Inside the Vatican's power struggles

The Vatican has been under intense scrutiny for almost six months now, the result of leaked correspondence that alleges financial corruption and intrigue within the Holy See. Arrests and firings this week brought matters to a head.

The latest on the 'Vatileaks' scandal, as the Pope fights back

Pope Benedict offers mass in May 2012, flanked by Cardinal Tardisio Bertone, one of the central figures in the Vatileaks story. (Stefano Rellandini / Reuters)

The Vatican has been under intense scrutiny for almost six months now, the result of leaked correspondence — the so-called Vatileaks — that alleges financial corruption and intrigue within the internal government of the Holy See.

The subject of the leaks has sparked a media frenzy in Rome and even among some of the world's financial press, but it is no surprise to church historians who have seen all this before.

"The Vatican is in a sense almost perpetually enmeshed in scandals, because it continues to act like a kingdom," says John Stackhouse, professor of theology and culture at the University of British Columbia's Regent College.

"It might have made sense at one point in history for the pope to also be a prince, but whenever you're involved in politics or business, things get messy."

Just a week ago the president of the Vatican Bank, Ettore Gotti Tedeschi, was ousted after receiving a unanimous vote of no confidence from bank overseers.

Since then, Vatican authorities arrested the Pope's own butler, Paolo Gabriele, on the suspicion that he had been leaking private letters to Gianluigi Nuzzi, a local investigative journalist looking into the corruption allegations.

Gabriele had been the Pope's personal attendant since 2006 and was discovered to have had a large number of the Pope's personal papers in his apartment, investigators said.

He has agreed to cooperate fully with Vatican officials, raising the spectre that other, senior churchmen might yet be named in the probe, Associated Press reported.

Paolo Gabriele, the Pope's long-serving butler, seen here in a 2008 photo with Benedict at the Rome airport. (Domenico Stinellis / Associated Press)

That's the kind of action — putting whistleblowers under house arrest, or transferring them safely away — that raises questions about administrative transparency, says Daniel Cere, professor of religious studies at McGill University.

"The kinds of standards that are expected of secular organizations," he says, "are standards and expectations that have to be built into faith-based organizations as well."

At the same time, Randy Boyagoda, incoming chairman of the English department at Ryerson University and author of an upcoming biography of Roman Catholic priest Richard John Neuhaus, says that church teaching and policies should be understood as separate from these more localized scandals in Vatican City.

As he sees it, scandals like these should be considered the unfortunate actions of individuals, not evidence of systemic problems inherent to the Vatican or the universal church.

It is important that observers "make a distinction between Vatican governance and church governance," says Boyagoda. "It's a very big difference."

A new ambassador 

This Vatileaks scandal, as it came to be known, began in January 2012 when an independent Italian TV station, La7, released a series of confidential letters, the first one being between Archbishop Carlo Maria Vigano and the Pope dating back to March 2011.

In the letter, Vigano alleges there were "so many situations of corruption and abuse of power long rooted in the various departments" of the Vatican's internal government that was costing the Holy See millions of euros.

Archbishop Carlo Maria Vigano, the papal emissary to the U.S., in May 2012 in Baltimore. (Steve Ruark / Associated Press)

He also pleaded not to be transferred to another post outside Vatican City, as some of his opponents were apparently urging, as that would "provoke profound confusion and dejection" among those seeking to reform the central bureaucracy of the church, according to La7.

A successive letter, dated May 8, 2011, expressed Vigano's concerns to his direct superior, the Vatican Secretary of State, Cardinal Tarcisio Bertone, that he (Vigano) was the victim of "strategies put into action in order to destroy me in the eyes of Your Eminence."

Bertone was responsible for the ultimate decision to remove Vigano from his post as secretary-general of the Governor's Office of Vatican City State and reassign him, in August, to be the Holy See's ambassador to the U.S.

In one of his letters, Vigano requested that the reform work continue under Bertone and alleged that many public works contracts within the Vatican were being awarded to friends, rather than the lowest bidder, resulting in what he believed was a cover for money laundering.

Many of the letters that have been released since appear to show Bertone in a bad light, leading some observers to believe that he is the new primary target in an ongoing power struggle within the Vatican and that there are attempts to shut down attempts at financial reform.

An official Vatican statement in February maintained that the sentiments in Vigano's letters are representative of "fears unsupported by truth," and are not accurate.

But as the allegations continued to mount the Vatican went out of its way this past week to state there is no cardinal under investigation in the leaks scandal.

And Pope Benedict himself took the unusual step of speaking out on the scandal. "Suggestions have multiplied, amplified by some media which are totally gratuitous and which have gone well beyond the facts, offering an image of the Holy See which does not correspond to reality," Benedict said Wednesday at the end of a general audience in St. Peter's Square.

"The thing about the Vatican that anyone who ever worked there will tell you: it is a culture that runs almost exclusively on personal relationships and trust," John L. Allen Jr. told CBC Radio's Day 6 on Friday.

A veteran Vatican correspondent for the National Catholic Reporter, Allen said that "the motor fuel that gets things done isn't systems or structures or protocol. It's the personal trust that officials have in one another that lets them move the ball.

"And this scandal has badly ruptured that climate because it has created real doubt on whom, ultimately, you can trust."

The Sindona affair

What may be giving these latest allegations impetus is that corruption in the Vatican's bureaucracy and attempts at its reform have a long history. In fact, they go back to the Middle Ages and beyond, observes UBC's Stackhouse.

Michele Sindona, awaiting trial in Milan in 1984. (Ferdinando Meazza / Associated Press)

In more recent times, there have been several high-profile incidents, including the infamous case of Vatican financial adviser Michele Sindona.

In 1968, Sindona was hired as a financial adviser to the Vatican and he ended up being poisoned in prison while serving a life sentence for fraud and misappropriation of funds.

Two books — Luigi DiFonzo's St. Peter's Banker, and Nick Tosches' Power on Earth — detailed Sindona's long previous history as a smuggler, money launderer and eventually heroin profit manager for the Cosa Nostra, specifically the Gambino Mafia.

Sindona's appointment to the Holy See was made on the basis of his perceived financial skill, having built a $450 million dollar empire that included several banks, as well as because of a long friendship with Cardinal Giovanni Battista Montini, who later became Pope Paul VI.

Sindona was convicted in the United States in 1980 and then Milan in 1985 of using his connections to surreptitiously divert huge amounts of money from his banks and other enterprises, including the Vatican, to suspicious Italian companies. 

'God's banker' 

Then, in 1982, Roberto Calvi, chairman of Italy's second largest bank, Banco Ambrosiano, was found hanged from London's Blackfriars Bridge.  (In 2005, five men were charged with his murder but they were eventually acquitted in a London court.)

Calvi had been known as "God's banker" due to his close ties with the Vatican, his bank's primary shareholder.

The Banco Ambrosiano also had a number of suspicious connections to the Italian underworld, including to a Mafia-linked Masonic lodge.

When Calvi first disappeared in 1982, it was discovered that the Banco Ambrosiano was missing approximately $1.287 billion from its books; and it was later revealed that the money had been loaned to dummy corporations owned by the Vatican Bank in Latin America and had not been repaid.

In 1984, the Vatican's Institute of Religious Works (which many call the Vatican bank) voluntarily paid $224 million to creditors in recognition of its moral role in the failure of Banco Ambrosiano. It did not admit legal responsibility.

"The church's recent history shows the strength of entrenched interests in the Vatican. They're extremely difficult to reform," says Stackhouse. "As a political realist, [I believe] they will always have this problem as long as they keep acting in the world of politics and business."

with files from Associated Press