As Pope Leo continues to settle into his pontificate, many in Rome
are still waiting on a slate of major decisions and appointments, some
of them holdovers from his predecessor’s time, and some of them
anticipated from any new occupant of the see of Peter.One of the
quietly less appreciated but perhaps more significant decisions facing
Pope Leo will be when and how to replace the 78-year-old Cardinal Kevin
Farrell.
The
Irishman spent most of his ministerial life in the United States, then
was moved from leading the Diocese of Dallas to Rome by Pope Francis in
2016. He was first appointed as prefect of the newly created Dicastery
for Laity, Family and Life. Francis later added the role of Cardinal
Camerlengo, placing him in charge of organizing the conclave which
elected Leo.
Both of these jobs are reasonably high-profile, and
Leo will have to give some thought to how to fill them as Farrell
approaches 80, the increasingly new normal age of retirement at the top
of the curia.
But less noticed — and perhaps more significant —
are the raft of other roles handed to Farrell by Francis over the last
nine years. The cumulative effect of those appointments has, in
practice, made Farrell one of the least noticed but quietly powerful men
in the realm of curial finances.
More
than any other person, the camerlengo, who has an MBA from the
University of Notre Dame, will shape the new pope’s impression of the
Vatican’s financial situation, even if Leo intends to take advice from
across various bodies and departments — and to seek outside
consultation.
And it means that when Farrell does eventually
retire from his offices, Leo will have to decide whether he wants to
maintain the de facto centralization of economic affairs which was left to him by Pope Francis.
In
addition to his more visible roles as dicastery prefect and camerlengo,
Farrell was named in 2020 by Pope Francis to lead the newly created
Commission for Reserved Matters, a body charged with overseeing
financial matters linked to the Holy See’s sovereign activities, which
are otherwise exempt from city state and curial financial laws and
oversight.
The creation and appointment of that body was,
superficially, presented as a necessary means of segregating matters
touching state security, diplomacy and sensitive international
operations from a raft of general financial reforms, which aimed at more
oversight and transparency.
While that was undoubtedly part of
the reason, the commission’s creation — and Farrell’s appointment to
lead it — were more significant as a development in curial power
politics, especially in the fallout of the Secretariat of State’s
financial scandals linked to the London property affair.
The same
reserved matters had previously been treated within the Secretariat of
State and led by that department’s head, Cardinal Pietro Parolin — in
other words, after an embarrassing scandal, Francis created a
Farrell-led commission to divest Parolin of sensitive responsibilities.
That
same year, Farrell was also handed a seat as a cardinal member of APSA,
the Holy See’s sovereign wealth manager, effectively placing him in
oversight over all curial assets and investments.
More was to come.
Following years of complaints from curial financial watchdogs like the Office of the Auditor General, and just months after a
damning internal report from the Financial Supervisory and Information
Authority on APSA’s anemic risk management and investment policies, Pope Francis in 2022 created a Committee for Investments.
According
to Francis’ new apostolic constitution on the Roman curia, the
committee is charged with “ensuring the ethical nature of the Holy See’s
movable investments according to the social doctrine of the church and,
at the same time, their profitability, adequacy and risk,” and
presumably avoiding a repeat of unethical investment scandals.
Cardinal
Farrell was again installed as the committee’s head. Interestingly,
while that new committee was intended to function as an advisor,
offering advice and clarity regarding the applicability of Church
teaching on investments by bodies like APSA, Vatican financial officials
say it has evolved into a much more executive role.
“The committee was supposed to supply what was internally lacking at APSA,” one senior financial official told The Pillar. “Clarity on what sectors and types of project it is — and is not — acceptable for the Church to become involved with.”
“Instead,
it has become a total center of power. The committee does not advise,
quite often it directs specific investments — positively — that is to
say, ordering a particular investment of its own selection to be made,
not giving advice on the proper choices of others.”
This
evolution of the Committee on Investments has placed it in tension with
the leadership of other financial institutions and departments,
according to several curial officials, including APSA, the Secretariat
for the Economy, and the Institute for Works of Religion, the Vatican’s
commercial bank — especially following a 2022 rescript from Pope Francis, directing APSA to work solely through IOR.
That rescript was repealed by Pope Leo in September of this year.
A
final financial position was created and handed to Farrell by Francis
in 2024, one of the previous pope’s final major administrative acts.
In
November last year, the pope appointed Farrell as the sole director of
the Vatican’s pension fund, dismissing the fund’s board in the process.
This move followed shortly after Francis informed the College of
Cardinals that the fund faced “a serious prospective imbalance,” and
that it was “not able to guarantee in the medium term the fulfillment of
the pension obligation for future generations.”
But, highly placed sources close to the fund told The Pillar,
while the fund has been in deepening financial trouble for some time,
matters have been made more acute in the years immediately preceding
total control being handed to Farrell and that the source of the problem
was in large part Farrell’s own Committee on Investments.
“The
[committee] already took over all decision making on investment
matters. Orders were made to sell and reinvest with new investment
managers chosen by the committee,” the source said. “We talk about the
pension fund, but in reality it is just an account now, there is no
actual management proper to it anymore, all discretion is concentrated
in the Investment Committee and [the Secretariat for the Economy].”
Internal Vatican financial reports presented to the Council for the Economy last year, seen by The Pillar,
show that liquidity in the fund dropped by 87% from 2022-2023, with
substantial increases in the amount invested in funds and bonds over the
same period.
As The Pillar
has previously reported, the early moves by Pope Leo indicate that the
pope has taken a more sanguine view of the Vatican’s financial state
than did Francis in the final year of his pontificate. The new pope has
downplayed talk of a “crisis” and insisted he isn’t “losing sleep” over
financial matters.
Coupled with that, Leo’s decision to
revoke Francis’ 2022 rescript ordering the exclusive use of IOR by APSA
and other Vatican institutions has been perceived by many as an
acceptance of widespread resistance to the initial order among curial
bodies like APSA and the Committee for Investments.
On one level,
Leo’s rescinding Francis’ order creates, or re-creates, the conditions
for a more decentralized process of investment management within the
Vatican — something insiders warn will cost the Holy See money, and make
oversight more difficult.
But on another level, officials suggest
that a practical decentralization of investments and their management
masks an actually more centralized decision-making process — a process
with Cardinal Farrell at the center.
With less than two years
until his 80th birthday, Leo is likely already mulling when and how to
replace Farrell in his most forward facing roles as camerlengo and
dicastery prefect. But the pope will also have to consider how to
replace the man who has quietly become, effectively, the Vatican’s Chief
Investment Officer.
