The love of money is a root of all kinds of evil (1 Timothy 6:10).

Although many consider the Vatican to be the seat of a spiritual kingdom, the Roman Catholic Church, it is in actuality much more than that. The Vatican is unique in that it is the administrative center of a universal empire which is at once spiritual and secular, religious and political. Unlike any other church, the Vatican enjoys full and independent sovereignty which puts it in a unique position. As a secular kingdom, its land and real estate holdings, along with its subjects, are scattered around the globe. As a result, the Vatican’s influence is felt worldwide. As a church, its material assets and income are tax free. Its ecclesiastical status combined with its position as an independent sovereign state makes it untouchable.

Until very recently, the Vatican’s banking system has resisted every plea for transparency. Arguing that its church status made it exempt from external audits or investigations, the Vatican Bank has provided cover for corruption of every kind. It has acted as an international off-shore tax haven for wealthy business owners and has had the dubious honor of ranking among the top ten most attractive countries for money laundering. While many regard the Pope as the world’s spiritual leader, we must ask, How can believers reconcile evidence of vast corruption with the image of a gentle shepherd over God’s flock? How did the Vatican become the economically and politically powerful organization that it is today?

A Brief History of the Papal Economy

In the early years of the Christian church, bishops were appointed by fellow Christians to oversee affairs of the church in important centers where Christianity had established itself. No one bishop was elected to be their head. But as the Roman Empire crumbled, the bishop of Rome grew in power and wealth, eventually taking not only ecclesiastical precedence but worldly prominence as well.

Over time, the Vatican took on the appearance of a grand worldly kingdom. As with any worldly kingdom, the Vatican had a court to support, the only difference being that this court consisted of clerics. In addition to collecting taxes from its land holdings, its priestly function privileged the Vatican with an additional source of revenue – offerings for its support from its congregants.

Pilgrimage

Over time, the church developed diverse strategies for persuading believers to contribute their means to Vatican coffers. As early as the 4th century, with the construction of St. Peter’s Basilica, the Vatican gained prominence as a pilgrimage site and commercial district.¹ The church was quick to cash in on the money-making potential of pilgrimages. To this day, pilgrims pay to view relics, visit shrines, museums, walk on holy roads and crawl up holy staircases.

Indulgences and Tax Revenues from Papal States

Indulgences, a creative invention for subsidizing the lavish lifestyles and building projects of the Pope and clergy, were introduced in the 6th century. The faithful paid for a piece of paper that promised them escape for the punishment of their sins. A practice found nowhere in the Bible, it was the sale of indulgences in particular that provoked the Protestant Reformation of the 17th century. Tax revenues from the papal states covered daily operational expenses, but it was the sale of indulgences that bankrolled the Vatican’s building projects, wars and opulent lifestyle.

Peter’s Pence

According to the Vatican, “By the end of the eighth century the Anglo-Saxons felt so closely linked to the Bishop of Rome that they decided to send a regular annual contribution to the Holy Father.”² In actuality, Peter’s Pence amounted to an annual tax on every household. Peter’s Pence took on various changes over the centuries, but generally “consisted not only of donations, but also of fees paid by loyal Catholics for services such as weddings, funerals, and confirmations.”³ Contributions waxed and waned depending upon the people’s perceptions of the current Pope and state of the church. Nevertheless, these contributions were the meat and potatoes of the Vatican’s finances for a thousand years.

Loss of Papal States

Prophecy was fulfilled February 20, 1798 when the Napoleon’s General Berthier took Pope Pius VI prisoner upon his refusal to renounce his temporal power. To observers, it appeared the Papacy had lost its supreme power and authority which it had enjoyed for more than a thousand years. Napoleon, however, restored the Papal States in 1800.

Then in 1870, the Italian nationalist army invaded Rome and the Pope surrendered but he declared himself to be a prisoner of the Vatican and refused to leave St. Peter’s. The new Italian government took possession of the papal states leaving only a small parcel of land on Vatican Hill to the Pope. The loss of the papal states represented an economic set-back for the Vatican due to lost tax revenues.

