Financial Scandals: The Hidden Wealth of the Catholic Church

By Anna Catherin Loll and

The Catholic Church in Germany, already struggling to cope with the sex abuse scandal, has been hit by revelations of theft, opaque accounting and extravagance. While the grassroots faithful are being forced to make cutbacks, some bishops enjoy the trappings of the church's considerable hidden wealth.

Photo Gallery: The Hidden Wealth of the Catholic Church Photos
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Shortly before Pentecost, Pastor S. received an unexpected early morning visit, not from the Holy Ghost, but from the police.

For the authorities, the words of the Gospel of Luke came true on that morning: He who seeks finds. More than €131,000 ($158,000) were hidden in various places in the rooms of the Catholic priest, tucked in between his laundry or attached to the bottom of drawers. The reverend was arrested on the spot. After several weeks in custody, Hans S., 76, is now back at the monastery, waiting for his trial.

And lo and behold, the proliferation of cash may have been even more miraculous than initially assumed. The public prosecutor's office in the southern city of Würzburg now estimates that S. may have embezzled up to €1.5 million from collections and other church funds. The members of his flock in a wine-growing village in the northern Bavarian region of Franconia are stunned. They had blindly trusted their shepherd, who always seemed so humble and modest.

The Catholic Church is currently being shaken by a number of financial scandals, not only in Franconia but also in Augsburg, another Bavarian city, where Bishop Walter Mixa's dip into funds from a foundation that runs children's homes recently made headlines.

More than €40 million have gone missing in the Diocese of Magdeburg in eastern Germany, €5 million have disappeared in Limburg near Frankfurt, and it was recently discovered that a senior priest in the Diocese of Münster had 30 secret bank accounts. And while parishes throughout Germany are cutting jobs and funds for community work, many bishops are still living on the high horse. A brand-new residence? An ostentatious home for their retirement? Restoration of a Marian column to the tune of €120,000? None of these expenditures presents a problem to high-ranking church officials from Trier in the west to Passau in the southeastern corner of Bavaria, whose coffers are brimming with cash.

In many places, this blatant disparity, along with reports of mismanagement, misappropriation and pomposity have prompted the faithful to challenge church officials. They are accusing many bishops of just covering up the problem, as they did in the sex abuse scandal. They are determined not to allow anyone to see behind the curtain into their parallel world of bulging bank accounts and hidden assets, which, in some cases, have buttressed their power for centuries. The only aspect of church finances that is public is the diocesan budget, which derives its funding from the church tax -- but the church's true assets remain in the shadows.

Growing Questions About Church Funding

Now all of this wealth is becoming a political issue, however. The unemployed, recipients of housing assistance, families, communities, businesses, the military -- in the coming years, the federal government plans to deprive them all of billions of euros. But the church, of all things, is being spared, and hardly anyone questions the generous support it receives from the government.

Financially speaking, Germany's dioceses are in excellent shape. "The Catholic Church claims that it's poor, but the truth is that it hides its wealth," says Carsten Frerk, a Berlin political scientist who, after years of research, is publishing "Violettbuch Kirchenfinanzen" (The Violet Book of Church Finances) this fall. Frerk estimates the cash assets of the church's legal entities at about €50 billion. The Catholics, who are not releasing their own figures, accuse Frerk of being a prejudiced, atheistic critic of the church.

The assets, accumulated over the centuries, are invested in many areas, including real estate, church-owned banks, academies, breweries, vineyards, media companies and hospitals. The church also derives income from stock holdings, foundations and bequests. As a rule, all of this money flows into the accounts of the so-called bishop's see. Only a bishop and his closest associates are familiar with this shadow budget, which tax authorities are not required to review. The public budgets of dioceses consist of far less than their total finances.

This complicated web is handled with such secrecy that not even the financial department heads of all dioceses openly discuss their finances with one another. Seemingly baroque structures make these finances even more difficult to fathom. Depending on the diocese, the administrators of the church's funds can be members of a church tax council, a diocesan tax panel, a financial board or an administrative board. Sometimes assets are also spun off into foundations.

Of Germany's 27 Catholic dioceses, 25 refused to provide information in response to a SPIEGEL survey, noting that this information "is not made public." Only two dioceses, Magdeburg and the Archdiocese of Berlin, which was on the verge of bankruptcy a few years ago, were somewhat more accommodating, probably because they have so few assets to hide in the first place.

Secret Assets

The vicar general of a well-heeled diocese, on the other hand, said: "Yes, the assets in the bishop's see are secret. But perhaps it would be better if you wrote: confidential." When asked to explain this secretiveness, a spokeswoman of the Diocese of Limburg responded: "That's just the way it is." Finally, a representative of the German Bishops' Conference said: "I don't want to talk to you about this."

Elected lay representatives at the base are hardly more successful. They face a wall of silence, even when they are responsible for financial supervision in their diocese. One of them is Herbert Steffen, whose congregation appointed him to the diocesan council in Trier. Steffen, 75, is not exactly a fierce critic. A former furniture manufacturer, he comes from an arch-Catholic family of entrepreneurs in the Moselle River region. His concern was as straightforward as it was conservative: He wanted to make sure that his diocese was in solid financial shape.

The businessman was irritated by his experiences in the diocesan council. "I was surprised by the small size of the budget. It was something I thought we ought to look at," he says. At a council meeting, he asked a confidant of the bishop whether this was the entire budget. "There is also the budget of the bishop's see. But it isn't intended for the public," the official replied. When Steffen asked, "are you telling me that we can't see it, either?" the official said: "No!"

Trier, Germany's oldest diocese, is a good example of the Catholic divide between rich and poor. Bishop Stephan Ackermann, who also oversees sex abuse cases for the German Bishops' Conference, can be quite generous in financial matters, particularly when they involve prestigious projects adjacent to his bishop's palace. For example, the diocese currently has €1 million earmarked for a planned renovation of the square behind Trier Cathedral. Local church authorities want to make sure that the area looks its best, just in case the pope decides to lead an annual pilgrimage to the "holy robe" in 2012, joining the faithful in worshipping a robe that supposedly contains scraps from the robe Jesus wore.

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