Render Unto Rome

by Jason Berry

  On becoming a bishop, a man—or his diocese—pays a fee to the Vatican called the taxa. “The amount varies according to the size of a diocese,” explains Tom Doyle, a Dominican on leave from the priesthood who served as a canon lawyer at the Vatican embassy in the early 1980s. “I remember when Joe Bernardin of Chicago was made a cardinal, the taxa was $6,000. I thought Chicago got a good deal on that one.”

  These days, many dioceses have turned to the bond market to reconsolidate debt and for building projects. “Investors increasingly view the collection plate as a reliable source of cash flow,” James Freeman wrote in the Wall Street Journal. “Church debt, which is increasingly packaged and sold as bond, has even offered sanctuary from otherwise turbulent credit markets.”19

  The bishop historically stands as a protector of immigrants and the poor, a role many hierarchs handle for the betterment of church and society. Cardinals are called Princes of the Church; each bishop functions as a prince of his own realm. In a monarchical power structure, money is a story of personality, how a given bishop tends to the infrastructure, funds, property, investments, social service programs, and parish life. But regardless of how they do the job, bishops are largely unaccountable for their decisions. The Vatican occasionally removes an incompetent bishop, but unless a hierarch speaks against dogma, he operates with little oversight. In the late 1990s Cardinal Anthony Bevilacqua of Philadelphia spent $5 million renovating an archdiocesan-owned vacation home on the New Jersey shore, his residence in Philadelphia, and three office buildings. Meanwhile, he closed fifteen inner-city parishes that had a combined deficit of $1.2 million. “Bevilacqua spent the approximately $5 million without making the expenditures public, bypassing his own advisers on some projects,” wrote Ralph Cipriano in a National Catholic Reporter investigation.

  In one instance archdiocesan officials failed to notify city officials about renovations at archdiocesan headquarters, in violation of city law.

  In contrast to his public style, Bevilacqua is remote in his private life. He reportedly has lived alone in a 30-room, stone-clad Victorian villa that serves as the archbishop’s official residence … with interior decorating, brass rails, Queen Anne chairs, gilt-edged mirrors, tasteful floral and pink draperies, pink brocade couches, poster beds with matching drapes and valances, brass chandeliers, brass sconces and polished stone statues of Italian greyhounds.20

  People in the pews had no role in choosing Bevilacqua. The Vatican and other bishops did. Nor, as laypeople learned during Philadelphia’s particularly harsh abuse crisis, could they remove him. Only the pope or a prosecutor could do that. The district attorney guided a lengthy investigation by a criminal grand jury in 2004–2005, which finally decided that Pennsylvania statutes did not support a prosecution of Bevilacqua for concealing pedophiles—the time frame was too far in the past. The 2005 grand jury report noted that the cardinal had a law degree: “What makes these actions all the worse, the grand jurors believe, is that the abuses that Cardinal Bevilacqua and his aides allowed children to suffer—the molestations, the rapes, the lifelong shame and despair—did not result from failures or lapses, except of the moral variety. They were made possible by purposeful decisions, carefully implemented policies and calculated indifference.”21

  THE EMBEZZLEMENT DILEMMA

  Catholics historically function in a culture of passivity, a mentality of pray, pay, obey that assumes that donations and decisions entrusted to ecclesial officials are executed for “the good of the church.” That timeworn term is elastic with irony. As Catholics we know too little about how well, or poorly, bishops and religious leaders manage the money we give and the larger sphere of church assets. The world’s largest organization is governed as a monarchy with no inherent structure for accountability, nor a true system of justice. Theft and embezzlements by American priests and lay workers account for substantial losses. Professor Charles E. Zech, an economist at Villanova University and director of the Center for the Study of Church Management, coauthored a report in which 85 percent of dioceses responding to the survey acknowledged having funds stolen. Eleven percent of the reported cases exceeded $500,000 in losses.22

  In 2009, for example, a jury in West Palm Beach, Florida, convicted the Reverend Francis Guinan, age sixty-six, of grand theft after hearing testimony about how he took funds over many years from his parish, St. Vincent Ferrer. The judge sentenced Guinan to four years in prison. The assistant pastor, John Skehan, drew fourteen months after a guilty plea in which he promised to make $780,000 in restitution.23 The two Irish-born clerics used church funds on expensive vacations, girlfriends, and lavish living. Dozens of cases of priests or lay workers who have stolen church funds have been reported in the American press. It is a problem that affects other denominations, too. In the reports on Catholic cases, one rarely reads of the priests being defrocked.