It wasn’t until the signing of the Lateran Pacts with Mussolini in 1929, that sovereignty was fully restored. In exchange for political support of Mussolini’s fascist government, the church was granted enormous power, including full sovereignty, tax exemption and establishment as Italy’s sole religion. Still, with the loss of almost all of its land, the Vatican lost a significant source of regular income. To cover its expenses and with direction from hand-picked bankers, the church began investing heavily in real estate and setting up banks throughout Italy. Money from the Lateran Pacts was also invested in insurance companies and industry, including arms and munitions manufacturing. Investments were later made in large American businesses, including IBM, General Electric, Shell, Procter & Gamble and others.⁴

World War II: A Unique Money-Making Opportunity

March 2, 1939, Eugenio Pacelli was elected Pope. He had been the papal nuncio to Germany and had a great fondness for everything German. His family was among the Black Nobles, Roman aristocratic families that remained loyal to the Pope when the Italian nationalist army took Rome and confiscated the Pope’s kingdom in 1870. Early in his pontificate, Pope Pius XII sent Hitler a message assuring the Führer of the Vatican’s desire for good working relations with the Nazis. Shortly afterward, he directed his diplomatic representative, the Papal Nuncio to Germany, Archbishop Orsenigo, to fete Hitler on his fiftieth birthday.⁵

Pope Pius XII’s policy was silence in response to the atrocities of the Holocaust and the slaughter of Serbs in Croatia. Priests and bishops were actively involved in the politics and killing machinery of Croatia and Slovakia where hundreds of thousands, possibly more than a million, Jews and Orthodox Christian Serbs and others were killed.⁶ Though repeatedly implored by eye witnesses to speak out against the brutality, the Pope remained silent. Even when the Nazis entered Italy, where 1200 Jews living in Rome were rounded up and transported along streets that lay just 250 yards (approximately 230 m) from the Vatican – virtually right under the Pope’s nose – to a military detention center, Pope Pius did nothing to stop the violence. A thousand of those Jews, mostly women and children, were put in rail cars two days later and sent to Auschwitz.

Germany’s Ambassador reported, “The Curia is especially upset considering the action took place, in a manner of speaking, under the Pope’s own windows.”⁷ The Vatican’s response at that time? An official thanks to Hitler’s Foreign Minister for the German military’s respectful wartime behaviour to the city-state,⁸ possibly a reference to a promise made by Ernst von Weizsacker, Germany’s ambassador, that Germany would protect the Vatican from damage.

Unbelievably, in 1942, Pius was pre-occupied with the filming of a movie he was having made about himself, Pastor Angelicus.

Why did the Vatican refuse to act on behalf of those being slaughtered? Might the reason have had something to do with money?

Word War II Vatican Money Facts

Following is a list of some of the ways the Vatican enriched itself during World War II.

Reichskonkordat - From 1933, the Third Reich had signed a pact, the Reichskondordat, with the Holy See agreeing to collect the 8 – 10% church tax through automatic payroll deductions of German Catholic workers,⁹ a substantial provision to the Vatican’s budget. The Reichskonkordat validated the Nazi’s rise to power and reigned in Catholic priests from voicing dissent against Hitler’s regime and effectively tied the church to Nazi Germany.

Vatican Bank - The Vatican realized economic benefits from exercising complacency toward Nazism’s anti-Semitic policies. In fact, the Vatican experienced such an economic boon during the war that it needed to create an efficient way of dealing with the inflow of profits. On June 27, 1942, the Vatican Bank, also known as Istituto per le Opere di Religione (IOR; Institute for Works of Religion) was formed. Because its only branch was inside the Vatican, it was “free of any wartime regulations.”¹⁰ It was free of independent audits. It had a policy of destroying all files after ten years.

