The head of the Vatican’s central bank appeared to admit this week to a transaction that could be a violation of European regulatory commitments, namely a loan of 50 million euros to finance the purchase of a struggling Italian hospital.
Sources say a controversial grant from the U.S.-based Papal Foundation was requested in order to balance the central bank’s books after the hospital was unable to repay the money.
In a statement Tuesday, Bishop Nunzio Galantino, head of the Administration of the Patrimony of the Apostolic See (APSA), acknowledged that the Vatican’s central bank loaned 50 million euros to finance the purchase of the Italian hospital, the Istituto Dermopatico dell’Immacolata (IDI), even though APSA is prohibited from making loans that finance commercial transactions by policies put in place to exempt it from external oversight.
The loan was made in 2015 to the nonprofit Fondazione Luigi Maria Monti, a partnership between the Vatican Secretariat of State and the Congregation of the Sons of the Immaculate Conception, the hospital’s previous owners, under whose management the hospital was driven to bankruptcy following a series of embezzlement scandals that led to multiple prosecutions and debts of more than 800 million euros.
The hospital was purchased by the foundation while it was in state-administered insolvency. When it became clear that the APSA loan could not be repaid by hospital income, Vatican efforts were made to secure a $25-million grant from the U.S.-based Papal Foundation to the IDI, which would be used to cover the hospital’s debt to APSA.
Although the grant was requested to ease a short-term cash shortage at the hospital, multiple sources in Rome and the United States told CNA that the money was actually intended to help replace the funds loaned to finance the acquisition, removing the loan from the APSA balance sheet and avoiding more attention on the deal.
Lay members of the Papal Foundation had reportedly raised issues with the conferral of the grant, largely because details about the use and final destination of the funds were scant. Approval of the grant was ultimately pushed through the foundation’s board, over the objections of lay members, but dispersal of the funds was slowgoing, as conflict enveloped the foundation’s board.
In April, a spokesman for the Papal Foundation told First Things magazine: “As the Papal Foundation board responded to the grant request, a variety of interpretations of the true financial condition of the IDI and its sponsoring entities were presented.”
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