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IDI foundation president gives new detail on Vatican loans for hospital purchase

Bambino Gesu hospital in Rome (CNS)

The foundation president also addresses reported misuse of funds from Bambino Gesù Hospital

The president of a foundation at the center of a Vatican financial scandal provided new details Thursday on the Vatican central bank loans that funded the purchase of a bankrupt hospital. He also claimed that controversial grants made by the U.S. based Papal Foundation were used to support the hospital’s expenses, not to repay its debts.

Antonio Maria Leozappa, president of the Fondazione Luigi Maria Monti, sent a Nov. 29 letter to Vatican journalist Sandro Magister. The letter aimed to offer “clarification and rectification” on the reported use of funds from APSA, the Vatican’s central bank, in the foundation’s 2015 purchase of the Istituto Dermopatico dell’Immacolata (IDI).

The letter also addressed the reported misuse of funds from Rome’s Bambino Gesu hospital, and a grant from the U.S. based Papal Foundation.

CNA has reported that the foundation’s purchase of the IDI was partially funded with a 50 million euro loan from APSA. On Nov. 20, Cardinal Pietro Parolin, Vatican Secretary of State confirmed to CNA that he had arranged the 50 million euro APSA loan.

Leozappa’s Nov. 28 letter explained that the controversial APSA loan was not made to the foundation directly, but to an “endowment fund” of the Congregation of the Sons of the Immaculate Conception, the religious order that originally owned the hospital and is a partner of the foundation.

After the loaned funds were conveyed to the endowment fund, the money funded the foundation’s purchase of the IDI.

The endowment fund was set up by Cardinal Giuseppe Versaldi, Leozappa explained.

“The ‘endowment fund’ was conferred, at the time of the Foundation’s erection, by [Cardinal Versaldi], who to this end obtained financing from APSA, not under the Foundation but under the Congregation of the Sons of the Immaculate Conception, which is therefore the sole debtor,” Leozappa said.

At the time the hospital was purchased, Versaldi was the “pontifical delegate” overseeing the order, which had been dragged into bankruptcy, along with the IDI, after the hospital’s senior administrators were discovered to have amassed debts of more than 800 million euros, through years years of fraud and embezzlement.

The Foundazione Luigi Maria Monti is a for-profit partnership of the Vatican’s Secretariat of State and the Congregation of the Sons of the Immaculate Conception. Leozappa has served as head of the foundation since his appointment by Cardinal Parolin in June 2017. The foundation was established in 2015, with Versaldi serving as its first head.

APSA is prohibited by regulatory agreements with Moneyval, a European financial monitoring body, from making commercial or personal loans. The bank has acknowledged that the IDI loan, the majority of which had to be written off, has impeded its profitability.

Leozappa also addressed grants from the Papal Foundation in his Nov. 29 letter.

The letter said the hospital had received “two installments, financing (not a donation) from the Secretariat of State for a total of 10.8 million euro (equivalent to 13 million dollars), the repayment of which is scheduled to begin in 2022 in case of a return to profitability.”

These funds appear to correlate in size and timing to grants sent by the Papal Foundation following an emergency grant request submitted by the Secretariat of State in 2017

“To the undersigned it appears that the relative financial resources were granted by the Papal Foundation,” Leozappa wrote.

The use and final designation of the Papal Foundation funds has been the subject of controversy among Papal Foundation leaders. The grant request, originally for $25 million, was presented by the Secretariat of State, reportedly for the purpose of injecting liquidity in the IDI during its return to profitability. CNA has reported that the actual intention of the funds was to cover the loan at APSA.

Cardinal Angelo Becciu, former second-ranking official at the Secretariat of State, told CNA this month that the approach to the Papal Foundation was devised specifically to help repay the debt.

“If I remember well, it was because the APSA couldn’t give the loan [due to its Moneyval agreements] and then Parolin talking with Cardinal [Donald] Wuerl saw this [approach to the Papal Foundation] as the solution.”

CNA asked Cardinal Parolin if he and Cardinal Wuerl had worked together on “soliciting a grant from the American Papal Foundation to help offset the debt incurred by APSA as a result of this loan.” Cardinal Parolin confirmed that he had.

“The operations involving IDI, as described, are ascribable to myself,” Parolin told CNA, insisting that there was nothing “non-transparent, irregular or even illegal” about the plan, which he described as being conducted “with fair intentions and honest means.”

Earlier this year, the $13 million in grants sent by the Papal Foundation were reclassified as “loans” by the Secretariat of State, senior figures at the Papal Foundation have told CNA that, rather than be repaid, the $13 million will be “discounted” against future grant requests made by the Secretariat.

Leopazza also said that the Foundazione Luigi Maria Monti had not received “financing” from APSA or the Bambino Gesu pediatric hospital in Rome. Nor were any “debts” to either body owed by the foundation to the Congregation of the Sons of the Immaculate Conception related the “endowment fund” used to finance the IDI’s purchase, Leopazza said.

No media reports have suggested the IDI, the foundation, or the religious order, had received “financing” or loans from Bambino Gesu.

However 2014 wiretaps recorded Versaldi arranging for 30 million in government funds granted to Bambino Gesu to be diverted to the purchase of IDI. The wiretaps recorded Versaldi discussing the plan with Giuseppe Profiti, president of Bambino Gesu, who agreed with the cardinal to conceal from Pope Francis the misdirection of funds.

Versaldi and Profiti both denied any wrongdoing; the cardinal claimed he only wanted to spare the pope the technical details of the efforts to save the IDI.

Leopazza, an attorney, has taught business law at Italian universities, served as a consultant to the Italian government, and was the vice president of the National Association of Bankruptcy Trustees.