Pope Francis blesses a group of newly ordained priests of the Legionaries of Christ in this 2017 photo. Photo CNS. Chilean President Sebastián Piñera, Lebanese Prime Minister Najib Mikati, and former UK Prime Minister Tony Blair have all been named in the exposé of the financial secrets and offshore dealings known as the Pandora Papers. However, there’s only one Catholic institution named: The Legionaries of Christ religious order.
The downfall of the Legionaries of Christ began in 1998, when nine men went to the Vatican to formally accuse Maciel of sexually abusing them”
The order was founded by Father Marcial Maciel, who was later credibly accused of abusing children and instituting a cult-like atmosphere within the institution.
Just three days before an intervention of the ordered authorised by Pope Benedict XVI began in 2010, they set up a scheme to absorb money through three trusts in New Zealand. These allowed them to hide millions in assets from the Vatican, and avoid paying taxes on investments in real estate, technology, oil companies, and even the company behind Kentucky Fried Chicken.
The downfall of the Legionaries of Christ began in 1998, when nine men went to the Vatican to formally accuse Fr Maciel of sexually abusing them. In 2006, at the age of 85, he was suspended from ministry and died two years later.
Apostolic visitation
In late 2009 an apostolic visitation was ordered by the pontiff, and shortly afterwards Cardinal Velasio De Paolis was appointed to impose “structural changes” in the Legion, and the order underwent a five-year process of renewal.
But on the eve of Cardinal De Paolis’s public appointment – after it had been revealed to the Legionaries – priests and businessmen close to the order set up an opaque network of trusts and subsidiary companies that have been used over the past decade. These tax haven accounts, according to Spanish newspaper El Pais, have accumulated more than $295 million in assets in sectors such as real estate, technology, oil, and fast food.
This weekend, the International Consortium of Investigative Journalists released an exposé of the financial secrets and offshore dealings of dozens of heads of state, public officials, politicians, artists and sports stars from 91 countries and territories. Hundreds of journalists spent two years investigating nearly 12 million confidential files that compose the so-called Pandora Papers.
Though many of the accounts aren’t illegal, the use of offshore tax havens is often accused of being highly exploitative, contributing to wealth inequality, and frequently going hand in hand with corruption and criminal activity, especially tax evasion.
The allegations against Fr Maciel were not only of sexual nature – he led a double life in which he fathered children, who he is also accused of molesting – but also of financial impropriety.
On July 6, 2010, the Retirement and Medical Charitable Trust (RMCT), was set up in order to “collect donations and make investments” to “financially assist retired members, mentally affected, or injured in an accident”.
However, the historic architect of Legionary finances, Mexican Father Luis Garza Medina, together with two of his businessmen brothers, opened Salus Trust and AlfaOmega Trust on November 15, 2011. The money for this trust allegedly came from “a family inheritance”.
The profits from this trust go into the RMCT, with the order denying owning or controlling AlfaOmega or Salus Trust, stating that the million-dollar benefits they receive from Fr Garza Medina’s structure are a generous contribution.
“It is not uncommon for members and their families to freely decide to give donations to the congregation or to other religious and charitable causes,” they said in a statement.
Legionaries of Christ
Yet the ongoing existence of RMCT in a tax haven belies the promises made by the Legionaries of Christ in 2017 after the Paradise Papers revealed a similar scheme: The order said that this financial architecture was no longer in use, and that it was something typical of the times of Fr Maciel.
“Today the Legion of Christ does not have offshore companies [in tax havens] nor does it have resources in offshore companies,” global spokesman Aaron Smith said at the time. “They were created when Fr Marcial Maciel was general administrator, and then they were closed,” he added.
In a statement released Monday, October 4, the Legionaries argued that the two trusts created in New Zealand by the Fr Garza Medinas for their benefit “are independent of our Congregation” and reaffirmed that the institution “does not control the assets of its religious, nor does it administer them, nor does it own them, unless the religious donate their assets”.
Although Fr Garza Medina is no longer in a high-ranking position within the Legion – he was removed during the Vatican’s intervention – his sister Roberta told El Pais that he never ceased to be in charge of the accounts, since “most of the assets are not in the name of the Legion, but in the name of my brother’s lenders”.
Only after the death of Luis and his sister Paulina, who is a member of the Legion-affiliated group Regnum Christi, will the resources of the trusts be fully turned over to the Legionaries of Christ, according to documents reviewed by the Spanish newspaper.