina, the lawyer who has been paid millions to defend paedophile priests in the United States.

Mr Milano categorically refutes the new allegations, describing them as inventions and says he will no longer remain silent or be intimidated.

The two men said they were honoured and enthused about working to safeguard the distribution and management of moneys donated by the faithful to fund the church's good works and that they had worked in accordance with Vatican statutes which state that the "Auditor-General, with full autonomy and independence, will follow recognised international best practices in public administration".

International standards for the audit sector are set by the umbrella body INTOSAI (International Organisation of Supreme Audit Institutions), a watchdog body which the Vatican has subscribed to since 1986.

"Why did we accept this job? Our intentions had nothing to do with ego but to contribute to the work that cardinals Pell, Parolin, and Marx were doing. They were convinced they were doing good, sound work ... sound until someone discovered just how good it was and threw it out the window," Mr Milone said.

"My mother used to go to church, donate money to help the church, as did so many of her friends and so many Catholics around the world.

"We discovered that this money ended up in personal pockets, it was diverted, misspent, misused ... I have a lifetime's career to respect. I want my grandchildren to know that their grandfather did the right thing."

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