Throughout the war, Vatican Bank executed “back-and-forth transfers of Swiss francs, lira, dollars, sterling, and even gold bullion, through a slew of holding companies in a dozen countries on several continents.”¹¹ In the midst of the unparalleled upheavals of WWII, opportunistic business titans, recognizing in the war an unequalled money-making opportunity also saw that the Vatican Bank was the world’s best offshore bank.¹²

Theft of Victims’ Insurance Policies - In addition, as an investor in Italian insurance companies, the Vatican benefited from the wartime practice of escheating, or transferring Jewish life insurance policies. Investigators estimate that during the war more than $200 billion in illegally retained premiums and unpaid benefits was stolen from Europe’s Jews. ¹³

Theft of Victims’ Gold and Jewellery - The Vatican played an important role in moving gold from German occupied countries during the war. For example, post-war investigators concluded that Krunoslav Draganovic, a Croatian Roman Catholic priest, deposited Croatian victims’ gold and jewellery in the Vatican Bank which accepted it as “a contribution from a religious organization.”¹⁴ The loot disappeared without a trace through the Vatican Bank’s money laundering process.

At the end of the war, victims’ loot undoubtedly funded the Vatican’s efforts to transport fleeing Nazi fugitives to safe havens.

Post-War Business Investments

The Vatican’s investments are shrouded in secrecy but details sometimes reach the public in the form of scandals. In post-war years, financial scandals have implicated the Vatican’s involvement in shady business deals with shady money-men. Most notable examples are the cases of Michele Sindona and Roberto Calvi. Sindona, who had links to the Mafia and the secret society Masonic Lodge Propaganda Due (P2) was an advisor to the Vatican Bank for years. Together with Vatican Bank’s director, Bishop Paul Marcinkus, and banker Roberto Calvi, Sindona developed a complex web of off-shore banks and shell companies that effectively hid the identity of account holders and their illegal profits. Sindona was sentenced to life in prison for the assassination of Giorgio Ambrosoli, the lawyer appointed to liquidate Sindona’s failed Italian banks. He died in prison in 1986 after drinking cyanide-laced coffee. ¹⁵

Fellow-P2 member and financier Roberto Calvi also worked closely with the Vatican Bank’s Marcinkus and Sindona. In 1981, Calvi, chairman of Banco Ambrosiano, was charged in connection with $1.3 billion in unaccounted for funds. Vatican Bank was Ambrosiano’s principal share-holder. Released on appeal, Calvi fled Italy, but was later found murdered in London. Speculation still abounds over who may have benefitted from silencing him. Calvi’s family believed that clues for his murder were in Vatican Bank files which were never disclosed.

Following the Calvi affair, Marcinkus retired in the Phoenix Archdiocese where he continued to enjoy a comfortable life. Few of his parishioners knew of his role as the director of the Vatican Bank and his controversial alliances. He died in 2006. ¹⁶

Bishop Marcinkus was in charge of investing for the Vatican Bank. Sindona and Calvi were his business partners. How is it that Sindona and Calvi ended up dead while Marcinkus simply ended up in retirement? Investigations into the Vatican Bank time and again come to a dead end because of the Vatican’s undisputed autonomy.

Hiding the Money: Sex Abuse Pay-outs

In the mid-1980’s, the news of wide-spread sexual abuse by priests became public. The scandal grew as information surfaced about how the church covered up the abuse by quietly paying victims to keep quiet and by relocating offending clergy. An article published February 8, 2012 estimated that at least $2.2 billion had been paid out in victims’ settlements in the United States alone affecting some 100 000 victims of clerical sexual abuse. The estimate of costs for dealing with the sex abuse scandal in the United States is thought to be low considering that “some dioceses and religious orders have made confidential settlements whose dollar amounts may never be known.” ¹⁷

Pope Francis apologized to sex abuse victims before leaving the United States in September of 2015. But for victims and their lawyers the apology fell far short of expectations. One lawyer called the Pope’s statement “damage control.”¹⁸ A disappointed victim wanted to see actions to back up the Pontiff’s words. “The Pope needs to say, ‘We made a lot of mistakes. We should have never directed these parishes, these dioceses to go into bankruptcy. Yes, we were hiding the money.’ He has to say those words.”

Shunting offending priests from one diocese to another, quietly paying off victims to keep silent, paying lawyers to defend against litigation and to lobby state legislatures against extending the statute of limitations to prevent new accusations from surfacing, taking legal action to insulate the Vatican’s property and financial assets from loss due to abuse case legal settlements – this is how the church has dealt with the child sex abuse scandal. Its policy, once again, has consistently been: Protect the bottom line.

