Merchants in the Temple (13 page)

COSEA shared this assessment with Francis, adding its own criticism of all the “commercial activities that are inconsistent with the public image of the Holy See and harm its mission: tobacco, fragrances, clothing, electronics, gas.”
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The Commissioners took a tough and unequivocal position, proposing that radical steps be taken:

We have to examine the commercial and cultural activities to reduce the financial and reputational risk, and bring them into line with the mission of the Church … [and thus] cease all activities that damage the image of the Holy See.

The cigarette, electronics, fragrance, and clothing stores should be closed while the commercial businesses should be converted for the purpose of “improving all the activities that strengthen the mission of the Church: museums, philately [the collection and study of postage stamps], numismatics [the study or collection of coins, paper currency, and medals] and activities for pilgrims.” The Pope and his trusted men believed strongly in a change of direction aimed at enhancing the museums, since they represented a huge source of income. Their argument found support in the figures provided by Ernst & Young:

Vatican Museums: 6% increase in revenue, while costs have grown by 9%; 84% of income is generated from ticket sales, and the other 16% is from food services, souvenir and bookshops, and audio guides to the collections (outsourcing activities). The Museums department is currently the body within the Governorate that employs the most people (approximately 700) and generates the highest economic returns (an estimated total income of 105 million for 2013). In 2006 the museums took in approximately 62 million. Profits from 2006 to 2012 went from 33 to 54 million. In 2012 the museum's total costs were about 24 million (mostly due to personnel costs). There were an estimated 5.5 million visitors in 2013: the number of visitors can fluctuate from 10,000 to 22–25,000 per day.

Regarding ticket sales:

Tickets purchased online include a four euro service charge. In 2013 the service charge will generate approximately 10 million euros. In 2013 it is expected that online ticket sales will account for 70% of all tickets sold. Most of the revenue generated by the museums comes from ticket sales (approximately 90% of the total). The rest comes from the six food sales points (from 3.7 million in 2006 to 5.2 million in 2012). The outside company that handles food services gives 25.5% of its proceeds to the Vatican. According to the terms of the current contract, the outside company purchases the raw materials used for food services from the Vatican City.
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The first figure to come under consideration was the number of employees, approximately 700. The internal analysis found that a good turnover rate would optimize the output of the available human resources. The most viable idea would be to keep the museums open for the whole weekend, which would increase receipts by 30 percent.

But no one at the Apostolic Palaces seemed very receptive to these possibilities, although Ernst & Young's proposals had reached Francis's inner circle:

The museums should be considered one of the pillars of the Vatican's economic development. [They could only grow] comparing the key performance indicators with the development of potential growth strategy proposals, including extending the hours every day and to certain days of the week (for example, staying open on Sunday), expanding the exhibition area, raising ticket prices, and exploiting the “brand” to increase the sale of merchandise.
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A Secret Unsigned Contract with Philip Morris

According to the statistics of the World Health Organization, tobacco smoke is the second-leading cause of death in the world and the leading cause of preventable death. Given the obvious health risks, COSEA considered the sale of tobacco the most negative commercial activity at the Vatican. To support or even simply tolerate smoking could not be condoned by Francis's pontificate. Selling cigarettes is the activity most alien to the Church's mission and the most threatening to its image and reputation in both theoretical and practical terms. This was made quite clear in the late afternoon of November 18, 2013, at a two-hour presentation on the Holy See's various commercial activities.

The presentation was given by two laymen of the Curia, Sabatino Napolitano of the Governorate's Department of Economic Services and Enrico Bartelucci of the General Accounting Office. The two men assured the auditors that “the Vatican City”—as can be read in the report written immediately after the meeting—“does not engage in promotional activities for tobacco.” This meant there was no advertising, no promotion of smoking, and no push to sell cigarettes. Their policy was to safeguard health and to condemn those who profit from tobacco sales. Their actions, unfortunately, told a different story. The Vatican, like any other state, had a strong interest in selling as many packs of cigarettes as it can. There could be no clearer proof than a letter of February 2013, which the Commission would examine a few months later.

The letter was written during the last days of the pontificate of Benedict XVI. On February 11, 2013, the Pope announced his resignation, to the shock and dismay of the faithful throughout the world. In the same period, business proposals arrived in the Curia that were not quite consistent with the message of the Holy Gospel. On February 21, one of the Vatican's cigarette suppliers sent an email to the Governorate management on the subject of the “2013 Agreements.” The text listed all the benefits that would accrue by reaching a certain sales threshold:

Dear Sirs,

Pursuant to our telephone conversation, I wish to confirm the following:

1.
Bonus target

2.
Contribution for Introduction

We take note of your agreement to the introduction of the 2 Winstons (Winston One and Winston Silver) and confirm our special contribution of 4,000 euros (2,000 euros as a reference)

3.
Danneman Cigarettes

We have no budget available, but since we believe this product could be interesting to you, we are ready to provide you with a contribution of 1,000 euros to introduce it.

At your disposal for any further information you may require, Paolucci & C. International, SpA
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In their reply the only point that the Governorate managers objected to was the clause regarding Danneman cigarettes, which was immediately rejected. Napolitano wrote, “Not possible. OK only under the same conditions.”

