The
Hidden Wealth of the Catholic Church: Secret Assets And
Cuts in Catholic Social Services
Writers Articles And Opinions
19 June 2010
By Anna Catherin Loll and Peter
Wensierski
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.
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.
Part 2: Cuts in Catholic Social
Services
On the other hand, subsidies for youth organizations
and community centers are to be radically cut or
eliminated altogether. Under the diocese's proposed
cost-cutting program, a number of facilities would be
shut down, including Catholic adult education offices,
the Catholic Academy of Trier and Catholic student
societies in Trier and the nearby cities of
Saarbrücken and Koblenz.
Those who would be affected by the cuts are outraged.
"Our goal is to make the church more accessible," says
Guido Gross, a pastor who ministers to university
students, "but now they want to get rid of the entire
field of activity." Lukas Rölli of the Confederation
of Catholic Student Societies adds: "I will renounce
my faith if the bishop signs this." For Rölli, the
Catholic Church creates the impression that it "is
trying to withdraw from society more and more, and
back into the vestry."
In Cologne, one of the world's wealthiest dioceses,
there is also a wide gap between appearance and
reality. Grassroots Catholics there have had to
struggle to stay afloat financially. Churches have
been closed while a shrinking number of priests have
had to minister to bigger and bigger congregations in
line with strict requirements outlined in austerity
programs. Meanwhile, the Archdiocese of Cologne has a
large budget of €863 million, and the assets of the
archbishop's see are estimated at several billion
euros. According to church critic Frerk's
calculations, the diocese's holdings in a group of
companies known as the Aachener Gesellschaften, which
consist of about 26,000 residential and commercial
units, were worth more than €1 billion in 2003.
But the archbishop's financial officer makes little
mention of all this good news. If he did, would the
faithful be quite as willing to support all the
cutbacks and cheerfully donate their money to pay for
a new stained-glass window in the cathedral by the
artist Gerhard Richter? For the archdiocese, it is
always preferable to have others foot the bills, even
when it comes to paying the archconservative Cardinal
Joachim Meisner. Based on a centuries-old agreement,
the government pays the diocese the cardinal's monthly
stipend of about €11,300, which hasn't stopped Meisner
from repeatedly attacked his sponsors for their
godlessness and various "failings."
Taxpayers' Money for German Churches
Meisner and many of his fellow ministers aren't the
only ones to receive public stipends. Year after year,
both the Catholic Church and the Protestant Church in
Germany receive generous payments from the federal,
state and local governments. Not as well known as the
church tax (about €10 billion a year) are the annual
subsidies to the church, both direct and indirect,
which in 2000 amounted to an estimated €17 billion.
The government pays substantial sums of money for the
maintenance and constant renovation of cathedrals and
other church buildings. It pays the salaries of
religion teachers and foots the bill for the altar
wine used in church services for the military. Some
benefits, such as the annual firewood deliveries a few
southern German towns make to their bishop, are based
on 200-year-old entitlements that politicians have
never reviewed.
Despite the constitutional separation of church and
state in Germany, substantial subsidies are paid for
church conferences, church libraries, pastors who
minister to police officers, inmates of prisons and
psychiatric institutions, and the military. The
government even helps to pay for the employment of
conscientious objectors, and for the maintenance of
offering boxes and wayside crosses.
The church likes to point out how much it does for the
poor and the weak, and to promote social cohesion, and
it has a valid argument. Nevertheless, the government
foots the bill for many of these activities. The
German government pays the bulk of the German Caritas
Association's estimated annual budget of €45 billion,
while the Catholic Church pays only a fraction.
In guidelines published on March 15, the diocesan
financial board in the Bavarian city of Regensburg,
which manages the assets of the bishop's see, even
specifies the conditions that must be met before it
will contribute financially to the renovation of
church-run kindergartens and shelters -- namely that
it will only contribute if the local government "has
contractually agreed to pay" two-thirds of total
production costs" and is willing to guarantee payment
of at least 80 percent of a potential operating cost
deficit for "at least 25 years."
Apparently the diocese is only interested in
church-run kindergartens if the government assumes
most of the cost. Does that mean the diocese would
quickly abandon its compassionate care for the
children of God if public funding were to dry up? In
other dioceses in Germany, Catholic hospitals, schools
and retirement homes are even fully government-funded.