  Consider Monsignor John Woolsey, an ousted pastor on Manhattan’s Upper East Side who in 2006 agreed to a guilty plea of grand larceny for stealing more than $50,000 from parish funds. Prosecutors contended that Woolsey had stolen more than $800,000 in the previous seven years. The parish, Church of St. John the Martyr, sued its Travelers Crime Plus policy for denying its claim of $1.2 million in losses from Woolsey’s theft. Woolsey spent a year in prison. Upon his release, a spokesman for the New York archdiocese said, “We will have to sit down with Msgr. Woolsey to discuss his future with him.”24

  Such news reports, and the Villanova study findings, did not surprise Michael W. Ryan, a retired U.S. Postal Inspection Service manager who for years conducted field audits to ensure the integrity of post offices’ accounting systems. Across two decades, Ryan, a rock-ribbed Catholic and father of five, patiently wrote to bishops, cardinals, and the USCCB, proposing a plan to safeguard the collection plates. The bishops avoided him like the plague. Ryan’s letters and the articles he has written can be accessed at www.churchsecurity.info.

  “Assuming Sunday collection embezzlements are ongoing at 10 percent of the approximately 17,900 parishes at any given time,” states Ryan, “the average parish loss falls somewhere in the neighborhood of $1,000 per week, or roughly $50,000 per year. That computes to an annual loss of about $90 million solely attributable to Sunday collection embezzlements.” If one accepts Ryan’s theory, it would mean that in roughly the same time span in which sex abuse cases cost the church $1.775 billion, the loss from embezzlement and theft by priests or lay staff was $2.16 billion.25 Ryan’s figures are raw estimates. Joseph Harris, who demands hard data, scoffs at them. But on this issue, Ryan has good company.

  Leon Panetta, the Obama administration’s CIA director (and President Clinton’s former chief of staff), served from 2002 to 2004 on the National Review Board for the Protection of Children and Young People, composed of prominent lay Catholics who were chosen by the bishops’ conference to research the abuse crisis and advise on reform procedures. Panetta has called for outside oversight of parish finances. “They’ve got to be able to move into the 21st century,” he told USA Today, “and begin to apply some management practices that can help insure that they protect the trust of their parishioners.”26

  Terence McKiernan, a director of BishopAccountability.org, the library and online archive of the Catholic Church crisis, has tabulated intrachurch theft losses in press reports of sixty-nine cases, amounting to $38.5 million, based on indictments, convictions, and civil actions. In many reports, prosecutors allege a greater amount of embezzled funds. When those figures are added, the total leaps to $81.5 million. How much of that was recouped by insurance, and at what cost to premiums, we do not know. “Reported losses,” says McKiernan, “are a fraction of the total. We’re dealing with an unaudited, cash-based system. The great majority of theft goes unreported in parishes, dioceses, and institutions run by religious orders. The same organizational problems that make theft possible in the first place make it difficult to detect. The general terms of the Villanova study show from another perspective that it is impossible to count the f
unds embezzled each year.”

  “The complex that bishops have as the authority is that no one can give them constructive criticism,” explains Mike Ryan. “I think the primary reason they refuse to accept and act on the need to safeguard Sunday collection funds is that they were pastors, back when, and they know that all hell will break loose if they change the present system where Father has access to a little ‘walking around money’ before the funds are deposited in the bank.”

