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The Understold Story: The Vatican, the Mob, Super Ponzi Schemes and MORE

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Message Gregory Paul

In the 1980s American news media both print and broadcast began to report on growing evidence that an alarming number of Roman Catholic priests had engaged in serial sexual abuse of children and teens, and that the church hierarchy had not only failed to properly address the situation, but in many cases engaged in racketeering to protect accused clerics and thereby minimize scandal and financial losses. However, coverage and investigation by the media and by the authorities was intermittent and insufficient, so it was not until after the turn of the century that the issue became a major national scandal. In part because charges were not brought soon enough few clerics have faced criminal charges. Another wave of pedophilia charges in a number of countries has yet again inspired a wave of public concern about the ethics of the Vatican, this time focused in Europe.

What few understand is that the pedophile disgrace is just the tip of an iceberg of outrageous church activity extending back over history (click here). It is alarming that the body politic is failing to appreciate that the Roman church has been involved in a chain of illegitimate activities that expose the inability of the autocratic patriarchy to avoid a high level of chronic corruption. The lack of adequate appreciation can be attributed in part to a pattern of under reportage and inadequate investigation by the news media and press concerning an array of questionable and extraordinary church activities during the 20th century and continuing into the 21st. These often bizarre events would seem to be out of a Dan Brown novel if they had not been documented by the mainstream press (to the best of my knowledge this is the only effort to survey and outline the contents of all major newspaper articles from the 1970s on that cover the below criminal schemes.) Nor has a mainstream book documenting the extent of the problem been produced and received widespread attention, a remarkable lapse of the publishing industry considering the fascinating scope of the subject and best seller potential of such a work. Another problem concerns insufficient government actions against potentially illicit church activities. Prosecutions have been rare, and when pursued are usually thwarted by the special status of the Vatican.

This essay focuses on events in the last century, which rested upon events in the 1800s. When it constituted a national entity with large territories the Papacy was able to tap large governmental revenue streams. However, over the centuries the lands and peoples controlled by the Holy See dwindled. The last remnants were stripped from the Papacy as the Italian majority rejected a Papal nation still plagued by corruption and excessive power, reducing the institution to some property in Rome by 1900. The Vatican was correspondingly impoverished in the first decades of the 20th century. Alleviating and then preventing a return to this condition has obsessed the Vatican.

At the beginning of the 21st century the official budget of the Holy See city-state stems from limited sources including the charitable Peter's Pence and sales of merchandise amounting to about $175 million a year. But total Vatican revenues and assets must be in the many billions. The 1929 Italian-Vatican settlement described below should now be worth multi-billions assuming standard investment returns. The Vatican receives one tenth to one fifth of monies received by lower levels of the church hierarchy. German Catholics have been funding the church through income taxes since the early 20th century; according to tax data the current yearly amount is about 5 billion dollars. In America donations at the parish level on up amount to over 6 billion a year. Total global annual revenues must be in the tens of billions. The bulk of the assets received by the Holy See probably reside in accounts of the Institute per le Opero di Religione (IOR), or the Institute for Religious Works, commonly known as the Vatican Bank, which does not release information on its holdings and investments. Investigators have concluded that the Vatican Bank has extensive accounts in Switzerland and other nations and islands with minimal banking regulations. In 1979 Hoffman reported that "Papal finances are to this day enveloped in secrecy." According to Colby (1987) Vatican bank officials have "had their own political interest in maintaining the bank's independence. The profitable, discreet institution, with important holdings in publishing, regional banking and insurance, wield[s] much power in Italy." Because the Vatican is a sovereign nation it is not been accountable to any system of national law, rendering it effectively immune from investigation by national law enforcement organizations, legal suits, or the media. Nor does the Vatican have extradition treaties with other nations. In legal terms Vatican affairs are subject only to international investigation, although this may be changing (Anonymous 2005, Cooperman 2005, suit by Dawkins and Hitchens).

The events that led to the Vatican transforming from an impoverished church subject to Italian law to a wealthy, independent nation occurred in the 1920s and 1930s; the collaboration between fascists and the church that facilitated this rise in church fortunes has been well documented by historians (Scholdor 1988, Gellately 2001, Steigman-Gall 2003, click here).

Mussolini was not an absolute dictator because he served at the pleasure of the King (M was legally deposed in 1943 after the Allied invasion). Consequently the founder of Fascism sought the elimination of the Catholic political opposition in the 1920s. In 1929 Mussolini and Pious XI signed a concordat and other treaties which included a lump sum payment of nearly 100 million dollars (equivalent to a billion in current dollars), more in investments in Italian industry plus government salaries for the clergy, and the sovereign Vatican state. A few years later, in negotiations that grossly violated conflicts of interest, the German Catholic church members Hitler, Papen and Kaas negotiated with the Holy See a mutually beneficial concordat that the Protestant dominated Weimer democracy had refused. The Fuhrer's legitimacy was greatly enhanced, and the all German Catholic bishops were required by the concordat to swear loyalty to the Reich, rendering impossible direct clerical opposition to the existence of the regime. In exchange a provision of the concordat insured that the Reich Treasury transferred into church accounts the income taxes of German Catholics, amounting to about $1 billion from the beginning to the end of the Third Reich (equivalent to about 10 billion in current dollars)1. The tax income and contribution made at the time included money stolen from Jews by German Catholics, the Holy See has made no attempt to use the revenues it gained from Hitler's Reich to compensate the victims.

After the war Vatican elements operated the "ratline" that helped fascists subject to prosecution for war crimes flee the allied dragnet (Gowan and Caniglia 1947, Dedyer 1988, Manhattan 1988, Quetteville 2003). In many cases the escapees paid for the assistance. Among those who escaped were the ruthless Fuhrer of the Balkans, Pavelic, as well as Mengele, Barbie and Eichmann.

In response to the infusion of large funds from the Italian and German governments, the Vatican set up the IOR and put its accounts under the charge of Bernardino Nogara, an pious, noncorrupt financial genius. His strategy was to engage the church in extensive corporate investments. This required the regular charging of and receipt of interest, which violated the long standing church ban on usury (Vatican II endorsed charging interest).

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Gregory Paul is an independent researcher interested in informing the public about little known yet important aspects of the complex interactions between religion, secularism, culture, economics, politics and societal conditions. His scholarly work (more...)
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