VATICAN CITY (AP) — The Vatican is facing another financial headache after donors to a major U.S. Catholic foundation balked at a request from Pope Francis to foot a $25 million loan to a scandal-plagued Rome hospital.
The Immaculate Institute for Dermatology made headlines in 2013 when prosecutors discovered a nearly $1 billion hole in its accounts and placed 40 people, including its priestly director, under investigation for alleged money laundering, fraudulent bankruptcy and other crimes. In May, prosecutors handed down 24 indictments.
The Vatican took over the hospital rather than let it fail, fearing for the livelihoods of its staff. But the hospital has struggled, and last summer the Vatican asked for a bridge loan from the U.S.-based Papal Foundation, a major source of funding for the Vatican’s charity works around the globe.
Started 30 years ago, the foundation has disbursed some $100 million for papal-endorsed charity projects, including $32,000 to buy an electric generator for a religious congregation in Benin last year, $100,000 to build a new seminary building in Brazil and $70,000 to build a primary school for poor children in Bangladesh. For their generosity, donors get a special papal audience each year.
But according to leaked foundation documents published by the conservative Catholic website Lifesite, several “stewards” or donors to the foundation opposed the loan, given the amount requested, the lack of due diligence about the hospital’s financials and the process by which American cardinals overruled the donors to approve the pope’s request.
“These recent actions will make it virtually impossible to recruit new stewards or to retain the membership of many current stewards,” warned the chairman of the foundation’s audit committee in a letter summarizing the scandal posted this week by Lifesite. “In many respects, the decision to grant $25 million to a dermatology hospital in Rome without proper due diligence is a disaster for the Papal Foundation.”
The foundation didn’t dispute the authenticity of the documents. It issued a statement saying it doesn’t comment on individual grant requests and that its mission hasn’t changed “to serve those needs of the Church that are of particular significance to the Holy Father.”
The Vatican declined repeated requests for comment Thursday and Friday.
According to the audit committee summary, the first few million dollars of the loan were handed over without any supporting documentation from the hospital. When members requested further information, no balance sheet was provided, just a thick binder of mostly Italian documents about medical procedures and resumes.
By January, the American cardinals who have the final say in the foundation’s decisions stepped back, realizing the “significant division” that had been created by the request.
In a Jan. 19 letter to the donors, the foundation’s executive committee said that no further money would be provided to the Vatican for the hospital, leaving about half of the $25 million request unfunded. The clerics proposed that any future grant over $1 million would be approved by a majority of lay and clerical trustees on the board.
“This is not a guaranteed answer for any problem in the future, but we do believe it will help prevent future scenarios like the one we have just experienced,” the letter read.