(Editor’s Note: As the following article, which appeared last week on the website of Garry Kasparov, former world-champion chessmaster and current political activist in Russia, reveals, problems of accountability and transparency in the Orthodox Church, sadly, are not to be found in the Orthodox Church in America alone. For those who have suffered these past years as the OCA worked out its financial and moral difficulties, often publicly, the following is offered, not in judgement on the Russian Church in its own historical conditions, but as a caution, that things could have been resolved much differently - or not been resolved at all. Many of the problems discussed in the following article are problems the SIC Report examined, albeit on a much, much smaller scale.
If the current questioning of the Russian Church in these matters, as elaborated here, allows us thereby to reflect on our own “progress” in these matters in the light of the recent All-American Council, the turmoil we have so recently endured and are working to resolve, may truly be seen as a gift from God. This Thanksgiving let us give thanks to God for helping us forward, and offer a prayer that the Russian Church may find its way forward as well.)
Help in the Name of Christ!
by Alexander Khramov
Translated from the Russian by Paul Shirokov
Last week Patriarch Alexei sent a letter to President Medvedev in which he asks “to provide financial stability for the Russian Orthodox Church Moscow Patriarchate (ROC-MP) during the time of crisis”. In order to achieve this Alexei II asks to extend a deposit insurance to all of the ROC-MP bank deposits, and also to revoke a tax on all church-owned properties.
(Note: At present only church properties that are used for worship are tax exempt, all other properties, e.g. rectories, offices, hotels, etc. are not.)
Besides that, the ROC-MP is asking for an interest-free loan for “stabilizing its financial condition” or, in other words, for a solution of all kind of problems that occurred in ROC-MP due the financial crisis, in the same way they occurred in many other institutions or organizations that keep money in banks, and are active in construction projects. (The construction industry has been hit particularly hard.)
It is wrong to think that the financial activities of the ROC-MP is limited to collection plates, sales of candles, religious literature and icons, collection of money for baptism and memorial services, etc. Of course, considering that the ROC-MP oversees thousands of parishes all over the country, and that a considerable part of the population attends church services regularly and “shops” in church stores, the aggregate income from that “network of retail industry” is quite substantial. However, it plays by far not the most important role in the ROC-MP budget.
Only 10% of the ROC-MP’s income is comprised of contributions from the dioceses (and these contributions are those that consist of money received from sales of candles, parishioners’ contributions and donations for sacramental services). This was reported by Alexy II during a hierarchical council on June 24, 2008. Moreover, the Patriarch pointed out that only 55 dioceses (out of 142) send their contributions to the ROC-MP. Contributions of some diocese are so small that they can be compared with contributions of some individual Moscow churches.
We shouldn’t be surprised that even money from “strictly church” income sometimes “get lost” and doesn’t reach its intended destination. The financial structure of the ROC-MP is completely non-transparent on all levels.
For example, what accountability mechanism, if any, is there for donations for sacramental services in any parish? How is the number of cars or apartments “blessed” controlled? Was it 20 or 120? And remember, that the “fee” for each blessed vehicle is several hundred rubles.
I don’t want to say that priests somehow become very wealthy as a result of this. (Usually, in order to get rich you don’t pick the occupation of a parish priest!) It is more likely that they merely receive some extra income thereby that helps them and their families to survive. However, manipulations with collection plates and “fees” for sacraments do not add to clarity of the (church’s) financial system.
Also, you have to understand, that in order to put together an accurate financial accounting, it is necessary to have an accountant. Where is a regular parish priest going to find one? Hence, priests often delegate their bookkeeping to another designated priest, the one who is responsible for several parishes. Furthermore, after money is passed through the hands of the designated priests they go to their hierarchs, who are also in no hurry to send them further “upstairs”. Therefore, you shouldn’t be surprised that the dioceses’ contributions to the ROC-MP are quite small. It couldn’t be otherwise, when the cash flows through several layers, each of which not only lacks any form of transparency, but often any kind of mechanism for recording cash transactions.
Therefore the ROC-MP gets its 90% of income from other sources. Which ones? The Patriarchal report lists the hotel “Danilovsky”, the ecclesiastical art production factory “Sofrino”, and also “individual contributions”. Obviously, the hotel and the factory alone are not sufficient to maintain a huge amount of real estate that belongs to ROC-MP (not to mention numerous church activities, Sunday schools, and church educational facilities). Besides, during the hierarchical council the Patriarch said that many parishes still owe money to “Sofrino” for the goods purchased, and that the resulting shortage of operational capital makes “Sofrino” unprofitable.
What’s left is “individual contributions”. They can be really large, considering that ROC-MP is fully capable of lobbying the interests of “Orthodox businessmen” in the State Parliament (or at least get them contracts for rebuilding of churches and other real estate. And the ensuing "kickbacks" of significant amounts of money could be quite legally accounted for as “contributions”).