Francis’s Church That is Poor and for the Poor

Pope Francis made big news when he picked a modest Ford Focus for his ride and chose to stay in a Vatican guest house rather than the Papal Palace. But other high-ranking clerics don’t have the same taste for poverty that Francis appears to have. For instance, news of overspending by Germany’s Bishop of Bling, Franz-Peter Tebartz-van Elst, brought cries of outrage from the public and concerned clergy. The bishop had spent 31 million euros (approximately $43 million) of church funds building his new ultra-modern residence outfitted with high-end extras most often associated with the lifestyles of the rich and famous. ¹⁹

Francis could have disciplined the extravagant bishop in such a way that would have clearly demonstrated his disapproval. Instead, he fell back on a tradition that countless Popes have resorted to – he simply moved Tebartz-van Elst from his diocese and relocated him to the Vatican and a new posting. The Pope’s response to the uproar over Tebartz-van Elst’s excessive lifestyle communicates his indifference to a widespread prodigal attitude among clergy.²⁰ The curia has a reputation for resisting efforts to reform as evidenced in the maxim, “Popes come and go, but we go on forever.” ²¹

A Disqualified Shepherd

The Vatican’s clandestine business practices are not congruent with the image it would like to project of itself as being the world’s spiritual leader. Where is the humility and self-sacrificing love of the Saviour apparent in the Vatican’s commercial enterprises? Some argue that the problems within the Vatican are limited to a few aberrant priests or incidents. But that simply is not the case. The problem is systemic. The Bible makes that clear. The misdeeds of the Catholic Church are rooted in the foundational principles of the organization. Jesus said, “My kingdom is not of this world” (John 18:36). The Vatican, on the other hand, appears to be firmly rooted and grounded in this world and in its philosophies and values.

Revelation 18 tells of a bright angel crying out:

Babylon the great is fallen, is fallen, and has become a dwelling place of demons, a prison for every foul spirit, and a cage for every unclean and hated bird! For all the nations have drunk of the wine of the wrath of her fornication, the kings of the earth have committed fornication with her, and the merchants of the earth have become rich through the abundance of her luxury (Revelation 18: 2, 3).

Babylon is the Roman Catholic church, as identified in Revelation 17, where in addition the angel says, “The woman whom you saw is that great city which reigns over the kings of the earth” (Revelation 17:18).

At the end of time, the times we’re now living in, God doesn’t tell Babylon to repent. The system won’t change, though He’s given her ample time to amend her ways. Instead God calls to individuals, “Come out of her, my people, lest you share in her sins, and lest you receive of her plagues. For her sins have reached to heaven, and God has remembered her iniquities” (Revelation 18:4, 5).

Although justice has been neglected time and again by the church, God warns unjust pastors of what is coming.

Thus says the Lord GOD to the shepherds: “Woe to the shepherds of Israel who feed themselves! Should not the shepherds feed the flocks? 3 You eat the fat and clothe yourselves with the wool; you slaughter the fatlings, but you do not feed the flock. 4 The weak you have not strengthened, nor have you healed those who were sick, nor bound up the broken, nor brought back what was driven away, nor sought what was lost; but with force and cruelty you have ruled them…

Thus says the Lord GOD: “Behold, I am against the shepherds, and I will require My flock at their hand; I will cause them to cease feeding the sheep, and the shepherds shall feed themselves no more; for I will deliver My flock from their mouths, that they may no longer be food for them” (Ezekiel 34:1-4, 10).

Time is running out for Satan and the stakes are high. By putting smooth words in the mouths of his lying prophets he is working to deceive, if it were possible, the very elect. (See Matthew 24:24.) It’s important for believers everywhere during these times of compromise and mixed messages to put our trust in Christ alone and distinguish the true from the false by evaluating all messages against Bible truth. Jesus’s word of warning is for each of us: “Beware of false prophets, who come to you in sheep’s clothing, but inwardly they are ravenous wolves. You will know them by their fruits” (Matthew 7:15, 16).