I have no way of knowing if and according to what terms the proposal was accepted. But I do know that there were negotiations with the titans of the tobacco industry to receive a bigger cut of the profits a few weeks later, in March, in the midst of the Conclave. The cardinals had arrived from all over the world to elect the new Pontiff. On the evening of March 13, on the fifth ballot, a majority of cardinals voted for Jorge Mario Bergoglio. In the meantime, the Vatican's commercial activities continued unabated. Business is business. On that same date, a document arrived on the letterhead of Philip Morris, the powerful tobacco holding company. It appears to be a commercial contract valid for one year, indicating parties, terms, and fees. The letter's contents are jaw-dropping:

The Governorate agrees to conduct merchandising activity on behalf of Philip Morris International (PMI) brand cigarettes. For the conduct of these services, Philip Morris International Services Ltd. Rome branch will pay the Governorate a fee in accordance with the terms and conditions of the present agreement. The Governorate will provide the following information on a monthly basis:

•
The volume of purchases (COT) for each brand at the Duty Free Shop of the Vatican State.

•
Competitive promotional campaigns under way and/or already conducted, product launches and initiatives relative to the retail sales price.

•
Information received from the Governorate will be kept confidential and reserved solely for internal use, except when Philip Morris Rome has a different need to divulge said information …

For the provision of these services, PMIS-Rome will pay the Governorate a fee of 12,500 euros … The invoice should be sent to the PMI Service Center Europe Sp Z.o.o at Al.Jana Pawla II 196 Krakow, Poland. The payment will be credited to the bank account in Germany held by the Governorate.

The contract is unsigned and should be considered a draft for an agreement that would become more nuanced. In the accounting analyses being conducted by Francis's men, however, it could have been worse. Unsigned agreements were examined to understand whether approval was pending. Incredible, but true.

There was more. Contracts were also found with sums indicated that were reduced by half in an addendum bearing either the same date or the date of the next day. This meant that if a supervisor asked to review a contract with a friendly company, he would see the official version without the amendments that had magically reduced the amount that was to be paid to the Holy See. This practice of outright deception occurred repeatedly in leases. The contracts would indicate one amount while in the files an addendum would cut the amount in half.

These two documents were not submitted anonymously to the COSEA commissioners. The man who believed that the Pontifical Commission needed to evaluate the email with the sales incentives was Francesco Bassetti, a layman who had worked at the Vatican since 1999 as an account auditor. He had the courage to bring these seemingly inexplicable papers to his superiors.

“Do not obstruct the mission of Francis”

Under the pontificate of Francis, the atmosphere had definitely changed: the draft contracts with the powerful multinational tobacco corporations were carefully evaluated, where in the past they had looked the other way. As we have seen, however, the Pope's will would not always prevail in the Apostolic Palaces. Indeed, that would rarely be the case. As discussed earlier, John Paul I, the so-called Pope of Change, had wanted to reform a Curia that had been infiltrated by a group of senior prelates with ties to the Freemasons. He died mysteriously after only thirty-three days of his pontificate. While Pope John Paul II was deeply committed to fighting Communist regimes, he didn't seem to realize that the IOR was involved in money laundering. When Benedict XVI was confronted by the strife within the Curia, corruption, and the evangelical problems of the Church in the world, he made the historic decision to hand over the helm of St. Peter's Bark to a new leader.

Today, almost three years since the beginning of Francis's pontificate, his reform of the Governorate has still not taken effect. The shops alien to the Church's mission are still open, churning out profits and serving thousands of customers who can make purchases there by exhibiting a buyer's card to which they are not entitled. The museums have not extended their hours, ignoring the proposals of Ernst & Young. They remain closed on Sundays, except for the last Sunday of the month, when admission is free from 9 to 12:30, and the doors close at 2:00
P.M.
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At the November 17, 2013, meeting in the Palace of the Governorate, clear guidelines had been given for the reform, based on the instructions of the Holy Father. On one side of the table were the analysts of Ernst & Young with Andrées Gomes, senior manager of EY Spain; on the other, the commissioners, from the coordinator, Monsignor Vallejo Balda, to Enrique Llano and Filippo Sciorilli. Vallejo Balda was very clear that the reform of the Governorate had to follow four cardinal points:

1.
Independence of the Pope (in the sense of freedom of action and a means for performing his work, not as an end in itself).

2.
Integrate the activity of the Governorate into the mission of His Holiness and make it consistent with the mission of the Universal Church.

3.
Structure and associated risks (economic and reputational).

4.
Sustainability / economic contribution.

As my reconstruction of the events illustrates, there has still not been any movement on these four strategic principles requested by Francis and outlined by Ernst & Young.

The situation is complicated, even Kafkaesque. One man who knew a thing or two about it was a member of the new guard, Cardinal George Pell, who would soon be chosen by Francis as the Prefect of the Secretariat of the Economy. Pell started to comb through the account books. He demanded transparency and shared Francis's policy for a Church without privileges and on the side of the poor and needy.

On March 26, 2014, the new Secretary of the Governorate, Father Fernando Vergez Alzaga, decided to address to Pell his heartfelt congratulation on his becoming the Minister Plenipotentiary of the Pontiff's finances. He wrote a letter that deserves to be read in its entirety, from the first to the last illuminating word:

My reverend Eminence:

I ask first of all you please accept my warmest congratulations on your appointment as Prefect of the Secretariat of the Economy. At the same time, I am pleased to inform your Eminence that the following arrangements have been made on behalf of the most Eminent Cardinals:

•
The purchase of food, in amounts compatible with family needs, at the Annona commissary or the Community Warehouse at a 15% discount.

•
A 20% discount off the list price limited to a total of 200 packs of cigarettes per month.

•
A 20% discount off the list price for clothing.

•
A 400 liter a month supply of fuel at special prices subdivided as follows:

a) Voucher for 100 liters.

b) Special price vouchers (15% discount off the going price) for 300 liters.