But it doesn’t stop there.
The ROC-MP is very active on a financial scene; they purchase financial instruments and invest in banking sector. The statute of ROC-MP from 2000 lists income from investments, and banking deposits among sources of income of the Church.
Therefore, the MP’s anxiety about the instability of its finances at the time of current crisis is justified. Let’s remind ourselves, that in the 1990's the ROC-MP owned a significant share of the corporation “International Economic Cooperation” (IES), which was in oil export business (on preferential terms), took part in international deals (e.g. in the Iraqi “Oil for Food” program), which caused her to become a part of that large financial scandal.
The “IES” corporation initiated a holding company which owned shares of some big banks and production-and-trade companies. The Moscow leadership took an active part in the management of the holding company. Now that company ceased to exist, the bankruptcy hearings have passed, but the ROC-MP’s share in the companies that holding company owed could not disappear without a trace. Besides, exactly of what the ROC-MP’s (and particularly the Department of External Church Relations’) investment portfolio consists is hard to imagine, considering the existence of multiple middle companies. The ROC-MP’s financial activity among its leadership is as non-transparent as among the regular parish priests. The only difference is that in latter case the amount is in thousands - and in the former, billions. The “IES” example is provided only (as an example) for the reader to picture the whole extent of the financial activity of the ROC-MP.
Besides the publicly-known fact about the ROC-MP’s shares in different companies, there are also well-known “church banks”, e.g. “Perevest” bank and “Sofrino” bank. Significant shares of those banks belong to church hierarchs and some clergy. Moreover persons close in relationship to them are on the boards of directors. One of the officially-stated purposes of their activity is church charity. These banks are in business of loaning money to people and businesses that are involved in real estate and construction projects. These banks are not very large, and as a result of the current financial crisis could be in real trouble. Hence, the Patriarch’s call for financial help should not sound surprising.
Also we need to recall the involvement of the ROC-MP in the construction of upscale condos, offices and hotels. Projects like these are attractive to investors: the ROC-MP owns a lot of land, including much in the center of Moscow. (The land is being transferred into the ownership of ROC-MP free of charge from the Moscow city government, who is likely to have common business interests with the Patriarchate, including in the construction business...)
We should point out that the land owned by ROC-MP is free of land tax. The Ministry of Finance, in the letter dated May 25, 2005 and numbered 03-06-02-02/41, quite interestingly resolved the issue of tax status:
“A land tax exemption is provided to a religious organization, who owns a piece of land on which a building of a religious or a charitable nature is located, despite the presence on this land of buildings of other nature.”
In other words, if the ROC-MP made a deal with a construction company, and on the piece of land owned by the Patriarchate, a huge building with upscale condos as well as a small tiny chapel were built, then the land tax need not be paid. It turns out that conditions for such successful construction projects are "heavenly", but, unfortunately, then came the crisis...
But it is OK. The ROC-MP, relying on the Will of God and on the will of President Medvedev, will receive loans from the state, and will finish building what it hasn’t built yet. But of course, this will be done for charitable and religious purposes only.
And we should not doubt the fact that the loan and new tax benefits will be provided to the ROC-MP. The Russian government is always quick to support the Church during difficult times. Let’s recall the infamous letter from the Ministry of Finance, dated November 4, 1996 and numbered 11-01-08, in which “ considering the financial hardship of ROC-MP”, the Ministry of Finance “as an exception, supported the request of Patriarch of Moscow and All Russia Alexy to import duty-levied goods in the form of humanitarian aid and within the set quotas”. The ROC-MP was then allowed to import - duty free- 50,000 tons of tobacco products and 112.3 million tons of sacramental wine. Of course, maybe the tobacco products and the wine were distributed later with spiritual and charitable purposes, and money raised from the sales went to the needs of little and vulnerable orphans, but to verify that is impossible.
Regardless of the fact that state support of financial endeavors of the ROC-MP (which as we saw are not limited to the sale of candles and icons) is hardly justified – we all live in a civil (or secular) society, -- and in the condition of a complete non-transparency of the financial activity of the ROC-MP, the act of providing it with more benefits and loans, is criminal.
Until a complete list of all sources of income and expenditures of the ROC- MP, as well as its assets is made public, any state help directed to this religious organization must be suspended. This also applies to not only ROC-MP but to other organizations to whom Russian government is eager to provide help (the help which is obviously provided with tax-payers money). In the meantime the finances remain murky....
In the conclusion I want to say: there is no need to be surprised that the leadership of the Russian Orthodox Church actively supports the present political regime. It has nothing to do with the “eternal Orthodox loyalty”, or the words of St. Paul, that “There is no power but of God”. It has to do with business interests. This is business, gentlemen. And no one cares about God, or St Paul, anymore.