THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Chancellor details money crunch

In testimony, he describes bleak archdiocese picture

By Kathleen Burge, Globe Staff, 8/6/2002

he chancellor of the Archdiocese of Boston painted a dreary picture of the church's finances yesterday, suggesting the archdiocese could ill afford the $15 million to $30 million settlement agreement that has hounded church officials since they walked away from it three months ago.

Also yesterday, Bishop Robert J. Banks - now the leader of the Green Bay, Wis., diocese and the former vicar for administration under Cardinal Bernard F. Law in Boston - testified that he paid little attention to the agreement because ''it was too long and I was too busy.''

The testimony came midway through a hearing on whether the archdiocese must honor a March agreement and settle with 86 alleged victims of defrocked priest John J. Geoghan.

Church officials say the agreement was only a proposed settlement that still required the signatures of 16 defendants, including Law, and enough money to pay for it. Lawyers for the alleged victims argue that the agreement was a contract that cannot be abandoned.

Chancellor David W. Smith testified yesterday that although the archdiocese had a $17.5 million line of credit from Fleet Bank, the church was cut off in June, after it had borrowed about half that amount.

''We owe $9 million to the bank,'' Smith said. ''They've said, `No more.'''

The archdiocese is already using the borrowed money to pay for its daily operations, he said, as is often done in years when it is running a capital campaign, such as this year's Promise for Tomorrow fund-raising drive.

The sex abuse scandal has hurt the church's fund-raising this year and forced the archdiocese to cut its budget by 40 percent.

In June, church officials said donations to the annual Cardinal's Appeal were down about a third compared with last year.

Yesterday, Smith also said that he had tried to arrange for a $50 million loan for the archdiocese, probably sometime in April, but was unsuccessful.

Banks testified yesterday that he had received a copy of the settlement agreement in April. He said he believed a lawyer for the Boston archdiocese would fly to Wisconsin and explain the agreement before he signed it.

''I did not study it closely,'' Banks said during his half-hour of testimony. ''It was too long and I was too busy.''

In the afternoon, lawyers for both sides questioned each other, arguing about what Superior Court Judge Constance M. Sweeney had meant when she talked about the settlement agreement in court in April.

Sweeney looked on silently, sometimes with a slight smile. Later, when the topic threatened to arise again, Sweeney noted drily, ''We've parsed my own words beyond my possible understanding.''

Sweeney restated an earlier ruling that the archdiocese could not legally free itself from the settlement agreement merely by pointing to the May vote of the archdiocesan finance council, which rejected the settlement as too costly. Sweeney ruled in July that Law - and not the finance council, which has authority only in church law - is the sole official of the archdiocese.

''If the cardinal were here to sign a note right now on behalf of the [archdiocese] ... he would be indebted to me under civil law,'' she said. ''The finance council might be mad. Other ecclesiastical people might be mad. But from a secular point of view, it would make no difference.''

Also yesterday, an Appeals Court justice overturned Sweeney's decision requiring the mediators who helped the lawyers draft the agreement to testify in court. The mediators have argued that both state law and their own rules - signed by both sides - preserve the confidentiality of mediation.

''Compelling such testimony, even if potentially helpful to the motion judge's decision on the merits of the parties' dispute, would conflict with the plain intent of the statute to protect the mediation process and to preserve mediator effectiveness and neutrality,'' Justice Cynthia Cohen wrote.

Mitchell Garabedian, lawyer for the alleged victims of Geoghan, said last night that he will not appeal Cohen's decision.

Kathleen Burge can be reached at kburge@globe.com.

This story ran on page B2 of the Boston Globe on 8/6/2002.
© Copyright 2002 Globe Newspaper Company.