Though Parolin said the arrangement was “carried out with fair intentions and honest means,” the APSA loan is likely to draw scrutiny from European banking regulators, as the loan seems to violate 2012 regulatory agreements prohibiting the bank from making commercial loans.
Those agreements were the result of an on-site inspection by Moneyval, the Council of Europe’s Committee for combating money laundering and terrorist financing, and legally prohibit APSA from providing services to individuals or taking part in commercial transactions.
CNA also asked Parolin to confirm that he had personally devised a plan with Wuerl to request Papal Foundation funds to cover APSA’s bad loan. The cardinal confirmed that he had.
The $25 million grant request was widely understood to be an effort to remove the bad debt from APSA’s ledger before it drew attention, after it became obvious that the debt-ridden and insolvent hospital could not repay its loan to the Vatican central bank.
Wuerl, however, told the Papal Foundation board that the funds were intended to save the IDI from closure by covering short term operating deficits. But lay board members raised questions about whether the cash was really intended to meet an operating shortfall at the hospital, or to cover the bad debt at APSA.
Papal Foundation trustees and donors expressed also skepticism about the amount requested, which was far larger than its normal disbursements, which ordinarily are grants of a few hundred thousand dollars to charities around the world, selected by the Holy See.
After one board member objected to the loan by letter, former cardinal Theodore McCarrick, who was then a member of the board, wrote that raising concerns was “irresponsible, and seriously harmful to The Papal Foundation.” McCarrick was under investigation for sexually abusing minors at the time he intervened in the matter.
Despite objections, the grant was ultimately approved by the Papal Foundation board in a secret ballot - sources inside the foundation told CNA that board members believe all but one of the bishop members voted for it, while all but one of the lay members voted against approving the grant.
Dispersal of the money stalled after the board continued to ask questions about the final destination of the funds.
Two initial installments were sent to Rome in late 2017 and early 2018, totaling $13 million. After internal disagreements about the grant went public, Cardinal Wuerl said he would ask the Vatican to cancel the request and return the funds. In early 2019 Parolin wrote to the board saying the $13 million would be reclassified as a loan, rather than a grant, and would be repaid as credits against future grant requests.
When the grant money stalled, APSA was forced to write off 30 million of the 50 million euro loan, wiping out APSA’s profits for the 2018 financial year.
Bishop Nunzio Galantino, head of APSA, acknowledged the loan and its write-off in September, even though APSA is legally prohibited from making loans that finance commercial transactions, due to its 2012 moneyval agreement.
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After the Oct. 21 publication of a book that alleged the Vatican was nearly insolvent, Galatino blamed the loan for APSA’s failure to register a profit for the first time in its history.
Parolin answered CNA’s questions this week after Cardinal Angelo Becciu, who has widely been reported to have been the driving force behind both arranging the loan and pushing for the Papal Foundation grant, contacted CNA to deny his involvement in those matters. He told CNA that both matters were the "competence" of the Secretary of State, Parolin.
Becciu told CNA by text message earlier this month that he had not known about the APSA loan until after it was arranged, and that he had no part in requesting a grant from the Papal Foundation.
The 2014 APSA loan was arranged over the strong objections of Cardinal George Pell, then serving as the Prefect of the Secretariat for the Economy and charged by Pope Francis with enforcing financial accountability on the Roman Curia. CNA has also reported a loan request for the same purpose had been vetoed by the IOR, the Vatican’s deposit bank, after its president, Jean-Baptiste Douville de Franssu, and Pell agreed that the IDI was unviable and the money would never be repaid.
While Parolin took responsibility for the IDI arrangements, Vatican officials across several dicasteries have told CNA Becciu was involved in organizing both the loan and coordinating the lobbying effort for the Papal Foundation grant. That effort included a visit to McCarrick by the secretary of APSA, Fr. Mauro Rivella, in Washington, DC, shortly after the grant request was made. The visit took place before McCarrick pushed board members to approve the grant, and after an investigation into McCarrick’s sexual misconduct had begun.
Still, Parolin insisted that “as far as I know, Cardinal Becciu had no role whatsoever in” those matters.