US lawsuits threaten Catholic Church

St Peters' Basilica in Rome is the heart of Catholicism

By Orla Ryan BBC World Business Report

The recent scandal surrounding the Catholic Church in America has put the spotlight on its finances.

The Church in America faces lawsuits running potentially into millions of dollars, threatening some dioceses with bankruptcy.

Allegations of paedophilia have led to the filing of lawsuits against the archdiocese of Boston.

Financial trouble in the States could mean trouble for the Church worldwide.

Financial management

St Peters' Basilica in Rome is the heart of Catholicism.

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From here the teachings of Pope John Paul II are filtered down to local dioceses and parishes around the world.

But when it comes to money, the Church's approach is different.

Local dioceses manage their own books and pay a regular sum to Rome, while the Vatican's finances are run separately and not always without controversy, notably its involvement in the collapse of Italy's Ambrosiano bank in the 1980s.

Greater transparency

"The Vatican was found culpable in the collapse of what was after all a major bank," said John Cornwell, the author of several books on the Catholic Church.

"In the settlement the Italian government suggested a payment of $250m which was in fact found by the president of the Vatican bank from the Vatican's own pension fund."

"Now after that debacle there was a consciousness for a need for greater transparency and greater responsibility," he added.

Now, the Church's finances are once more under public scrutiny.

In America, the archdiocese of Boston is facing lawsuits following allegations of paedophilia.

Law suits

Cardinal Bernard Law led the diocese at the time of the alleged abuses.

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"I wish that I could turn the clock back and undo the harm, the hurt that has been caused to children, to families and others," he said.

"Please know that as long as I am in a position to do so, I will work tirelessly to address this crisis and to underscore its severity."

His plea for understanding has not placated litigants in Boston. And around the world, several cases of paedophilia have emerged and other suits could follow.

Payouts

Millions of dollars in damages have already been paid.

Father Tom Rees, editor of America - the country's national Catholic magazine, is concerned about the size of these payouts.

"The results, when you are talking about this kinds of millions of dollars, will be less money for scholarships for inner city kids going to Catholic schools... less money for hospice care for Aids patients - all of the kinds of things that the Catholic church does with its donations and its money," he said.

"Where is that going to come from if the coffers of the Archdiocese are empty?" he added.

Battling for hearts and minds

The Church is not only one of the biggest providers of social services in the United States, but Catholics in America are some of the biggest donors to the Vatican purse, second only to Germany.

This is money the Vatican badly needs elsewhere in the world.

South America is one of the Church's traditional strongholds but hundreds of thousands of Catholics have left, wooed by the missionary efforts of Protestant evangelicals.

"The nature of this competition for minds and hearts in South America is extremely expensive because we are talking about schools, about Universities, about the running of publishing houses and broadcasting systems, satellite television and so forth," said John Cornwell.

He said the prospect of bankruptcy, even in some diocese, would have a huge impact not only on the church in the US, but also a knock-on effect on the way in which the Vatican can run itself and the churches' missionary work throughout the world, especially in developing countries.

It is clear that if US donations fall, then ultimately, the Catholic Church may find that it is not just money it is losing, it will be the battle for hearts and minds of Catholics around the world.