Vatican won't solve diocese money problems

VATICAN CITY -- From New Zealand to Newfoundland, sex abuse settlements are posing an enormous financial burden on the Roman Catholic Church, even leading the Boston Archdiocese in the United States to consider the unprecedented step of filing for bankruptcy.

But when it comes time to pay the bills, Vatican officials won't be signing the checks.

Settlement costs this year in Ireland are estimated at $140-million, and in the United States dioceses could wind up paying hundreds of millions of dollars for new claims. Victim advocates estimate that U.S. dioceses had already spent $1-billion on settlements before this year's crisis.

In the Boston case, the Vatican would have to approve a bankruptcy filing, but otherwise the Holy See doesn't bail out dioceses in financial trouble. It expects each diocese to pay its own way -- often counting on them to help the Vatican's worldwide mission.

What's more, the Vatican has always said that claims of its immense wealth are exaggerated, and that the precious artwork and real estate it possesses are held in trust for humanity.

The Vatican "does not have a responsibility, not in a strict sense," for a diocese's finances, said Cardinal Edmund C. Szoka, who led the Vatican's budget planning office in the 1990s.

"The bishop in a diocese is responsible for his diocese," he said.

Szoka, a former archbishop of Detroit and now president of the commission that governs the Vatican city state, has received credit for helping turn the red in Vatican balance sheets to black, demanding strict financial accountability.

In July, however, the Vatican reported its first deficit in nine years -- about $3-million -- and blamed the shortfall on the worldwide financial slump aggravated by the Sept. 11 attacks.

At various times, the Vatican has faced calls to sell off its art to finance operations or help the poor. This year, it denied a report that Pope Paul VI had discussed the possibility of selling Michelangelo's Pieta in a 1978 meeting with a French art dealer.

Church officials say the Vatican's real estate holdings, mainly buildings in and around Vatican City, are listed as worth about $650-million. But that doesn't include holdings considered priceless, such as St. Peter's Basilica, part of the trust for humanity.

Church law requires Vatican approval if the possible sale of assets exceeds a figure set for each country by its bishops conference. The figure for the United States is $3-million.

The Boston Archdiocese's financial commission has given Cardinal Bernard Law permission to file for Chapter 11 bankruptcy protection, a move that would open the church's financial records to exceptional scrutiny by a state court in Massachusetts.

"A bishop, who enjoys unquestioned religious authority to administer his diocese as he sees fit, could not be expected to take kindly to such supervision by a judge nor to the relentless inquiries of the creditors," said Fred J. Naffziger, a professor of business law at Indiana University, writing in the Jesuit magazine America before Boston moved toward bankruptcy.

Law has been at the Vatican this week, presumably discussing the bankruptcy issue and possibly calls for his resignation.

The church in the United States is not alone in facing huge settlements for its mishandling of clerical sex abuse claims.

A $140-million settlement in Ireland will require the church to sell some property. However, the Irish government is footing much of the bill because of the church's stated inability to pay, and because the state is responsible for monitoring care in schools or orphanages where the abuse occurred.

Other agreements this year have been reported in New Zealand and Canada, where Catholics have been asked to help raise funds to pay sex abuse victims at a Newfoundland orphanage in a $12-million out-of-court settlement.

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