  “Many priests and parishioners would not consider ‘walking around money’ to be theft,” adds McKiernan. As Ryan points out, if funds are accurately deposited, a priest can write checks to cash. The parish finance council will monitor the accounts, with special focus on the cash account. The weekly collection should always be counted in the presence of two people with the total collection matching the amount that is deposited in the bank and shown on the deposit slip. For many years the bishops claimed that they could not impose binding standards for the removal of child molesters because every bishop was autonomous. They changed their position in 2002, adopting a youth protection charter. The same could be done with a policy to safeguard the collection plates. Were that to happen, argues Ryan, dioceses would see a surge of income. Alternatively, as McKiernan states, “losses can go unnoticed for decades.”

  When the losses spotlighted in the BishopAccountability.org database are weighed against the financial management of religious order provinces, the situation is more serious. In Philadelphia, a religious order’s finances were as vulnerable to theft as those of a diocese. The Reverend Charles Newman, OFM, was charged by a county grand jury in 2007 of taking by theft and forgery a total of $1,033,748 from Archbishop Ryan High School (where he was teacher, principal, and finally president) and from his Franciscan order. Newman was accused of using some of the funds to groom and bribe a boy he sexually abused. The youth later died of a drug overdose. Newman pleaded guilty on the finance charge and in 2009 drew a sentence of three to six years in prison.27

  FINANCIAL ACCOUNTABILITY

  In a 1985 survey of empirical data, Andrew M. Greeley found that Catholics donated on average $320 per year to the church as opposed to $580 by Protestants. “The decline in Catholic contributions over the last quarter century is the result of a failure in leadership and an alienation of membership,” noted Father Greeley, an esteemed sociologist, “not from the Catholic community or from sacramental participation but from support of the ecclesiastical institution.”28 In the quarter century since that survey, the alienation of Catholics from church leadership has worsened. A 1994 study found that the church lost $1.96 billion a year from “low giving”—what the bishops “could collect annually if Catholics gave at the average rate of all Americans” of other faiths.29 In a 2000 study provocatively titled Why Catholics Don’t Give … and What Can Be Done About It, Professor Charles Zech of Villanova assessed survey data in concluding that Catholics “felt they did not have sufficient influence in Church decision-making, lacked information on how Church funds were spent, and didn’t think denominational leaders were accountable on how contributions were used.”30

  As custodians of a religious charity the bishops are under no obligation to produce profit and loss statements for stockholders or the IRS. The distinction mattered little until the battering that many prelates took in the media coverage of the abuse crisis and the spotlight on legal settlements, which raise questions about the use of donations for religious causes. In a shift toward transparency, many bishops now post diocesan financial statements on their Web sites. Jack Ruhl, a professor of accountancy and associate dean of Haworth College of Business at Western Michigan University, has done sustained research on Catholic Church financial disclosures. Ruhl reports:

  Of 194 dioceses and archdioceses, about 115 have audited or reviewed financial statements available online. Of the others, 39 do not release financial statements to the public. At 12 dioceses, you must make a written appeal to the chief financial officer and if he or she thinks your request is worth granting, they will grant it. Another 28 dioceses publish some sort of financial report, which is different from financial statements, and which may or may not be audited. Only 5 of the 115 audited statements include parishes. The remaining 110 are primarily just the administrative offices. If the audited financials are just for the administrative offices, and not the parishes, those financials are almost worthless to someone who wants to understand the financial state of a diocese.

  The highest level of assurance is provided by a full set of financial statements that have been audited by a public accounting firm.

  A CPA firm will not provide an audit report without all of the figures for a statement. Ruhl credits the Archdioceses of Boston and Los Angeles and the Kalamazoo, Michigan, diocese for posting audited statements:

  A review is substantially less in scope than an audit. That’s how the Chicago Archdiocese releases information.

  No assurance is provided by financial statements that have been compiled by a CPA firm. A compilation just requires the CPA to look for obvious errors. An example is the Archdiocese of New Orleans. The numbers may or may not even be close. There is not a full set of financial statements, nor are there notes to the financial statement.

  Atlanta, Austin, Arlington, and Anchorage have audited statements, but none includes parishes in the accounting entity. Austin states that its parishes and other agencies have been separately incorporated. I would be very certain that they have been separately incorporated as a shield from abuse settlements. Anchorage’s statements are “special purpose,” not prepared in accordance with generally accepted accounting principles.