Church Pays no Taxes and is
Unsupervised
In return, the church is not even required to pay
taxes: no property tax, no corporate tax and no
capital gains tax. Everything it does as a public
corporation in Germany is considered charitable,
benevolent and tax-exempt. Unlike other public
corporations like universities, the church is not
subject to any state supervision.
According to church law, "the Catholic Church has the
innate right, independently of secular power, to
acquire, own, manage and sell assets for the
attainment of its own purposes." Defending this
"innate right" and the billions backing it is one of
the central functions of bishops.
Complicated financial structures and secret coffers
only become somewhat more visible to the public when
perfidious administrators abuse them.
This is a particularly glaring issue in the Diocese of
Limburg at the moment. A few weeks ago, the head of a
church financial administration, who had embezzled
about €5 million, was sentenced to more than six years
in prison. The man, who was also the managing director
of the Catholic congregation in Limburg, had unimpeded
access to church funds.
"The embezzlement was surprisingly easy," the judge
remarked. The problem was only discovered when the
diocese recently began to introduce a new commercial
accounting system. Until then, the Limburg bishops and
their confidants could apparently dispose of their
funds as they saw fit. The current Bishop of Limburg,
Franz-Peter Tebartz-van Elst, had to admit that
mistakes were made during financial audits.
A Palace Fit for a Prince
The diocese could easily afford such a careless
approach to its finances, because the bishop's see
appears to have plenty of cash. It is currently
planning to build a new residence for the bishop,
partly with funds from the bishop's see. Residents of
the small city refer to the hill above Limburg, where
the bishop will live behind the tall stone walls of a
former aristocratic estate, as the "Acropolis."
"Our bishop wants to be a prince again," the locals
say mockingly. By contrast, his predecessor, Bishop
Franz Kamphaus, chose to live modestly in a two-room
apartment in the seminary instead of the old bishop's
residence, which he turned over to a family of
Ethiopian refugees for several years.
What architects have designed for Tebartz-van Elst on
the "Acropolis" is far more than a generous apartment
with an on-site chapel. As part of the project,
adjacent buildings will also require extensive
renovation and conversion. New quarters will be needed
for an order of nuns that will be moving in to ensure
that His Excellency is well taken care of. And as part
of a new security system for the cathedral museum,
relocating one of the museum's emergency exits will
cost €1.5 million alone. As an added benefit, it will
be harder to disturb the bishop in his refuge in
future.
Meanwhile, the bishop has ordered his flock to live by
the motto "Save and Renew." Limburg is one of the
dioceses cutting back on parishes, masses and priests.
In the surrounding villages, the faithful are hard at
work collecting donations for the most urgent
maintenance work on their churches. "The saving is
happening at the base, while the renewing takes place
elsewhere," says Henny Toepfer of the local chapter of
the reform movement "We Are Church." She has trouble
understanding why millions of euros are available for
a new residence, but not to pay for buses to bring
elderly Catholics from the villages to church
services.
The Lure of Financial Markets
For some time now, the old-fashioned vices of
pomposity and wastefulness have been joined by a
thoroughly modern temptation for the financial
administrators of the bishops' sees: the promise of
turning a profit in global capital markets.
Take, for example, Magdeburg. Hoping to solve its
financial problems, the poverty-stricken diocese,
which also has relatively few members, established a
stock corporation called Gero AG. To increase earnings
from interest and compound interest, Bishop Leo
Nowak's confidants invested in real estate deals, ship
partnerships, biogas plants and even controversial
research into genetically modified plants. A priest in
the administration of the diocese even blessed a
greenhouse intended for use with genetically modified
plants, in hopes that the church's pious investment
would flourish.
Today the bishop faces a financial mess. His diocese
claims to have lost more than €40 million, while the
press estimates the losses at about €100 million. Now
the new executive board of Gero AG plans to
restructure the ailing network of companies and
holdings. The corporation has already sued its former
managing director for damages.
Why do the princes of the church refuse to be held
accountable to their congregations? And why are they
so careful to keep the government, which supports them
so generously, out of their financial affairs?
A former spokesman of a diocese has spent a lot of
time thinking about these questions. He attributes the
current problems to the pre-modern world of diocesan
ordinariates and residences, which revolved around
royal courts. "The bishops and prelates, with their
colorful titles, feel superior to the Western world
and shield themselves against it," he says. "The
confessional stands in the church, not the offices of
the tax authorities."
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