  Finally, there are financial statements that are not even accompanied by a compilation report. Somebody has just put some numbers together. An example of that is the Archdiocese of Philadelphia.31

  The church faces a major challenge in the retirement and elder care needs of priests and nuns, many of whom never paid into Social Security. The Archdiocese of Los Angeles had a $98 million shortfall for clergy pension and retirement as of 2009. The Chicago archdiocese was short $103 million for these needs in 2010; the Boston archdiocese was short $104 million. This funding crisis for priests and nuns stems only in part from the loss of investment revenues in the Great Recession. Abuse litigation is a huge cost. So is a downturn in giving by people who leave the church, distrust bishops, or have been strained by the recession. In 2003 religious orders of men and women faced unfunded retirement costs of $8.7 million. Of 573 religious communities providing data to researchers, 38 were adequately funded for retirement.32

  These are aching realities in light of the paramount role of religious sisters in developing a Catholic system of schools, hospitals, and orphanages. Today, that infrastructure has an impact well beyond the faithful. Catholic schools educate many inner-city youngsters from non-Catholic families. The church’s commitment to the poor, immigrants, and people on the margins is enmeshed with U.S. social policy. Catholic Charities USA was a leader in helping Vietnamese refugees relocate in America in the late 1970s and in assisting Gulf Coast families who were thrown into an economic free-fall by the BP oil spill in 2010. The Reverend Fred Kammer, a Jesuit and former president of Catholic Charities USA, explains, “In the United States, the Roman Catholic Church runs the largest private school system, the largest private health care system, and the largest private social service system. We built parallel systems that were dependent almost entirely on religious”—meaning priests and nuns in religious orders, not diocesan clergy. “And those three systems are all now predominantly staffed by lay people. They serve lay people and non-Catholics. Now one can say this is ‘a shortage of priests’ if you look at it negatively. Or it’s the era of the post–Vatican II church and the emergence of the Catholic lay person and the realization that baptism calls you to ministry. It’s reality.”33

  Catholic Charities USA had a $3.8 billion budget in 2007. Forty percent of that came from state and local governments, and 11 percent from federal gra
nts. More than $440 million was for programs assisting needy children and families, including foster and residential care.34 Catholic Charities in each diocese functions with its own budget, programs, and fund-raising. Overall, Catholic Charities has more than 50,000 employees and 250,000 volunteers providing services that are integral to the nation’s social safety net.

  THE VATICAN

  The Holy See issues a financial statement each July; however, it is not a clear picture of assets and worth. The two main categories are the Vatican city-state and the Apostolic Patrimony. The city-state revenues come from real estate, museums, gift shops, stamps, and coins. Apostolic Patrimony is the administration, or the Curia; it governs the 120 diplomatic missions, a publishing house, Vatican Radio, and the daily L’Osservatore Romano. The city-state revenues typically offset costs of Apostolic Patrimony. In 2006 the Vatican operating statement showed a surplus of $3.2 million, despite a loss of $9.5 million in the value of the euro against the dollar. “Most donations to the Vatican and some of its investments are in dollars, yet the Vatican’s expenses are mainly in euros,” reported Catholic News Service.35 But the Holy See has a major asset omitted from its financial statement: the Vatican Bank.

  In 1984 the Vatican Bank agreed to pay $242 million to three creditor banks as compensation for its role in assisting the money-laundering scheme of Roberto Calvi’s Banco Ambrosiano, which collapsed under $1.2 billion in debts. The Vatican Bank is traditionally “off the books,” a black hole in the Holy See financial statements. The Holy See’s true net worth is invisible. Subtract liabilities from understated assets and you have an illusory bottom line. Nevertheless, the Holy See’s 2007 balance sheet valued its total assets at 1.4 billion euros, or about 2.05 billion U.S. dollars. The statement showed the bulk of the Holy See’s income from rental properties in Europe. “The net worth is small for a national government,” comments Jack Ruhl. “But this is a gross understatement because they’re listing the value of St. Peter’s Basilica and other historic buildings at 1 euro each ($1.47).”